Attracting new donors often gets all the attention in the nonprofit world, but an increasing number of organizations have begun taking aggressive steps to do all they can to make sure donors keep giving after the first time.
"Smarter organizations are finally looking at their files and asking, How do we keep people loyal? How do we reduce churn?" says Adrian Sargeant, a visiting professor at Indiana University who studies fundraising.
Charities are doing more to shower attention on first-time and small donors.
They often customize thank-you notes and calls, and extend a more-thoughtful welcome to new donors. Many groups are now looking at donor loyalty through a customer-service lens, aiming to give supporters a personal touch, more information about how their gift dollars are spent, and more opportunities to get involved. Also gaining steam are efforts to increase the number of donors who sign up as so-called sustainers-those who give regularly, usually monthly in small amounts that are paid automatically through credit-card or bank accounts.
Such efforts are needed, charities say, because the bad economy and slow recovery have shown that it was a mistake to simply rely on big donors or new supporters; getting repeat gifts also matters for the long-term bottom line.
A report last fall from the Association of Fundraising Professionals and the Urban Institute underscored the need for tactics aimed at building loyalty.
In 2012, organizations reported that fewer than 39 percent of their donors who had given the year before supported them again, a retention rate much lower than in 2005, when more than 46 percent of all donors gave again the following year to organizations.
Statistics collected by Target Analytics, a division of the fundraising technology and consulting company Blackbaud, show that the share of first-time donors who gave a follow-up donation declined from a median of more than 34 percent in 2003 to 27 percent 10 years later.
"The rates are dismal," says Chuck Longfield, chief scientist at Blackbaud, "but whether the rates are in the mid-30s or mid-20s, it just doesn't make any sense to spend so much time and energy on acquiring new donors and then hardly any on keeping them."
Costly Turnover
Not retaining donors is costing charities money, Mr. Longfield and other experts say. Nonprofits are missing what's known as the lifetime value of a donor who gives, sometimes in ever-higher amounts, year after year. Annual revenues are taking a hit, too.
According to the fall report from the fundraisers organization, for every $100 charities raised in 2012, they lost $96 from donors who gave less or stopped giving altogether. At the same time, the overall number of donors declined. For every 100 donors charities gained in 2012, they lost 105 through attrition.
Reasons for the retention challenge abound. Because the number of charities has increased, competition for contributions is greater, experts say, and younger donors are less loyal to organizations than their elders were. But some nonprofits are bucking the trends. Click on the links below to see the techniques they've used successfully.
Nonprofits that spend a lot of money to hire staff members who seek large gifts and tend to loyal supporters fare far better in fundraising than other institutions of similar size, according to two studies commissioned by the
Association for Healthcare Philanthropy.
