2020 Was a Great Year for Giving. Or Was It?

2020 was a windfall fundraising year for many nonprofits, thanks to the increased urgency and generosity created by the global COVID-19 crisis.

According to the Fundraising Effectiveness Project’s 2020 4^th Quarter Report, giving increased by 10.6%, and total donors increased by 7.3% year-over-year.

BUT…

Sadly, once again, we saw donor retention fall short in 2020. Retention fell 4.1% year-over-year, driven largely by a 9.2% decrease in new donor retention. New donors retained pathetically low at 19.2%.

That means that fewer than 1 in 5 new donors gave again in 2020 to the charity they first supported in 2019.

Our sector continues to fight this uphill battle to acquire more donors every year to backfill for attrition and fuel growth. But if we focus more attention, more investment, and more energy on retaining the donors we already have, it will relieve some of the pressure to increase donor acquisition every year. It would also allow organizations to increase profit (because retaining donors is almost always cheaper than getting new donors), which in turn would drop more money to the bottom line to fund mission impact.

Here are six tips to help you and your organization improve retention, take some pressure off of your acquisition efforts, and hopefully generate more margin that you can put toward mission impact:

Approach new donor acquisition differently

Many organizations make the mistake of thinking that acquisition is all about donor volume. If we have a lot of donors coming into the organization, acquisition is a success, right? WRONG. This is one of the key reasons, in my opinion, for our industry’s paltry retention rates. The reality is that all donors are not equal. If you measure the success of your acquisition program simply by looking at your response rate and average gift, you’re making some big mistakes. Nonprofits that have higher than average donor retention often approach acquisition in a more strategic way, focusing primarily on Long-Term Donor Value as the driving metric by which they measure acquisition success. When you measure your acquisition channel performance and even your specific audiences (i.e., each direct mail list, every digital channel, etc.) by LTDV, you will identify channels and audiences that produce good upfront results but are poor performers over the long-term. As you optimize your acquisition program for LTDV you will positively impact retention by focusing on the donor audiences that are more likely to stick around and give more to you over time.

Create an exceptional thank you process

Thanking donors for their giving is essential. In testing, we’ve seen that the timing between a donor giving a gift and receiving a thank you letter often impacts whether or not they’ll give again. I’ve found that the larger the gift, the greater the expectation of a quick reply from the organization. The sweet spot timeframe is 48-72 hours. But timing is table stakes at this point.

Organizations that have better than average retention tend to put more focus on creating a delightful giving experience and thank you process than those that have lower retention rates. This includes things like making the thank you letter more than simply a formal tax receipt. It includes celebrating the donor for the impact they’ve made with their gift, telling them a story of impact that shows clearly how their gift will make a difference, and reminding them that your work is not done yet, and they are still a vital part of your ongoing mission.

Nonprofits that excel in this area also create multiple gratitude touch points over time for their donors. The thank you letter is important, but by itself it isn’t enough. Donors at certain gift levels, gift frequencies, or longevity will deepen engagement and giving if they receive a live thank you call. We’ve also seen that the incorporation of a handwritten thank you note (separate from the formal thank you letter) can have a significant impact on retention, second gift conversion, and long-term value per donor.

Rethink your new donor welcome and conversion series

Most nonprofits that I’ve encountered in my 20+ years in fundraising either don’t have a formal welcome and onboarding process for new donors, or the process they do have isn’t optimized in a way that creates meaningful positive impact on second gift conversion and donor retention.

The nonprofits that are beating the market on new donor retention often take a different approach and invest more heavily in new donor welcome and onboarding strategies that create stronger bonds with new supporters and drive them to take additional action in support of the cause more quickly.

Whether you’re working in the digital space or the direct mail space (or ideally, you’re managing these channels in an integrated way), you should seek opportunities to engage new supporters in ways that are meaningful to them, craft an onboarding process that connects them more closely to your mission, their ability to create impact, and opportunities to build deeper relationship with your organization and those you serve.

In a recent conversation on the Global Online Fundraising Scorecard with Brady Josephson at NextAfter, he shared that one organization they work with rethought their new donor welcome and conversion process and because of that saw an amazing 900% increase in 2^nd gift conversion.

Invest in engagement

Often the pressure on organizations and fundraisers to generate immediate revenue is so high that we don’t take the time to invest in engaging our new supporters before we go right into asking for additional gifts. This might be financially efficient in the short term (and it often is), but it’s one of the aspects of our work that does more long-term damage to donor relationships than most realize.

Engagement doesn’t have to be some complicated, expensive undertaking. But it does need to be thoughtful and intentional.

The organizations that are beating national trends in donor retention are investing time, effort, and resources in developing thoughtful and engaging donor journeys for new supporters, long-term givers, recently reactivated lapsed donors, and even for volunteers, advocates, and other “warm” prospective donors. 

In developing journeys like this, your opportunity is to create pathways for conversation — that is, a two-way dialogue with supporters and potential supporters that builds relationship instead of just rushing to an ask. This kind of engagement fosters trust and alignment between you and your supporters that then allows for more meaningful dialogue over time. Ultimately, this kind of engagement leads to increased giving over time, greater long-term retention, and more opportunities for your supporters to deepen their involvement through monthly sustained giving, upgrading to Mid-level and major gift support, and even to making legacy gift commitments.  

Focus on donor impact, not organizational activity

Don’t make the mistake of talking to your supporters about your work, your accomplishments, and your efforts. It might be tempting to follow this playbook because you want to showcase how amazing your organization is, how buttoned up your staff are, and how smart you are. Unfortunately, this also communicates to your supporters that you don’t need them. And when donors get the impression that you don’t need them, they will be quick to shift their giving to other organizations that express a genuine need and appreciation for their partnership and charitable support.

Instead of focusing inwardly when you communicate with supporters, you’ll have significantly more success by showcasing how your donor has helped make an impact in your cause and in the lives of those you serve. The more you can connect supporters directly to the beneficiaries you serve, the more likely you are to retain those supporters and deepen their commitment to your cause. 

Leverage marketing automation

Everything we’ve talked about thus far related to effectively welcoming and onboarding new supporters, improving engagement, and showcasing donor impact can be done manually. However, manual operation of programs like this is fraught with risk. The biggest risk is that the work simply doesn’t get done. With so many other competing priorities inside a nonprofit organization, each of these critical tasks is easily put aside when something that feels more urgent pops up. Even if you’re able to pull this off in a manual operation, there are still risks of delays and errors that could severely damage your relationship with new and ongoing supporters.

Automation allows you to create those thoughtful donor journey experiences and funnel supporters into them automatically based either on the characteristics of supporters, the behaviors they take as they engage with you and your content, or a combination of the two.

A great example of this might be a new subscriber to your website, who signs up today to receive emails from your organization. You might elect to send that subscriber through a series of three to five emails where you welcome her, affirm her decision to share her email address, and provide her every few days or once a week with some of the best content in your existing content library. Another example might be that you create a monthly sustainer conversion email series that is triggered once a donor makes three gifts within a 90-day period, with the goal of incentivizing that donor to commit to an ongoing monthly gift to your organization. 

This kind of automation can be executed through many different systems. Regardless of the system you use to do this, building the intentional strategy upfront is the key to success with automated engagement and marketing efforts.