Donors are the lifeblood of any nonprofit organization, and their value cannot be overstated – but it can be calculated.
Many fundraising and nonprofit professionals like to think that their job is different and distinct from that of people who work in sales and marketing – and in some ways it is – but the truth is that like any other business, your non-profit cannot survive without its customers: your donors.
And just like any other business, your average donor’s lifetime value can be calculated: How much do the average donor donates to your organization, multiplied by your organization’s average retention rate. For example, if your donors donate an average of $800, but you lost 70% of your donors every year, you’ve got a problem.
For more on donor retention, and why it’s important, check out our posts about what retention is, why it’s more important than donor acquisition, and how to improve it.
The key to increasing donor retention, however, is first and foremost to understand why your donors are leaving.
Donors stop donating to charitable causes for all sorts of reasons, from a change in their employment status to a change of their zip code, but many of the most common reasons are within your control.
Donors stop donating when they lose confidence in the organization. Most often, when they’re left unengaged, they don’t feel that they are familiar with the names and faces in charge of the causes to which they give. People buy from people, and donors are no exception.
Donors also end their charitable gifts when they feel that the organization doesn’t need them any more. Check out this post about how forgetting to say “thank you” can lead donors to believe that they’re an unimportant or insignificant part of your donor base – just another face in the crowd – and therefore they should probably give their gift to a cause that needs them more.
You may also find that your donors are no longer donating because the cause is no longer personal for them. Perhaps they were once touched by a campaign or project that you were undertaking, but now they feel that your organizational priorities have since shifted. It is on you to make sure that you know your donors, know what is important to them, and make sure that they continue to feel connected to the work that you’re doing. Have a quick look here at how personal and specific thank-you cards go a lot farther than form letters or template emails.
Finally, donors may simply forget about you: It seems hard to envision, since you wake up in the morning, drive to your office, spend all day thinking about your charity or foundation, spend your evenings and weekends at events and galas for your charity and foundation, and never really stop thinking about how to make an impact, but if you don’t make an effort to keep your organization top-of-mind for your donors, they can easily forget to renew their pledge. That’s why a handwritten note of gratitude, or a personalized engagement letter can go a long, long way.
It may seem painful, with such tight budgets, to invest in donor engagement and retention – after all, acquisition is the sexy step-sister of donor stewardship; but what good are one-time donations if you’re trying to build a sustainable organization that can continue to do good in the world. You need your donors to donate more and more, again and again, and to tell their friends as well (feel free to peruse this nifty post about how to drive referrals).
If it seems painful for you to spend on engaging, thanking, and retaining your donors, imagine how painful it is for them to find room in their budgets to donate to your organization; everyone knows that when the economy takes a downturn, charitable giving takes the first and biggest hit.
To build a strong, sustainable fundraising machine that can survive any economic condition, just remember why donors leave in the first place:
- They lose confidence in the organization, because they no longer feel connected to the management team, or the individuals who brought them through the door in the first place.
- They feel the foundation, charity, or NFP doesn’t need them any more, and redirect their dollars to a cause that does.
- They lose their personal connection to the cause; fundraisers don’t know them as anything more than a name on a call list, or a dollar amount, and so they don’t know how to nurture that connection. The personal touch is missing.
- They simply forget about the organization, or forget to renew their pledge, and no amount of emails that go straight to their spam filter is going to remind them.
Knowing why your donors leave is a great first step towards ensuring that they never do. Great fundraisers understand that donor retention is within their control, if they’re willing to spend the time, money, and effort to manage relationships and engage their donors.
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