Studies show that acquiring new donors is more costly than retaining existing ones. Typically, the amount it costs to acquire a new donor will be two to three times more than the amount gained from a new donation.
Donor retention is often less expensive than donor acquisition, and repeat donors can be extremely valuable assets for a nonprofit organization. However, nonprofits are losing existing donors.
The Fundraising Effectiveness Project’s Fundraising Effectiveness Survey Report, showed that in 2012, for every 100 new donors added, 105 existing donors were lost. Donor retention rates have slowly leveled off after the recession, but rates still remain high. According to the Urban Institute, donor retention rates fell 41.5% from 2010 to 2011.
There are a number of factors that can cause organizations to lose donors━some of those, like economic troubles, an organization cannot control. However, nonprofits can control donor cultivation and relationship building. They can also look for signals that an individual will likely become a repeat donor. It can be hard to confirm that an individual will donate again, but below are a few positive signs.
They fit your donor profile.
Who is your target audience? What characteristics do those that donate to your organization have in common? Age, income and education level are just a few characteristics that make up a donor profile or constituent group. Nonprofits may have several constituent groups. A constituent relationship management software like DonorPro CRM can help identify, organize and track each one. Once organizations have established clear donor profiles, they can use them to get a sense for whether or not someone will likely donate in the future.
They ask questions.
In an Urban Institute study, 60% of donors said that they wanted to see how their first donation is making a difference. If a donor asks questions about when your next campaign is, how they can help, or how a cause is progressing, they are showing an active interest. This could signal that they will continue to help through donations or other assistance.
They share your story with others.
When your donors are compelled to share your story with others, it can produce many positive effects like promoted peer-to-peer fundraising and increased awareness. Also, social media and advances in nonprofit fundraising technology have made it easier than ever for donors and other constituents to share stories and for organizations to track it. Furthermore, a donor that shares your story is valuable even after their initial donation. For instance, if an individual donates to your cause, then shares your story with their friends through social media, it could generate more interest and new donors at no cost to your organization.
You are doing your part.
Retaining valuable donors is not an easy task. We can look at some signals to gauge whether or not a donor will donate again, however, if organizations do not do their part to cultivate and build relationships, retention will likely fall. In order to build a lasting relationship with donors, nonprofits should keep the lines of communication open. Let donors know how their contributions have made an impact with compelling stories and data. Send them a well-crafted and personalized thank you letter. Keep in communication with them on a regular basis, but also, don’t spam them with frequent updates or emails. View our blog on methods to improve donor retention here for more best practices.
With new nonprofit fundraising technology and tools available, organizations have more chances than ever to identify and cultivate their donor base. Focusing too many resources on donor acquisition and neglecting your donor retention could prove fatal to your fundraising efforts. Nonprofits should look out for these positive signs and effectively communicate with donors to foster lasting relationships.