Tag Archives: DonorRetention

How to Get Your Piece of the Pie

When I do a presentation for a client’s Board of Directors, I often begin by asking, “Excluding government, how much money do you think was contributed from all sources, to all causes, in the United States during the previous calendar year?”

In most cases, the guesses are in the hundreds of millions. I say, “Higher.”

Eventually, the guesses may reach one billion. I say, “Still higher.”

Unless there is a “ringer” in the room — someone who works professionally in nonprofit development — nobody ever comes close to the actual number: $557 billion for the calendar year ending December 31, 2023.

That’s a big number — more than half a trillion dollars in charitable giving. When I first started working as a professional fundraiser, it was barely a tenth as much.

One would think $557 billion is a great accomplishment — and it is. Here’s the bad news. While it represents a 1.9% increase in current dollars from 2022, when adjusted for inflation, giving declined by more than 2% year over year.

More sobering statistics from the 2023 Giving USA Annual Report:

  • Fewer people are contributing. Of those who gave in 2022, fewer than 46 out of 100 gave again in 2023.
  • Among first-time 2022 donors, only 19 out of 100 gave again in 2023.
  • Not very long ago, religious organizations (churches, synagogues, etc.) could expect to receive fifty cents of every dollar given. In 2023, their share was barely 24 cents per dollar.
  • Even among those who make major gifts – and the definition of “major” varies quite a bit by cause and organization – only six out of every ten renew their support from year to year. Which means that four out of ten do not.

How can your organization get its share and increase donor retention?

Start by strengthening frontline fundraisers. We are not doing what is necessary to recruit, retain, support, and enhance the professional skills of these essential people. And then they leave to find a better work environment.

The constant churn of staff is disruptive to the most critical element of development success: the quality of the human relationship that is embodied by the frontline fundraiser. Because when a fundraiser leaves an organization, it is not just that person who walks out the door – so too go donor relationships.

Pushing Back the Tide

When we conduct a search for a new frontline fundraiser, whether for a Director of Development in a small organization or a Major Gifts Officer in one much larger or undertake a coaching assignment to enhance professional development for an individual or team, we do a thorough assessment of the organization’s philanthropic history. This allows us to uncover key metrics of an organization’s development program and set a baseline to measure progress.

You may ask, why does this matter when recruiting a new staff member or training existing staff? By benchmarking your organization, we can help you focus your recruitment on the right kind of person.

Moreover, the new hire — or your development team — will understand what needs to be done and, more importantly, with whom. This will inevitably enhance donor relationships and increase philanthropic revenue and financial sustainability.

Such clarity in understanding the job and the metrics of success will lead to a longer, more fruitful tenure for the person whom you hire or retain, strengthened relationships for donors and funders, and an organization exceptionally well-positioned to fulfill its mission, achieve its vision, and embody its values.

Conclusion

Recruit the right kind of people and actively engage them through intentional onboarding, supervision, and management. Invest in professional development designed to enhance their skills and experience. Then, you will increase your success and overcome the downward trend in donor retention and giving. You will then secure the financial resources needed to achieve your goals.

Understanding a Donor’s Whim

Do you know your first-time donor retention?

Average first-time donor retention is currently estimated to be 19.6%. That means that of the 100 donors you just sent a thank you note to, only 20 will likely be with you next year. Yes, I am being generous and rounding up.

If your donor retention rate for repeat donors is at the average of 53.65%, you will have 11 of those 20 donors in two years. And only 6 donors left in three years’ time. 

Now stop for a moment and think about the letters, emails, social media posts, and events that brought you 100 new donors. Those six donors who remain with you after three years had better be major donors who you are carefully stewarding.

This year, instead of focusing on New Donors, consider how to make each gift more than a one-time donation.

A closer look at why donors give

Most micro, small, and mid-level donors give for variety of reasons:

  1. Organizations they are personally connected to
  2. Organizations their friends/family are personally connected to
  3. Disaster and/or emergency relief
  4. In response to a direct mail, email, phone, or text solicitation

This is going to sound obvious, but if someone is not personally connected, they are less likely to give again. Included in the 100 firdt-time donors are those who gave:

  1. to a gala where a colleague was honored, a friend asked for support when running a race, or a neighbor’s request to support their Facebook birthday fundraiser a second time. 
  2. because there was a tsunami, war, or migrant population in crisis and they felt that their dollars could help right away
  3. out of excitement–or fear
  4. in response to an email from their summer camp, a call about donating to the local July 4thcelebration, or out of guilt because they are going to use the greeting cards that came as a “freemium” in a direct mail piece.

