The Donor Retention Weak Spots
The industry is abuzz with talk about donor cultivation and donor retention. But what does that really mean in 2017? The age of hastily signed direct mail reminders is fading into the distance. Personalizing means more than spelling a donor’s name correctly.
At the end of 2016, the Association of Fundraising Professionals, in collaboration with Neon and several other organizations, released the newest Fundraising Effectiveness Project (FEP). Several years in the making, the project set out to help nonprofits maximize their fundraising efforts through a comprehensive data analysis of gains and losses.
The results told a long running story of ineffective donor retention across the industry. Over the last 10 years, retention rates averaged less than 50%. While there was overall growth in donors from 2014 to 2015, a closer look showed that for every 100 donors gained, 96 were lost through attrition.
More startling, the organizations struggling hardest are the smaller nonprofits that need funding the most. There appeared to be a correlation between the amount of money an organization was able to raise and their growth. Organizations bringing in over $500,000 saw more than 10% growth from 2014 to 2015. Charities in $100,000 – $500,000 range saw a less than 1% boost, while organizations doing less than $100,000 in fundraising faced average losses greater than 10%.
Instead of asking about the next best way to get donations, nonprofits should start asking themselves how to retain and cultivate their donors.
This blog is going to talk about how to increase your donor retention rate through 3 powerful donor management practices.
1. Be a Donor Manager
Think of donors as an extension of staff. You wouldn’t just hire a new development director, shake their hand, and send them off to work with nothing more than a weak email follow-up 6 months later. So, don’t leave donors in the dark. Be transparent.
Donors need to feel they are an extension of the good work that a charity does. A key way to guarantee their investment is to really build a relationship. At the very foundation of relationship building is trust.
- Share your successes.
- Share your struggles.
- Be straightforward with your asks.
Don’t beat around the bush with your donors about what you need. Nobody likes to feel like they’re being fooled.
Remember: there’s a reason they gave to you in the first place. They believed in your mission. Remind them that their contributions are integral to growth. Tell your donors what you need, how you want them to give, and what their contribution means to the nonprofit. Fundraising isn’t about crossing your fingers and hoping for the best. Give instructions. Manage your donors.
2. Invest in Technology
Even the savviest leaders use technology tools to maximize their performance and productivity. Managing your donors requires more than drive, desire, and an Excel document.
Donor management software is integral to being an effective donor manager. When you’re looking for a donor database solution, look for a product that allows you manage multiple efforts from one system. This will save you time and money. Shuffling between applications will make it impossible to stay organized and manage effectively.
A system like Neon CRM allows you to manage your membership, fundraising, events, and website information all from one dashboard. Neon CRM also integrates with popular tools like Quickbooks, MailChimp, and Eventbrite. We’re proud of what our system can do, but we’ve also compiled this donor database guide to help you make the best decision for your unique nonprofit. Just remember you’re looking for a comprehensive solution. You can do better than just “fundraising software” or “donor management software”, look for software systems built specifically to facilitate all aspects of the nonprofit sector. Your goal is optimize donor retention, but don’t forget that you need more than a database. You need a space to really interact with donors on all levels.
It’s easy to be weary of software as an end all solution, but it’s proven to help charities grow. Check out our Lakeland Case Study on how one nonprofit was able to grow 25% with Neon CRM.
3. Leverage Nonprofit Data
A good nonprofit CRM will allow you to create data driven reports about donors, events, and campaigns. Data has been a buzzword in the business sector for a while now, but leveraging data is integral to growth for every type of organization. It allows you ask and answer important questions, then take action.
For an example, let’s go back to the FEP data. Prior to conducting research, they set out to answer the question: how effective is the nonprofit sector at fundraising? They answered this question by measuring growth over two years, and then comparing the measurements to isolate trends.
We know for certain that greatest losses for nonprofits came from lapsed repeat and downgraded gifts. Now, let’s leverage that information. A good donor management system will allow users to segment their donors. You can segment by:
- lapsed donors
- lapsed repeat gift donors
- downgraded gift donors
Now, you can personalize outreach to those specific groups and see what can be done to get them back. You can also proactively target our repeat gift donors with communications to remind them that their gift really does matter.
So, when looking at a report, it’s important to ask yourself what you’re hoping to answer with this report. The more detail-oriented your donor management software is, the more closely you’ll be able to look at the nitty gritty details. The better your donor data, the more you can do to increase your donor retention.
Check out Neon CRM’s reporting capabilities to see an example of what kind of data you can leverage.
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