Donor Retention Strategies To Grow Your Fundraising Income

If your charity is to retain donors, very simply, you have to know who your donors are and what they want from your organisation. What job are they hiring you to do? And how you can provide the best standard of care, tailored to their needs and preferences, so that their experience is a rewarding one. For many charities successful donor retention will require a mind-set change – a new emphasis on long-term thinking and a move away from a focus on short-term targets. The reward – improving your donor retention rates can result in increased revenue and an overall total uplift in donor value.

 

Five Donor Retention Strategies to Grow Your Fundraising Income

1. Know what to measure

To calculate donor loyalty switch your focus from measuring past transactions (RFM) only to estimating on-going commitment, by measuring Life Time Value. Life Time Value (LTV) is a measure of how much a donor contributes to a charity over the duration of the relationship that the donor has with the organisation. LTV is calculated by estimating the costs and revenues associated with managing communications with the donor for each year of the donor’s relationship with the organisation. (Because this metric is future focused you will need to discount the estimated future donations and future costs). Remember LTV calculations should not include recruitment costs, as these are not relevant to the calculation of the standard of care a donor receives once they have been recruited. LTV can be used to determine development strategies and in decisions related to investing in the reactivation of lapsed donors.

2. Know why your donors leave

It is the actions (and inactions) of the charity that cause the positive or negative attitudes of donors and their resulting commitment to the charity. Everyone in the organisation needs to understand why donors leave and what can be done to keep them. Ask your donors why they have left. Examine the reasons they give. Which are in the charity’s control to do something about? Are the reasons to do with the actions of the charity or the inactions of the charity? Identify what needs to start happening, stop happening, what the charity needs to do more of or less of. Assign responsibility for the actions identified. Set deadlines for the actions to be undertaken. Monitor and review.

3. Take the guess work out of retention

Take the guess work out of retention and get to know your donors – ask for feedback, find out how donors feel about your organisation and what their expectations of the charity are. Commitment is a two way street – charities need to be committed to building a genuine relationship with their donors. To do this charities need to listen to their donors and tailor donor care strategies based on an analysis of the information they collect.

Find out –

  1. What are your donors’ motivations for supporting your charity?
  2. What are your donors’ needs and preferences?
  3. What experiences deepen your donors’ commitment to your charity?
  4. What experiences impact negatively on your donors’ commitment to your charity?
  5. What matters most to your donors?
  6. What activities can you eliminate that do not matter to your donors?
  7. How can you improve those activities that do matter to your donors?

4. Ask yourself do you have a retention problem or an acquisition problem?

Your churn rate is the total number of donors that have left in the period being measured, divided by the total number of donors at the beginning of the period being measured. Yes, you should be monitoring how many donors are leaving but you should also be looking at which donors are leaving. By looking at your churn rate by donor segment highlights which type of donors are at risk and will require you to take action. The churn rate can be used to look at which donors are most likely to leave and when. And dissecting the numbers helps to establish what the charity can do to reduce the churn rate.

But you should also be asking is this a retention problem or an acquisition problem? Are you losing donors who are not really donors at all? Are these “donors” individuals who were approached at the right time, with the right message or were asked to donate by a close family member or friend, but are highly unlikely to donate again? Rather than investing scarce resources in trying to retain these donors, it would be better to re-direct valuable resources by focusing on developing relationships with donors who are interested in and have a genuine concern for your charity’s mission and understand the value of the work the charity is doing.

5. Invest in Retention

Under investment in retention does not make sense since acquiring new donors is more expensive than retaining existing donors. Our research tells us that increased donor retention rates leads not only to increased revenue but to an overall total uplift in donor value. Investing in service quality is one aspect of donor retention another important aspect of building commitment is the quality of the creative and copywriting. Stand out. Differentiate your charity. Communicate effectively. Donors who cannot distinguish one charity from another are less likely to be committed and are more likely to switch their giving.