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Monday
Feb112013

Strategies to Increase Nonprofit Donor Retention Rates

While all nonprofits recognize the value of cultivating donors over the long-term, they feel an incredible amount of pressure to implement short-term strategies that will raise money today. Unfortunately, many nonprofits don't feel like they have the luxury of focusing on fundraising strategies that will bring in long-term results, which has led to low donor retention rates. According to the Fundraising Effectiveness Project, the commercial business customer retention rate is 94%. Guess what the nonprofit donor retention rate is? 49%. That is an attrition rate of 59%.

Between 2006 and 2011 donor retention rates decreased about 10%. Yes, you can attribute part of this decline to a bad economy, but I think this is also due to the fact that there are a lot more nonprofits competing for donors than ever before. In the last 10 years, the nonprofit sector has grown more than 60% in the U.S to an estimated 1.5 million organizations.

According to the study, only 16% of all donors gave more money the following year. And only 65 of the 2,377 nonprofits in the study had a retention rate of over 70%. These numbers are dismal and clearly indicate that nonprofits need to invest more time and resources cultivating new donors and retaining them. Here are four strategies you can start using to increase your retention rates tomorrow.

Personalize your communications to your donors


Some organizations feel they are already personalizing their donor communications because they address them by first name in a direct mail appeal or email appeal. Yes, that is a great start, but that is not enough. Donors want more. You need to understand their interests. This data can be gathered through surveys, tracking the issue they were recruited on, and the different types of actions they take with your organization. If you have a social CRM you can also track your interactions with donors and do a lot of listening.

Segment your list


Segmenting is critical to increasing retention rates. Why? Because it enables you to better personalize your communications and make it relevant to their expressed interests. If you have a good CRM system you can segment by issue area, donor level, and location, right down to the city zip code. For example, if you were a national animal welfare organization with chapters across the U.S. and you were trying to help raise money for a shelter in Washington, DC you would want to segment the list and send the fundraising appeal only to the people in Washington, DC since they were personally connected to the issue locally.

Always thank your donors and stay in touch


Many organizations have an automated thank you message sent when someone donates online. But that is not enough. Donors expect more from you. Send them a personalized thank you message. Tell them how their hard earned money that they donated to your organization will be spent and what kind of an impact their donation will have. Keep them updated on the impact of their donation. Pick up the phone and say thank you. On their birthday, call them and wish them a happy birthday and don’t ask for money. charity: water does this for their donors and it makes their donors feel appreciated and special. If you can’t afford to call all of your donors and wish them a happy birthday, no problem, send them a birthday e-card.

Move donors up the ladder


If you segment your donors right in a CRM, you will also get a complete snapshot of their giving levels, how often they donate, etc. This will give you the data you need to move them up the ladder. For example, when a donors contributes to your organization 4x a year or more, consider upgrading them to a monthly donor.

What are your favorite strategies to retain donors?

Reader Comments (2)

I think the idea of reaching out to donors for reasons other than asking for money is huge. What a great way to stand apart from all the clutter, especially with the rise of nonprofit organizations lately. Another strategy is to cluster donors by how much they give or how much impact they make. For example, let donors know that they are a silver member donor because they reached that benchmark. Give donors a sense of status and make that status public. It drives competition between donors; competition always motivates people.
In terms of making it personal, social media is a great way to do that. Connecting with individuals makes an organization seem less like a giant and more like a human. That's also an easy way to make the birthday shout outs happen.
February 13, 2013 | Unregistered CommenterKatie
This is a timeless article! Thank you for sharing it. Hopefully you won't mind if I post it within a blog post. If you rather I not, just let me know and I can remove it...but it seems to relevant not to share. Thanks again!
March 26, 2014 | Unregistered CommenterDensie Dahl

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