“You should really stop doing it!”
I turned to see the security guard of my building ruefully shaking his head at me. I knew precisely what he was referring to.
Every morning, on my way to work, I see a homeless woman at the street corner. I always give her the change I have.
Clearly, Saurabh (our building watchman) did not approve of my giving behavior.
“Because it really doesn’t make a difference” is his take. Apparently, he had been giving to her too – for quite some time. But he gave it up since he did not see any tangible results.
Saurabh’s reaction is not very different from that of your average donor. They too at one point would have contributed to your organization. But, after a few recurring donations, would ultimately stop giving.
This post can help you identify the underlying problem with why donors leave. It will also give you some pointers on what you can do to retain them.
- Here’s the only reason why donors leave
- Donor retention is essential for all nonprofits
- How does donor retention help your nonprofit?
- How can you make donors stay (and give again?)
- Tackling the communication gap
- Common misconceptions on why donors leave
Here’s the only reason why donors leave
Every donor who contributes to your nonprofit comes with certain expectations. They expect to see some results for their generosity. They want to be more involved in your nonprofit’s cause.
If the nonprofits don’t reciprocate their enthusiasm or cater to these expectations, donors are less motivated to give. They either stop giving altogether. Or, they reduce the number of regular contributions they make.
The only reason why donors stop giving is that their expectations towards your nonprofit are not being met.
The term ‘donor expectations’ is a blanket term. It accurately sums up the reasons behind donor attrition, yes. But it doesn’t narrow down to a specific cause that makes donors leave.
Let me give you a better idea:
- 53% leave due to lack of communication
- 46% of donors leave due to lack of meaningful info or appreciation from nonprofits
- In some other cases (rather like Saurabh), their expectations of outcomes do not match reality
Though these reasons seem simple enough to handle, not a lot of nonprofits are having luck with it. In fact, the donor retention trend for nonprofits is quite alarming.
Pic courtesy: Bloomerang, retention
This graph shows that until as recently as 2017, nonprofits were losing more than 70% of the donors they acquired.
Donor retention is essential for all nonprofits
The 70% drop off rate is not taken as seriously, because some nonprofits look at attrition numbers for only their major donors.
I see their reasoning behind this strategy. Major donors are those who make substantial contributions to your cause. They are already deeply invested in what you do. So encouraging them to give again (or more), would take little effort.
However, times have changed.
The strategy will no longer work for you because of two fundamental reasons.
Donor list dries up fast
If you do not act to fix churn, the number of donors in your list will start fading away quickly. Here is a realistic look at where your list would be, 5 years from now.
With just 10 donors, even if they are major donors, the amount of funds you raise will be laughably low.
Competition is increasing
So, there are now 1.5 million 501(c3) in the US – with a majority of them doing similar work. A direct result of this is that the limited resources available are spread very thin.
That means the competition for donors is fierce. Corporates or any of the million nonprofits can easily sway your donors.
“Donors who give $50 – $250 annually are the mainstay of many charities that don’t have major gift programs. The slow, long-term drop in the number of these donors is jeopardizing the work and impact of many charities.”– Mike Geiger, President, and CEO of the Association of Fundraising Professionals
Quick Tip: Here is how you can calculate the retention rate for your nonprofit.
DRR = [(no. of returning donors current year)/ (no of previous year donors)] * 100
How high (or low) is it?
How does donor retention help your nonprofit?
From a philanthropic standpoint, donor retention seems like an administrative hassle that takes your focus away from the cause you are fighting for.
Nothing can be further from the truth.
Donor retention helps you maximize the impact you can have for your cause by bringing in more resources at a lesser cost.
It is, in essence, just another way to help your mission – from behind a chair rather than being in the field. Here is a quick look at how it can help your organization.
Advantages of a good donor retention program:
- Improves fundraising efforts
- Contributes to added revenue
- Increases donor loyalty
Let me explain each of these separately so that you can see how they impact your organization.
Improves fundraising efforts
A lost donor actually costs your organization a lot more than you realize. All the effort you put into acquiring a donor goes to waste if he leaves after just one gift.
It would cost you 2 or 3 times more to acquire a new donor, as opposed to encouraging an existing donor to continue giving.
