Nonprofit Donor Retention is Not as Hard as You Think

heart blossoms Nonprofit Donor Retention is Not as Hard as You Think

What do you do to let your donors’ love blossom?

At least if shouldn’t be so hard.  After all, the commercial sector manages to retain 94% of their customers. Then why does the nonprofit sector only manage to retain 41%? Even worse, new nonprofit donor retention is only 27%. That’s abysmal. What’s going on?

Why are our for-profit brethren beating the pants off of us when it comes to retention?

While it’s tempting to say “oh, they have lots of money to throw into research, advertising and all sorts of technology”, that’s not where their competitive edge lies.  No. What they understand (that most folks in the social benefit sector seem to misunderstand) is the concept of customer service.

Customer service.

Ever hear the old adage: “The customer is always right”?  Of course!  But is “The donor is always right” a central tenet of nonprofit business? I would say that, all too often, it’s not even close.  In fact, quite the opposite is true.  Nonprofit leaders still persist in the notion that folks should give to us out of some altruistic impulse.  They should give to us because our mission is important.  They should… because it is the right thing to do.

Well… that’s nice wishful thinking.  But if you’re running your business on wishing and hoping you’re not going to be in business very long.

Nonprofits today have a lot of competition for donor investments.  You can no longer afford to sit idly by assuming folks will stick with you just because you’re “good.” Or just because they’ve given before. Today’s one-time donors are not sticking around. You can’t afford to rest on your laurels just because you did an effective job (once) with donor acquisition and now believe you have “captured” this donor in your database.

You haven’t captured anyone. Your prison is the opposite of maximum security. No donor is really captured, unless by free will. To truly capture you must captivate. And keep on captivating.

How do you do that?

It’s not that hard. All that is required is a shift in thinking. 

Here’s what 12 experts have to say on the subject of how to improve donor retention  (npENGAGE will offer a free e-book on the subject later this month, so get on their list or get on mine to catch the release). It’s as easy as pie, and we’ve known about it for well over a decade. You’ve heard of it; I know you have.  You just aren’t really doing it like you mean it.

It’s called being donor centered.

You can’t just pay it lip service. You need an action plan that follows your new thought paradigm. You’ve got to commit to truly incorporating this philosophy into your culture. One way is to take the The Donor-Centric Pledge, a recommendation from the incredibly savvy Simone Joyaux and Tom Ahern found in their 2008 book, Keep Your Donors: The Guide to Better Communications and Stronger Relationships. Consider formalizing your commitment to a donor-centered practice into written policies and procedures. Joyaux and Ahern came up with 23 donor-centered principles which you can read here; below I’m recommending my top “lucky 7”.

If you truly commit to these 7 donor-centered principles, you’ll make your own luck — and donor retention will become a whole lot easier:

We, [fill in the name of your nonprofit organization here], believe that…

  1. Gifts are not “cash transactions.” Donors are not merely a bunch of interchangeable, easily replaceable credit cards, checkbooks and wallets.
  2. Having a program for developing a relationship with that donor is how organizations tap that enormous potential.
  3. “Lifetime value of a donor” is the best (though often overlooked) way to evaluate “return on investment” in fundraising.
  4. Many first-time gifts are no more than “impulse purchases” or “first dates.”
  5. A prerequisite for above-average donor retention is a well-planned donor-centric communications program that begins with a welcome.
  6. Donors are investors. They invest in doing good. They expect their investment to prosper, or they’ll invest somewhere else.
  7. A prime goal of fundraising communications is to satisfy basic human needs, such as the donor’s need to feel important and worthwhile.

To keep you donors coming back, here are a few more tips:

1. Develop a strategic donor stewardship plan. You need a real plan with measurable objectives, assignment of responsibilities and timelines.  You may think you’re being successful, but it’s really two steps forward, three steps back. It’s called donor churn, and it isn’t pretty. In fact, every 100 donors gained in 2012 was offset by 105 in lost donors through attrition — a net gain of negative -5. (for organizations raising less than $100,000/year it was negative -13.5%)!

2. Remember to keep your focus on transformation; not transaction. Your donor’s first gift is the latter.  It’s only a beginning.  The meaty part of the development process starts with that gift.  It’s just like when you meet someone new.  They’re not really a friend yet.  But if you share common interests and values they may become a true friend over time.  It won’t happen all by itself however.  You’ve got to work to build the relationship.

