Improving donor retention critical to successful fundraising

March 6, 2014

Improving donor retention critical to successful fundraising

As much as for-profit companies realize the increased cost of securing new clients over retaining current ones, the same holds true for the donor pool. According to Nonprofit Quarterly, recruiting a donor can cost two or three times more than the individual will initially give to the organization. In some cases, it can take 12 to 18 months before the relationship is a profitable one for the nonprofit.

According to NPEngage, if current trends continue, donor retention rates could hit as low as 20 percent. If the cost of acquiring new donors rises over that time, then it would be nearly impossible for fundraisers and the nonprofits that rely on them to remain viable.

How to keep donors happy, engaged and giving
There are many different ways to improve donor retention and some are a little surprising. Mark Rovner, founder of Sea Change Strategies, told NPEngage that gimmicks and gifts are not the way to improve donor retention. Engagement with donors should be meaningful – not a tote bag or free DVD. Most donors don't contribute their money to a nonprofit because of a complementary gift, they do so because they believe in the cause. While it's nice to give a donor something tangible in return, it needs to be inline with their reason for becoming involved with the organization.

It is in a nonprofit's best interests to focus on providing compelling stories instead of cheap merchandise. Share the stories of other donors and those who benefited from the charity's services to illustrate how important the organization is. What donors really want in return is to know that their contribution is helping an organization to reach its established goals. While there are some parallels between the customer relationships of for-profits and nonprofits, donors are not the same as a consumer conducting a business transaction. Profit margins are not worked into the nonprofit model, so for a small donation to pay off, nonprofits must look down the road.

Welcoming and thanking those who contribute
Donors should feel welcome, and of course, appreciated. Instead of handing out a free gift to new donors, send a welcome pack that explains the importance of future support and share the organization's success stories. Also, encourage new connections to engage the nonprofit on social media. Ask them to sign up for emails as well, but respect their wishes if they don't want new material in their inbox.

A donor is most interested in a nonprofit at the moment he or she decides to write a check. A welcome pack that encourages them to stay connected through social media could pay dividends in the future. Maybe three months down the road the donor has forgotten about the nonprofit until a post in his or her news feed or timeline on social media platforms reminds them of the satisfaction they felt after their last donation. Most importantly, make sure you sincerely thank donors for their gift, no matter the size.  

Content presented by First Nonprofit Companies, the leading provider of state unemployment insurance solutions for 501(c)(3) nonprofit employers.

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