“Over 70% of people that we recruit into organizations never come back and make another gift, so we’re caught on this treadmill where we have to spend lots of money on acquisition which most nonprofits lose money on anyway, just to stand still.”Professor Adrian Sargeant, Director of the Centre for Sustainable Philanthropy at Plymouth University
As the good professor points out, focussing on new donor acquisition while not fixing retention is like trying to fill a leaky bucket. Despite all your efforts, you will be hard-pressed to improve your fundraising goals.
Contributes to added revenue
A mere 1% increase in retention rate will mean an additional income from $1000 to $100,000 + – depending upon the size of your nonprofit.
This added revenue enables you to fight for your cause better.
Increases donor loyalty
Remember what Saurabh told me? Based on his experience, he recommended that I discontinue my giving.
Your donors do the same. They share with their network what their experience with your organization was and how it made them feel. If they have more positive experiences, they would be happy donors who become your strongest advocates.
- They tell their friends and family about your cause (increased referrals)
- They are ready to give more (the average amount of ask increases)
- They want to be more involved with your cause (opportunity for regular giving or planned giving)
That is why donor retention should be the central focus of your fundraising efforts.
Having a good donor retention program is not an option. It cannot be considered a burden or be an after-thought.
What a lot of nonprofits (maybe yours too?) struggle with, however, is crafting a donor retention strategy that makes donors loyal to your cause.
How can you make donors stay (and give again?)
A good donor retention strategy is two-fold. It focuses on identifying the main reasons why donors leave and then works on improving it.
Fortunately, some of the heavy lifting has already been done for us. The awesome folks at Bloomerang have published a detailed survey highlighting the top reasons donors leave.
Based on this infographic, here are some quick thoughts that you can address right away
See your donors as more than just wallets
What first caught my eye is that 54% of donors were let go because they could not afford to give once again.
If you are facing the same issue, then you may want to consider revising your ask. Instead of asking for money, you could ask them to volunteer at an event, or you ask them to refer you to someone in their network who would love to support you.
By switching your ask, you convey an essential message to your donors – you tell them that their contribution is what counts. Not their money. By seeing them as not just a source of revenue, you stand a good chance of winning their loyalty.
Since these donors are already invested in your cause, they would probably love to volunteer and be more closely involved in what you do (which is a sure win for you.)
Don’t forget them once they leave
36% of your donors leave you only to support another organization. I cannot give you a magic bullet to stop this number. But these donor retention strategies can give you a good start to fixing this.
Despite your efforts, if they leave, you can bring back lapsed donors. Just ensure that you keep talking to them often. Ask them for feedback, show them that they are missed, and try to highlight how much their contributions have accomplished for your cause.
Can the legacy be continued?
16% of donors take the ‘till death do us part’ quite seriously. For donors like these, who have prioritized your nonprofit for most of their lives, it is vital that you go the extra mile.
Talk to your existing donor community about how much their support meant to you and what their contributions helped them do.
Share those stories with the family or close friends of the deceased donors. See if you can inspire them to continue the legacy of giving their relatives had begun.
In rare cases, if you already have a relationship with the donor, explore planned giving options with them while they are still alive. Do exercise extreme tact when you decide to do either of the above suggestions. You can very easily be mistaken as insensitive and uncaring in the above situations.
9% of donors have no memory of supporting your nonprofit. Technically speaking, this is a communication issue (check the next section.)
But this is also a massive misstep in the branding and marketing of your nonprofit. As Roger Craver puts it:
“If ever there were evidence of ineffective communication and branding, this is it.”
The only acceptable number in this category is 0%. Even if one donor doesn’t remember you or your organization, re-think your branding efforts.
Tackling the communication gap
“But we send them messages often” if that is your line of defense, I have some bad news for you.
53% of your donors disagree with you. In the above infographic, all the highlighted reasons fall under this category of lacking communication.
These donors have stopped giving because they did not receive a thank you message, or did not feel appreciated, or simply have had a poor communication experience.
- The first step in addressing this problem is to go back and check whether these touchpoints are covered.
- The next step is to improve your messaging
The donor journey is unique to every donor and differs vastly from one nonprofit to another. The primary touchpoints of email, website, snail mail, text, etc., may seem ordinary. However, the specifics of which channel your donors prefer, what kind of content he would prefer, (and how often he expects communication) are unique to you.
