Mastering the art of grant management: A complete guide
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As a general rule, retaining existing donors costs less than acquiring new ones. Current donors have already expressed an interest in your nonprofit organization’s purpose and have demonstrated a willingness to act on it. This means for most nonprofits, reducing donor losses—and increasing donor retention—is the most affordable strategy for sustainable fundraising.
In this article, we’ll explore the current state of donor retention, including reports on the average donor retention rate and strategies for improving your own efforts. But first, let’s answer some common questions.
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Donor retention is an important metric for nonprofits to measure, as it can have a major impact on their overall fundraising success. Organizations with higher donor retention rates tend to have more stable and predictable sources of funding and are therefore better equipped to meet their fundraising goals in the long term. And, because the donor demographic shift is underway from baby boomers and the silent generation to Gen X, fundraisers will need to raise the same (or more) funds from a smaller pool of donors — making the retention of existing donors that much more important.
The average donor retention rate across nonprofits hovers around 40-45%. This means that a significant portion of organizations’ existing donors feel less inclined to give year after year. Start identifying a good target donor retention rate for your nonprofit by first measuring your overall existing retention rate and comparing it to the 40-45% benchmark, and setting a goal against it!
According to the Fundraising Effectiveness Survey Report for the third quarter of 2023 (July, August, and September), nonprofits’ donor retention rates “were boosted early in the year, but started going down again in August”. After adjusting for late data, AFP anticipates retention dropped by 1.3% in Q3 compared to 2022. This is a smaller drop than previous reports have captured: for example, nonprofits’ overall donor retention rate dropped by 3.5% from 2021. Donor participation also fell in Q3 of 2023 by 7.6%.
Not only are nonprofits struggling to retain donors, but some donor segments are trickier to keep than others. In the third quarter of 2023, micro donors (who gave less than $100) decreased by 15.7% year over year, and small donors (who gave between $100 and $499) decreased by 7.9% year over year. Additionally, the retention rate for new donors dropped by 16.9%.
Many of the donors being lost are among the smallest, which means more and more philanthropic dollars are becoming more and more concentrated in the hands of fewer and fewer donors. Some scholars worry about the implications of Americans’ less democratized charitable giving, and they connect growing wealth inequality and other structural causes to this trend. This pattern also contributes to a more competitive environment for nonprofits seeking the support they need to fuel their work — and this can also affect the supporter experience fundraisers give to their donors.
Looking for tangible ways to demonstrate to your existing supporters that you appreciate them? Try this evidence-backed tactic from nonprofit fundraising, engagement, and technology expert Kirstie Kimball of Build Power Strategies!
While the current donor retention statistics may seem daunting, there’s room for improvement through more targeted and strategic engagement efforts. By focusing on building strong relationships with donors, your nonprofit can create a loyal base of supporters who will continue to give in the future.
If your nonprofit wants to build a solid foundation for long-term donor retention, try these tips:
It can be helpful to have a designated individual or team responsible for overseeing donor retention efforts, tracking retention rates, and implementing strategies to improve retention. This team can work with other departments, such as marketing and development, to ensure that donor retention is a priority throughout your organization.
While securing new donors is important, retaining existing supporters is equally (if not more) important to nonprofits’ sustainable growth over time. By measuring the current state of donor retention, benchmarking your organization against recent data, and adjusting your strategies, you can grow your dedicated base of supporters and work together to increase your impact in the communities you serve.
The right strategies and technology should help nonprofits of all sizes retain more support over time and propel you to your peak impact. Download our guide, Next-level donor retention and renewals, for even more expert tips on a more retention-friendly supporter experience, communication strategies to keep donors coming back, and more!
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