Every nonprofit leader I've ever interacted with works hard to acquire new supporters.
They build lists, create, test, and refine campaigns, evaluate donation forms, and generally do whatever it takes (within the bounds of good judgement) to drive support.
After all, without dollars, programs cannot operate, missions cannot be accomplished, and the change the organizations are looking to create in the world cannot be realized.
But as hard as we (as a nonprofit industry) work at getting donors, our efforts at retaining donors are lacking in comparison.
We all know retention is important, that without loyal donors we cannot hope to achieve our overall goals, so why does supporter retention so often take a back seat? Why do we struggle to backfill the dollars we lose when donors don’t renew?
Of course, there is no one single answer, no silver bullet to solve the problem. Like other areas, we must take a look at our approaches, attitudes, techniques and tools. Let's evaluate what is working and improve what is not
The View at 30,000 Feet
Let’s start by taking a step back though and looking at retention from a larger perspective. According to the Fundraising Effectiveness Survey Report, overall retention for nonprofit organizations in 2010 was only 41%. Fewer than half of our supporters are choosing to donate again to an organization that they obviously connected with at some point.
Now, there is a small silver lining: Repeat donor retention was 70% in the same period.
For those who work in fundraising, this is pretty familiar: repeat donors renew at a significantly higher rate than first time donors. And this all fits well into the traditional support or donor pyramid concept, but even so, at 41% there is no doubt we can do better.
Marginal improvements in first time donor renewals create more repeat donors where we have a better track record to run on, allowing us to compound our gains over time.
Lessons From the Private Sector
A Forbes article suggested that increasing customer retention by only 5% can increase profitability by 75%!
Pretty staggering. For nonprofit organizations, we may have even greater leverage. Building lifetime value is key for any fundraising program, and as pointed out earlier, second year donors renew at a significantly higher rate than first time donors. Combine that with the high cost of acquisition and you have a recipe designed to magnify even small incremental gains in retention.
Furthermore, with nonprofits, people give because they feel a connection, an affinity, even a calling, if you will, to help support a mission or need. I would argue that we could (and perhaps should) assume that affinity is stronger than product loyalty in the for-profit world.
If so, then we must be doing something wrong between the time of that first gift and the drop-off at the second. 100% renewal is not realistic, but 41% is not acceptable. We can do better. We should do better. What is your renewal rate today, and what can you do, right now, to make it just a little bit better? Tell better stories? Make donors feel more included? Provide more transparency?