Raise your hand if you have given to a gala, a crisis, or new organization based on a solicitation in the past 3 years. Keep your hand raised if you gave any of these organizations a second time. Yet, those quick gifts do not account for the 80% loss. 

Many of those 80 donors were just not offered a reason to stay connected. 

How do you build connections with our first-time donors so more than those 20% give again? Get back to the basics:

  • Thank
  • Recognize
  • Report
  • Steward
  • Cultivate
  • Ask

Thank and acknowledge every donor multiple times (7-10 times).

What if every new donor received a picture drawn from a child in your program (parents can only keep so many!). Or they were sent a special email, personalized to all first-time donors “video-thanking” them for joining the community. 

Whether you have 50 or 500 new donors this year, you can work on donor retention. See how high you can get your new donor retention rate. And let me know the results. I always like to hear a good success story! 

Fundraisers, Start Your Engines

Over the past several months, we have spent a great deal of time talking about how best to identify, recruit, engage, onboard, develop, and retain professional leadership for your organization. Now, those leaders must begin thinking about raising money for the operation of your nonprofit.

Planning Starts Now

With many of our clients, we have already begun preparing for end-of-year giving.

With many of our clients, we have already begun preparing for end-of-year giving.

That’s correct. It is the beginning of June — seven months from the end of the year — and I am here to tell you that if you have not yet begun planning how you are going to capture all the gifts you are accustomed to receiving in the last six weeks of the year, you are, to coin a phrase, tardy to the party.

To increase the possibility of success you should begin planning now: at least half of what you will achieve is dependent on your strategic thinking and tactical planning in the coming weeks.

Fundraising Has Gotten Harder

According to the Fundraising Effectiveness Project, the data makes this abundantly clear:

  • Each year, in the aggregate, there are fewer donors than gave the year before.
  • Among those who do donate, they make fewer gifts for smaller amounts.
  • Donor retention is at an all-time low and the renewal of first-time donors is absolutely abysmal.

I share this not to depress you. Rather, to grab your attention and assure you that if you think about how to retain and upgrade donors now, you can be successful in swimming against the tide.

In future articles we are going to focus on different segments and offer specific suggestions for how to work with them. These may include:

  • Major donors — the definition of which varies by organization
  • First-time donors — how to ensure you get the next gift from them
  • Underperforming donors — those who support you regularly and faithfully, but have stayed in the $100 range for the past decade (or longer)
  • Mid-level donors — those who make gifts of $250 or $500, but have the capacity to give more frequently and in larger amounts

But don’t wait for MJA to talk about it. If you think in these specific donor segments, you can then develop strategies and tactics (emails, newsletters, calls, events, etc.) appropriate for each group. By organizing your approach and resources in this way, you will have the bandwidth necessary to plan, test, and adjust as needed.

Four Essential Guidelines

For now, let me share some things that will inform and improve your planning…

#1. Focus on the relationship, not the money. 

Donors are people; they seek affiliation with something beyond their own immediate needs. If you are successful in connecting them to your mission and helping them see the value they can provide in furtherance of your objectives, they will give joyfully.

But, if you simply say, “You gave $100 last year, can you give $150 this year?,” they will conclude that to you, they are nothing but a human ATM.

#2. Communicate in a donor-centered, not organization-centered way.

You are passionate about your organization and its mission. It has needs, financial and otherwise. So you think you must focus on helping donors understand what those needs are.

But donors want to know what they can do to help solve the problems your organization exists to address.

As you create a case for giving which will inform all your solicitations, newsletters, brochures, and acknowledgements, make sure it is primarily about the donor, the cause, and the important role they will play should they decide to support it.

#3. Pay special attention to past donors who have not given in the previous 12–24 months.

It can cost four to five times as much to acquire a new, first-time donor as it does to renew an existing donor or revive a lapsed donor. Those who have stopped giving recently — in the past year or two — are most likely to give again.

Spend time trying to understand why these once-valued supporters have stopped giving and focus on bringing them back into the fold.

