We talk a great deal about donor retention in our fundraising programs, and with good reason. Acquisition is an expensive and time consuming endeavor, and donors who don’t return bum everyone out. But let me throw a Hot Take: we are worried too much about donor retention, and for the wrong reasons.
Our friends at Bloomerang recently published a major study of donor retention trends, and it is a fascinating summary. The key takeaway? “Donors are up. Retention is down.” Much angst and hand-wringing is taking place about these trends, including from my sober minded colleague Michael Rosen, who is deeply frustrated with retention rates and wonders if anything at all can be done.
To all of this I say, let’s examine our specific data and segmentation before we declare a national crisis. For most of us, the sky is not falling, and in fact, lowered retention rates for certain segments are inevitable by-product of growth, and should be expected, planned for, and embraced. Why?
Innovation, mostly via technology, is driving first time giving, and is today changing the very nature of philanthropy. This means we are attracting first-time donors in new and creative ways. Social media is only about ten years old in the world, not yet a teenager. Online fundraising is even younger.
Philanthropy and technology together is still a baby, and yet still producing amazing results. Online giving, peer to peer fundraising Facebook campaigns, text to give, Day of Giving programs, and the rest are rapidly emerging as brilliant ways to attract first time donors in ways we could not have imagined back in the days when broad base fundraising was limited to direct mail, telephone solicitation and event attendance.
These are exciting times. Donor growth is very real. But a low likelihood of a renewal is the reality of a first time donor, most of the time, since fundraising began:
- First time givers tend to give smaller gifts. Why? Sometimes they are responding to a critical issue or trend (see the ACLU’s rapid growth these past weeks). Other times donors want to kick the tires and try something new. Whatever.
- Smaller gifts make up the majority of donor pools, for most organizations. That means a broad percentage of your donors are less likely to renew support. Why? Maybe the urgency is there, or priorities change, or something else comes along.
- A lot of the first time smaller donors will not return, and so will need to be replaced. Is this good or bad? Neither. It is a byproduct of marketing reality, and not an existential crisis to our industry.
- We are attracting new donors to our causes in new ways. Good for us! Some will return, lots will not. That’s a reality of any marketing effort. We accept this reality in other sorts of business. Coca-Cola introduces some new sugar free soda via a splashy Super Bowl ad. We try it. We don’t buy it again. First rule of sales: some will, some won’t. That doesn’t mean we did anything wrong.
However. Good Stewardship (and the lack thereof) does impact retention. And this is because donors are more savvy than ever before at about how they should be treated (a rapid and accurate written thank you, for example), how often they should be solicited, and how they want to be communicated with going forward. That donors are becoming more sophisticated and demanding about their philanthropy is a good thing for our sector. My pal The Whiny Donor reminds me of this weekly.
So, what should we really worry about when it comes to donor retention? Renewing mid-size and major donors through individual cultivation and stewardship should be your chief concern, and if you aren’t retaining 70%+ or so of our $1,000 (or whatever your leadership annual giving level happens to be) you have a real problem.
Instead of worrying so much about overall retention, let us focus upon retaining and growing our mid-sized donors. Why mid-size donors? Because they are much more likely to renew.
Instead of wave after wave of direct mail do every donor from last year, at every level, how about a laser focus on incentivizing upgrades. I am not a fan of stickers or tote bags as incentive to increase my giving, but I am responsive to experiences: backstage tours, special previews, and the opportunity to learn more about an organization up close and in a special way.
So, what if my local public radio station made some effort to increase my giving (every year, the same $100, for the past ten years) with an idea above, instead of sending me at least twenty direct mail solicitations every year?
How many of your $100+ donors do you talk with regularly? Try this test. Run a report of donors who’ve made consecutive $100+ donors for two or three straight years. These are real people who’ve made a real investment in you. How many names do you recognize? How many how you connected with? Why not?
Instead of all the hand wringing, let’s get to work on upgrading our entry level donors to higher levels and developing stronger relationships. Some smaller donors (maybe the majority of initial givers) will fall away after making that first gift. That’s okay. Not everyone is going to drink the new Coke.