Once you have a handle on the donor journey, it is time to fine-tune the messaging.
For instance, canned thank-you messages that are generic, do not count as ‘communication.’ Your donors are smart enough to figure out that it is automated. They also realize that it is probably sent in bulk to every donor on your list.
To ensure that your donors appreciate the messages you send them, check out these ‘tips.’ These tips can help you make the messages ‘stick’ with your audience.
Make your messages relevant
When I say relevant, I mean give your donors context as to why they are receiving the messages.
For instance, if you are sending out a thank you message, instead of saying, “Thank you for standing by us,” you can say “Because of you, we are one step closer to solving the water crisis.”
The latter message reinforces to the donor why they contributed in the first place. It also tells them that their donation has genuinely helped your efforts.
It is crucial that both of these aspects are highlighted in every communication with your donors.
Show your donors you know them
This is where the whole aspect of personalization comes in. Personalizing your messages is not just adding your donor’s name to your message. It is about adding information that shows them you know where they are in the donor journey.
You can talk about how much they donated last time, why they gave (if you have those details), and also highlight how their contribution was used.
Right from the tax information at the bottom, to giving details on how their contribution has helped show the donor that this organization has taken the time to personalize this email
Sometimes, that is all that takes!
This is something you can easily replicate for your organization too.
Segment and target your donors
Not all donors are created equal. The kind of communication each of them expects from your nonprofit can be drastically different.
For instance, if you segment your donors based on their age group, here is a snapshot of what they want you to send them.
Pic courtesy: Donor Experience Study, Community brands
You can also segment your donors based on how much they give. For instance, major donors can have an entirely different engagement cycle from that of a regular donor.
Donors who repeatedly attend your fundraising events and engage with you more frequently can be included in an exclusive text-alert system.
The downside to this targeted messaging is the amount of quality content you need to generate. Annual reports, impact stories, and personalized invitations take a lot of time (as a writer, you can take my word for it.) If your nonprofit does not have the kind of resources (time and volunteer effort) to support this endeavor, you have to focus on it a bit later.
In such cases, you can redouble on the extent of personalization and relevancy with your communication.
Improve your donor journey
An average prospect takes a minimum of 7 to 12 before he becomes a donor. That means, he can check out your social media page, read about your latest campaign on your website, and sign up for a text messaging campaign to get more information.
Throughout each of these touchpoints, you have to keep your messaging consistent and relevant. More importantly, it is essential to give him a good experience across all these channels.
- That means, responding promptly. In this context, it means replying in less than 4 hours.
- And not making your donor repeat himself. For instance, if your payment gateway crashes while making a donation, he has to retype the entire information.
This sort of multi-channel engagement requires the support of technology. You have to have at least a CRM (if not a donor management software) to keep track of the various donor touchpoints.
Added to that, you also have to invest in an excellent email marketing tool and a text messaging platform to make it easier for your volunteers to talk to the donors.
Such mounting overheads do not make it easy for a small organization to keep up. However, you can see a quick spike in retention rates, merely by making it easier for your donors to complain!
Pic courtesy: DonorVoice, How nonprofits stop churn before it starts
Please understand, I am not suggesting you put up a superficial ‘complaint box’ just to see an increase in retention rates. I am merely pointing out how much impact you can have, if you give your donors what they expect (no matter how small.)
In this context, it could be as simple as listening to them. The first step in doing that is making it possible for them to reach you with their problems. The more you listen, the easier it would be to identify why donors leave.
Common misconceptions on why donors leave
Using the above tips to plan a donor retention strategy is a significant first step. However, there are some common misconceptions that might hinder you while implementing it.
DonorVoice has succinctly captured these issues and how it affects donor retention in any organization.
These issues suggest that solving the problem of ‘why donors leave’ cannot be done only with technology. It needs a change in perspective by the nonprofit sector on the whole concept of donor churn and how donors are perceived.
For instance, if you could just ask the Saurabh’s in your donor database as to why they left, I am sure they will be happy to tell you. It would give you excellent insights into what aspects of communication need attention.
The question is, are you ready to embrace it?
Stop your donors from leaving
Improve donor communication with targeted SMS