#4. Create a culture of philanthropy. 

This has two components: Asking and Giving.

Asking: Many donors don’t give because they don’t think they are being asked. For them, a text, email, or even a USPS letter is not enough. They need personal engagement on a one-to-one level.

Giving: Once someone has given, don’t think you are done with them until next year. You owe them acknowledgement and expressions of appreciation that inform them of their impact in ways that recognize them as the true heroes of your organization’s mission.

It’s a Different World

When I first began fundraising, the focus was almost entirely on major donors and the acquisition of new donors. We did not give much thought to retention because we didn’t have to: Eight of every ten donors renewed their support each year and more than half of first-time donors made a second gift.

Today, according to the benchmarking of the Fundraising Report Card, fewer than 35% of all donors renew their support from one year to the next; fewer than 20% of first-time donors make a second gift.

Philanthropy has become a leaky bucket. There are many reasons for this, but the fact remains that for your organization to reach its ambitious year-end goals, so that you may continue to serve those people and causes you hold dear, you must think strategically, work diligently, and create a detailed written plan NOW.

How Many Letters Should I Send?

The “how many letters should I send” debate is back in session.

If you are like most organizations, you continually have the same conversation every year. It’s summer, when you take the time to plan your ”End of Year” Appeal Calendar, and someone will ask, “How many letters should I send at year-end?” Then the question is, “how many emails?” Followed closely by, “is that too many emails?”

Let’s answer the question, “how many letters should I send?”

We know, when budgets are tight, two letters can seem extremely expensive. Sometimes the conversation changes from, “how many letters should I send?” to “how few letters can I send?” A lot of organizations are shifting to one letter, but more important is to see the letter as one element in the year-end appeal calendar. Before you eliminate one or all letters, consider what else you can change in the overall calendar.

If the decision is purely cost-based, ways to reduce costs on a letter include sending:

  • One letter to everyone in your database and one postcard to non-responders who gave by post last year
  • One letter to everyone 
  • One letter only to donors and LYBUNTs who gave by post last year
  • Would one response card be less expensive than a tear off? 
  • Can it be two colors instead of multi-color? 

Then include emails and social media for the balance of the campaign.

If the decision is based on time or staff constraints, there are other strategies I would implement. Email me and let me know your concerns. From there I can write you back with suggestions and/or write another article focusing on those issues.

How did your donors give last year?

I am a believer that letters encourage gifts – even online gifts. I believe that because I save the letters of the nonprofits I will donate to this year, bring them to my computer, and give online. However, that is a reminder mechanism for me, and not the reason I give. If an organization I want to support only sends me an email, I still give.

However, if your donor took the time to write a check or squeeze their credit card information onto those tiny lines on the response form, the letter may impact their gift. And no matter the size of that gift, their gift matters.

What if there are only 100 people who gave by mail last year?

There are still more ways to save. If a small number of people gave by mail over the past few years, you might be able to print your appeals in your office. It should still look professionally designed (or at least Canva-designed), including a printed response mechanism with a unique, personalized set of asks, and a return envelope. They do not need to know that you are printing them in-house. But, they should see the personal handwritten notes that you can write if you are printing appeals in-house.

What does all this mean? Stop procrastinating and create a:

  • Calendar (include cost estimates/budget constraints)
  • Theme for your year-end appeal (this makes every step easier to write)
  • Write each element including the letters, emails, response mechanism, etc. (you can edit them later but do it asap, so you avoid the stress of last-minute writing)
  • Thank you notes for online gift auto-response, online gift personalized note, mailed thank you note, letter from board president, and any other thank you notes you will send

Really, stop procrastinating and get to it. If you don’t know where to start, or even if you do, use AI to write stronger, clearer letters. I wrote this article about AI early in February, which seems like a lifetime ago (look for an update soon). The NYT had a great series on how to use it with guidance on prompts. Tom Ahern recently wrote an article about how he used AI in fundraising. Now you have no excuse not to get those letters done.

And speaking of letters, don’t forget to write the emails. Write more than you think you will use – at least 10 over 3 months. You can always reduce the number you use – but you won’t want to write more in crunch time.

You will feel so much better by tomorrow when you have a calendar and drafts done. Then the questions will not be “how many letters should I send?” but what other strategic elements can I add to improve the end-of-year appeal.