3.  Learn everything you can about your supporters. It will make it much easier for you to provide them with the value they desire and/or need.  Don’t just guess.  Do your research.  It’s not that difficult given all the tools at our disposal today, and it will put you way ahead of the game.

4.  Develop and implement a thoughtful, personal acknowledgment program. According to Penelope Burk’s research 46% of donors decide to stop giving for reasons tied to lack of meaningful information or to a feeling that their giving is not appreciated. Saying thank you in a prompt, personal and creative way might be the single most important tool you have in your fundraising toolbox.

Let’s go back for a moment to the groundbreaking donor-centered research by Penelope Burk. The core of Ms. Burk’s work is that 93% of donors would definitely or probably give again if we communicated with them more effectively, 74% would continue giving and 64% would give more.  All they want from us is a few things: (1) prompt, personal acknowledgment; (2) indication their gift is being used for the intended purpose, and (3) some additional communication about the gift’s impact.

That’s really not so hard, is it?

If you know you could do a better job of keeping and upgrading your supporters then the Attitude of Gratitude Donor Guide is for you! Tons of tips, templates, samples and resources – plus you get a free 15-minute consult. And it’s pennies. Why?  I really can’t stand that you’re losing all your donors. Stop just doing things right… do the right things!

Next step? Penelope Burk exhorted me to “treat every donor like a major donor.”  You owe it to yourself to check out my new E-Course: Winning Major Gifts Fundraising Strategies. It’s convenient, affordable and jam-packed with actionable tips you can put to use immediately to raise more money. And if you reserve before January 17th you’ll save $30!

Photo: Flickr, aussiegall

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About Claire

I’m Claire and I want to help you raise more money, reach more people and build long-lasting relationships with your supporters. Take a look in the archives.

Comments

  1. I would contend that most not-for-profits are missing the boat, not only on the relationship level but also in highly defining their value proposition. My own not-for-profit operates well outside the fold of conventional models. For that reason, it is a hard sell to potential donors. They do not understand the value of what it is I do because that value is extremely difficult to quantify. Most not-for-profits do not consider the donors return on investment by quantifying impact in ways that make sense to a value-driven consumers. Altruism is a good lever but there are innumerable worthwhile not-for-profits and the field is becoming increasingly competitive. Value focus, that is, measurable impact, and clearly communicating that value are the most important keys in any transactional relationship.

    • Sitting around waiting for altruists is increasingly a losing game. Unless folks know what you do, why you do it, and how you reasonably expect to be successful, they’ve no real impetus to channel their altruism through you. So, yes, it’s critical we do a more effective job clarifying and telling our stories and channeling our values. Thanks for your comment!

  2. Hello Claire,
    First, thank you for the magnificent article. It’s shameful that many nonprofits have such poor customer service when in some cases, the lives of people and animals depend on these nonprofits getting results quickly. My advice is to say “Please” and “Thank you”, thank donors promptly (that same day-and I agree with you-make it personal) for their gift, and hire “people people”, meaning those with great people skills. Hire for attitude, train for skill. Train the staff you have. If they don’t respond, replace them with people who will treat your all important donors right and who understand how to treat customers like best friends. Thank you Claire!

    • Thanks Kirt! Training of all staff is an absolute necessity. Customer service is a corporate philosophy. Creating a culture of service must be top/down and bottom/up. Appreciate your comments!

  3. I will keep that it mind when you said it’s all about thinking. It would never be hard as long you would not think that it is hard.
    Joelle O’Reilly-Hyland recently posted…Joelle O’Reilly-Hyland on Growing Africa’s FutureMy Profile

Trackbacks

  1. […] If the commercial sector manages to retain 94% of their customers, then why does the nonprofit sector only manage to retain 41%? This is the question raised by Claire Axelrod in a recent post on the Clairification blog. […]

  2. […] blog post, “Nonprofit Donor Retention is Not as Hard as You Think”, fundraising expert, Claire Axelrad focuses on why retention rates are so low on the nonprofit space and how that can […]

  3. […] If the commercial sector manages to retain 94% of their customers, then why does the nonprofit sector only manage to retain 41%? This is the question raised by Claire Axelrod in a recent post on […]

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