What is Donor Retention Rate and Why Is It Important?
New donor acquisition is an essential component of a healthy fundraising program. You always need a steady stream of fresh new donors, but it is important not to neglect your existing donors. In fact, it generally costs more to acquire a new donor than it does to retain an existing donor.
What Is Donor Retention Rate?
The donor retention rate is an indicator of how well you are handling donor relationships. It is the measurement of how many donors continue to make donations to your organization year-after-year.
Unfortunately, across the nonprofit sector, donor retention rates are low and continue to get worse. According to the 2018 Fundraising Effectiveness Survey Report, the average donor retention rate was 45.5% in 2017. Less than half of all donors return to nonprofits each year, forcing nonprofits to scramble to acquire new donors to shore up the loss.
If you have a high donor retention rate, then it indicates you have a loyal base who believes in what you do. A low retention rate signifies you need to do a better job engaging and keeping your donors. You should immediately find out the cause.
Without sustained donor retention, nonprofits cannot effectively grow.
How to Calculate Donor Retention Rate
- Generate a list of donors from 2018 and determine the number of unique donors.
- Of those 2018 unique donors, how many gave again in 2019?
- Calculate the percentage of donors from 2018 who renewed in 2019. Specifically, take your answer to #2 and divide by your answer to #1, multiply by 100. For example, let’s say you had 2,000 unique donors in 2018 and of those donors, 876 gave a gift in 2019. [876/2,000 = .438] X 100 = 8% retention rate.
Ways to Boost Your Donor Retention Rate
- Offer Recurring Gift Options Recurring gift options give donors the opportunity to give gifts on a regular basis through auto debit. Be sure your online donation forms and direct mail reply forms give an opportunity for a recurring gift.
- Thank Donors You should thank your donors as soon as possible after you receive their donation. The confirmation screen is helpful, but go an extra step and mail an acknowledgement letter that expresses your appreciation and shares how their gift makes an impact.
- Offer Different Ways to Give Besides the traditional way of mailing in a check, invest in software that allows you to offer online donation forms, text giving, PayPal integration, etc.
- Communicate Regularly and Use Multiple Channels Donors should regularly hear from you, so they know what impact is being made through your organization’s efforts. Be sure to use all your channels to communicate with your donors and followers — direct mail, social media, and email.Monthly communication is a good frequency for direct mail and email, and at least three posts per week on social media.
The average recapture rate of lapsed donors is 5%. If donors stop giving, the chances of them ever giving again are very small. This is why it is so important to retain your donors.
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