The State of Nonprofit Donor Retention (And What To Do About It)
As a general rule, retaining existing donors costs less than acquiring new ones. Current donors have already demonstrated a belief in your organization’s mission and a willingness to act on it. This means for most nonprofit organizations, reducing donor losses—and increasing donor retention—is the most affordable strategy for meeting their fundraising goals and powering their purpose.
Donor retention is currently low
Unfortunately, across the nonprofit sector, donor retention rates are low and getting worse. According to the 2021 Fundraising Effectiveness Survey Report, giving for that year grew by about 3%, but the donor retention rate dropped by 4% from 2020 and the number of active donors decreased by about 6%. This drop in donors for the year 2021 was also “larger than the growth in donors [for the year 2020,]” meaning this decrease for the year 2021 also represents “a net loss (-0.8%) of donors since 2019.”
Not only are nonprofits struggling to retain donors, but some donor segments are trickier to keep than others. In 2021, micro donors (who gave less than $100) decreased by 9.3%, and small donors (who gave between $100 and $499) sank by 6.1%. The latest FEP report shows that this problem appears to have become even more acute from Jan. 1 to March 30 of this year: the segment of donors giving $500 or less—the largest group of donors—appears to have shrunk by 7% from 2021.
Chronically low donor retention may also cause problems in the near future
These findings are alarming at face value, but are even more so in the context of historical retention activity and predictions for the future. Nonprofits are continuing to lose donors, trapping organizations in a losing cycle of constantly spending time and money on costly donor acquisition only to lose most of that investment when those donors don’t return to make a second gift.
Many of the donors being lost are among the smallest, which means more and more philanthropic dollars are becoming more and more concentrated in the hands of fewer and fewer donors. Some scholars worry about the implications of Americans’ less democratized charitable giving and connect growing wealth inequality and other structural causes to this trend. This pattern also contributes to a more competitive environment for nonprofits seeking the larger, harder-to-land gifts they need to fuel their purpose—especially as conversation continues in our sector about potential economic difficulty on the horizon.
4 ways nonprofits can improve donor retention rates
Although low donor retention is endemic across the nonprofit sector, there are steps individual organizations can take to help themselves stand out and survive. These four tips can help nonprofits rise above the retention slump:
- Track your retention rates. A shocking number of nonprofit development departments aren’t sure what their current donor retention rate for the year is. Staying updated on the status of your program’s retention is the first step to improving it—as we’ve said before, what gets measured gets moved.
- Start with a donor stewardship program. Building donors’ loyalty to your organization means engaging them in a variety of ways outside of fundraising asks. The time that you spend on donor stewardship pays off with donors that stay with your organization for the long run.
- Automate recapture and renewal efforts. Don’t leave it up to already-busy staff to remember when recapture and renewal outreach should start. By automating the process, you’ll save staff time and create a more timely and seamless experience for your donors. Which brings us to our fourth and final tip:
- Make the most of your technology. Whether it’s automating your recapture series, utilizing predictive analytics to identify the best times for those automated renewal and recapture series to go out (and the best donors to receive them,) or converting more one-time donors into sustainers, your technology can give your whole fundraising team much-needed support by taking on technical tasks and letting you spend that time on other aspects of fundraising that require more of a human touch.