There is a quality debate going on right now at The Agitator (is there any other kind there?) about the extent to which nonprofits use donor identities to customize their appeals. This is subtopic of the big introspective question we have as fundraisers: how are we doing?
This discussion is wonderfully timed, because we have some new evidence to assess ourselves — data from the 2016 Fundraising Effectiveness Project. So how are we doing at retaining donors?
Not great, it seems. We’ve lost four percentage points and eight percent off of our retention rates since 2008. And, if you’ll recall, 2008 was not a banner year for the economy or fundraising.
This also compounds, so if you had five years of 46% retention instead of 50%, you’d find yourselves with a third fewer donors retained. Even these small amounts can wreak havoc on a file. And on the flip side, the value of increasing retention is significant.
And how are we doing at welcoming donors to our organizations? Even worse, it would seem:
This is a drop of 6.4 percentage points and almost 22% from 2008. With first-year retention at 23%, a new perspective is required. Let’s say your cost to acquire a donor in an acquisition mail piece is $20. In reality, it’s $87, because 77% of those people you acquired aren’t retaining. This necessitates a drop in acquisition cost, an increase in second-gift retention, an increase in the lifetime value of donors, or some combination thereof.
Repeat donor retention is also down, but “only” down 11%.
To quote the study authors:
“The question then becomes what can be done about retention and what resources should an organization employ toward improving their retention. This question is not easily answered, and likely varies widely depending on a variety of factors.”
We are either getting worse at retaining people or lower retention is happening to us because of systemic changes. Either way, we need to adapt in order to keep our files intact long term. And with first-year retention plummeting, there may be indications that what got us here may not be what gets us to our next there.
That’s why The Agitator discussion is so valuable: it’s all talented people grappling with a changing landscape and the extent to which we need to change as a result.
Here, we think the combination of commitment + identity + experience is the key to understanding why donors give and why they stop and that that understanding is what will drive our fundraising in the years to come.
Since the drop in first-year retention is especially perilous, we’re in the final stages of a white paper and webinar on online welcome serieses. Specifically, we’ll look at opportunities — taken and missed — to learn constituents’ identities and improve their experiences. If you’d like to learn more about these, please sign up for our email updates we’ll send you a notice when they go up:
And, if you want a much more eyecatching version of the FEP data, Bloomerang did a nice infographic version of it here.