Every $100 in fundraising revenue gained in 2011 was offset by $100 in losses. Every 100 donors gained in 2011 was offset by the loss of 107 other donors. The donor retention rate for the sector in 2011 was 27 percent.
Why are these statistics from a recent survey conducted by the Association of Fundraising Professionals so, well, disappointing? Before I answer that question, let me tell you about an encounter I had with a chief development officer at a national healthcare organization.
I met Mark two years ago at a conference where I was speaking about trends in fundraising. He sat in on my session and approached me after it was over with a question about whether and how fundraising is evolving in response to generational shifts. We stayed in touch over the years, trading ideas and strategies related to multichannel approaches to raising support.
Several months ago, we had a chance to catch up over breakfast in Washington, D.C. After a brief conversation about fundraising performance and how things were going compared to last year, we started talking about his organization's efforts to acquire new donors. Eventually, he asked me whether I knew of any "tricks" to increase donor headcount. After what seemed like a fruitful forty-five minutes, I changed the topic to donor stewardship. As I started to talk, Mark slumped back in his chair and his facial expression settled into a blank stare. It was clear he wasn't interested.
Eventually, I stopped and said, "I take it your thing is acquiring new donors?"
"Our board is all about raising more money," he replied. "My meetings with board members today will be focused on bringing in more donors and diversifying our base of loyal supporters. I don't have a choice; I need to focus on acquisition. Sure, I could work harder to get our existing donors to give more, but I know the board cares more about me getting new donors to support the organization."
My curiosity piqued, I asked him: "Do you prefer working on campaigns to acquire new donors or ones that focus on donor retention? Your personal preference, not what the board wants."
"Fundraising to me is an uphill challenge," he said. "It's a challenge at times to figure out the best strategy, the right message, and the optimal way to present an appeal in order to get a positive reaction from a donor. It's an incredible feeling, though, to crack the code. I get that feeling when a donor upgrades, but I get more excited when I can find a successful way to get a contact to give."
There it was: the infatuation with donor acquisition, from boards that want an ever-growing donor base to directors of development that love the challenge of coming up with the one message that gets a donor to break out his or her wallet for the first time. And yes, as a former fundraiser, I can tell you that it is exciting when one cracks "the code."
Unfortunately, donor acquisition and retention stats don't lie, and what they tell us is that organizations are losing donors as fast, and sometimes faster, than they acquire them. Given that fact, isn't it time to rethink how we fundraise? Isn't it time we build development departments that value repeat donors as much as new donors? Isn't it time for a donor-focused revolution? If you agree, here's how your organization can be part of it.
Invest in Talent That Understands Donor Stewardship
When hiring development staff, think about asking job candidates a different set of questions. Instead of asking about the largest ask they've ever made, or the approaches they use to solicit potential prospects, ask about the retention rate for donors they've acquired, the strategies they've implemented to enhance those rates, and what they would change in your shop if hired.
Allocate Resources for Donor Retention Programs
Organizations that are serious about donor retention walk the talk, allocating the same amount of resources for donor retention as they do for donor acquisition. Whether it's for technology upgrades or a series of donor-engagement activities, organizations need to spend money to ensure that donors continue to support your organization and increase their gifts over time.
Track Different Data to Understand Donor Retention
Your organization's data on donor retention should focus on engagement. What actions do your donors take when you communicate or seek their input? What causes them to move from communication to action? Conduct focus groups, interviews, and other kinds of surveys to get a better understanding of what works to increase your donors' loyalty to the organization.
Help Your Board See the Light
Donor retention isn't a staff issue; it's an organizational priority that should be driven by the board. It's up to your executive director and development staff to help board members understand the importance of donor retention and why such programs are necessary for long-term success. Ask for a show of hands at your next board meeting to see how many of your board members chose not to support an organization this year that they had supported in the past. Ask those board members why they stopped supporting the organization in question and what it would take to bring them back into the fold. Turn it into a teachable moment that illustrates to other board members why you need their assistance (in the form of leadership, time, and financial support) to improve your organization's donor retention rate.
It's been said before that convincing a donor to give is hard, but convincing a donor to keep giving is twice as hard. Ignoring your existing donors poses a huge threat to the stability of your organization. It's imperative, therefore, that your organization figures out the right balance between its donor acquisition and retention activities. In the words of my friend Mark, "Donors won't necessarily remember why they gave to your organization in the first place, but they'll always remember why they stopped giving to it."
Join me on Twitter to talk about the #donorrevolution.
-- Derrick Feldmann