Donor retention is the measurement of how many donors continue giving to your nonprofit year after year. You can calculate this metric for your organization by dividing the number of donors who gave again this year by the total number of donors who gave last year.
Maintaining a high retention rate means your nonprofit has access to ongoing, sustainable financial support. The average retention rate for the nonprofit sector hovers around 45%, meaning that for most organizations, less than half of their donors give again from one year to the next.
To increase your donor retention rate, you’ll need to create effective donor stewardship and engagement strategies. This will help you build strong, genuine supporter relationships that stand the test of time.
The donor retention formula
Below, we’ll break down this donor retention formula into three clear steps: engage, request, and repeat. Each step plays an important role in connecting with supporters and building deeper relationships with them. Let’s take a closer look at each stage.
Whether you’re stewarding major donors or first-time donors, engaging with them is the first step toward developing relationships and boosting your retention rate.
Engage with donors after they make a gift by:
- Thanking them quickly for their gifts. Send an automated thank you email and donation confirmation to assure donors that you received their gift. Then, follow up within 48 hours with a more personalized letter to express your appreciation. Be sure to include the specific donation amount and describe how your organization plans to use the gift.
- Sharing your fundraising results. If donors gave to a specific campaign, follow up at the end of the campaign to reveal the fundraising total and outline the impact these funds will have on your mission.
- Highlighting the impact of donor gifts on your organization’s activities. When you have something exciting to share, seize the moment and reach out. Send messages that describe how you used donations, whether it was to purchase supplies for your animal shelter or to fund a children’s garden expansion project.
- Segmenting donors. Use your donor database and communication tools–like an email marketing platform, if you have one–to segment or group donors based on shared characteristics. This will allow you to send more personalized messages, in less time, to each group. For example, first-time donors will be curious to learn more about your work and get to know you. Set up a welcome message or series that speaks to their new experience interacting with your nonprofit
- Offering multiple ways to get involved. Invite donors to participate in peer-to-peer fundraising initiatives, volunteer opportunities, advocacy campaigns, and other activities. Donations are essential, but so is involvement in your cause. Give your supporters a variety of activities that strengthen their bond to your cause.
After you’ve conducted a variety of engagement activities, it’s time to ask for another donation. It can be intimidating to ask a donor for help yet again, but in fact, most donors are eager to continue assisting your organization. This is especially true if you’ve taken the time to engage them in a way that fosters a deeper connection to your mission.
When requesting an additional donation from a donor, look at how much they gave previously and how much they interacted with your organization during the engagement period. This will inform how you make your appeal and how much you ask them to donate. Ideally, you’ll be able to increase your ask and receive more funds from the donor than you did the previous year.
You can also use prospect research to determine whether any current donors have the potential to give at an even higher rate and become major donors. Search your donor database and, if you have access to one, your prospect research database to identify donors who exhibit wealth indicators (stock and real estate ownership, large past charitable gifts, etc.) and philanthropic indicators (previous history of giving to your organization or similar causes, past political donations, etc.). These markers indicate that a certain donor might be willing and able to contribute a larger gift this time around. Use that information to tailor your ask appropriately.
The process of engaging donors and requesting donations is one you should repeat regularly. However, there are things to take into consideration before sending multiple appeals:
- Fight donor fatigue by finding new ways for donors to engage based on what they’ve been interested in previously. Also, don’t send appeals too often.
- Send surveys to donors to measure their satisfaction, loyalty to your nonprofit, and trust in your organization. Note their feedback where possible (ideally, in your organization’s database) so you have guidance on when and how to engage them in the future.
- Keep an eye on your retention rate using the analytics dashboard in your donor management system. Note when your retention rate drops or rises and consider the adjustments in your engagement strategy that might have led to the change.
The more energy you invest in stewarding your current supporters and understanding their motivations, the easier it will be to appeal to their preferences and improve your retention rate. You’ll be able to connect them with new opportunities that resonate with their interests and values, leading to longer-term support.