What are you doing to retain donors? (A donor loyalty assessment)

Categories: General Development, Insights & Advice, Library

Nonprofits lose more than half their donors after the first gift. According to the 2016 Fundraising Effectiveness Project (FEP), just 46% make a gift the year after an initial donation. Increasing your retention rate just 10% could result in more than 100% growth over four years—and that presumes that donors give the same amount. When you consider the potential to upgrade giving, connect others to your organization, make a planned gift, etc., some estimates forecast that just a 10% improvement could yield a 200% difference over time.

That is compelling, but we are guessing that you were already convinced. So, now what?

The first step to improve donor retention is to understand what you are doing to maintain donor loyalty? How well do you:

  • understand your donors’ motivations;
  • communicate with them;
  • recognize their support;
  • steward their gifts; and
  • engage them?

Not sure? Take this brief assessment. Give yourself one point for each question you answer “yes.”

Donor Understanding

Question 1: Do you seek and track feedback from donors on a regular basis?

Donors welcome the opportunity to have their voices heard. They have a greater appreciation for organizations that take the time to listen and respond to their constituents. Ask for their opinions and preferences. Make them feel like they are part of your team. Host online chats about a specific topic; conduct surveys about a particular program; organize focus-group discussions to test reactions to a product or service that you plan to introduce. You’ll gather information that can

  • bolster your case for support;
  • identify the programs/services/activities that resonate;
  • manage and deliver communications effectively; and
  • advise you how to do things better.

Question 2:   Do you use the information you gather?

Data is only valuable if it’s used. Capturing and recording the information within your data management system will help with development planning. With the knowledge you gain from the information, you can:

  • design more focused appeals that inspire donors;
  • identify prospects to support your organization in different ways;
  • refine your tactics to identify, cultivate, and solicit future donations; and
  • create new opportunities for donor/constituent engagement with the organization.

Communication

Question 3:   Do you tailor the content of communications based on your knowledge of the donor?

Effective communication is more than newsletters, mass email, and annual reports. It is a systematic approach that takes into consideration what you know about your donors. For example, Donor A has supported your organization for five years. You discover she is a physician and a swimmer who plays water polo. Your organization wants to build a swimming pool to provide therapy sessions for individuals with arthritis. Your communications to Donor A now focus on the health benefits of swimming and how water exercises improve joint mobility and lessen pain. Your communication with her is delivered in a way that speaks to her knowledge and experience. It enables her to identify with the benefits that come from water activities and as a physician, she knows the health benefits your clientele will gain. She’s deepening her investment in your organization because you are speaking to what she cares about. You have simply paid attention and followed through.

Question 4: Are you communicating with your donors effectively?

According to StatisticBrain, the average person’s attention span is eight seconds—meaning one word per second or eight words. Almost within the blink of an eye, your donor will move on unless your message resonates. The headline of your newsletter or the subject line of the email should contain strong words that capture your readers’ interests.

Your communication should appeal to the head and the heart—using statistics and stories to demonstrate impact. If your donor cares about children being prepared for kindergarten, illustrate how her gift helped an at-risk four-year-old gain the skills necessary to start kindergarten at grade level.

The content should be relevant and personalized and make donors feel like they are engaged in a conversation. Share something new so they will come back to learn more. Make sure every communication you have with your donors has a call for action: to advocate, to volunteer, to learn more, or to donate.

Recognition

Question #5: Do you know how your donors want to be recognized?

All donors should be recognized—whether discreetly through a modest thank you note, or broadcast to all. Whether a gift is $10 or $10,000, every donor wants to be recognized for their action. That recognition should be proportionate to the gift and at a level that is both comfortable for the donor and the organization.

If the goal is simply to recognize donors and their giving levels, then an announcement—through annual reports, electronic or static signage, on stage, plaques, donor walls, and banners—is sufficient.

On the other hand, recognition programs, such as giving societies, circles or clubs, provide your organization the opportunity to honor donors at leadership levels and to treat them in a way that perpetuates giving to your organization.

Understanding your donors’ motivations for support to your organization will ensure that you are providing the proper recognition, and in some instances, benefits for the gift—such as access to special events, exclusive information, tickets, etc.

Question #6: Do you have a formal recognition program?

When establishing a comprehensive recognition program, take inventory of the opportunities your organization has to recognize donors at all levels. Recognition is more than putting someone’s name on something (though, that is part of it). Create a plan that recognizes donors AND builds relationships and motivates other donors to give and increase their giving. Don’t miss an opportunity to honor your supporters.

As you develop your recognition program, consider the following elements:

  • permission for public recognition that includes specifics about the way they want to be listed and in what communication vehicles (newsletter, online, etc.);
  • procedures for anonymous donors;
  • categories for recognition;
  • naming opportunities (with a minimum gift requirement);
  • sample language for various types of recognition;
  • formal commitment agreements;
  • payment schedule;
  • clauses to remove names for certain situations;
  • opportunity to opt out of receipt of online communications.

Stewardship

Question #7: Does your organization have a policy that guides the acceptance of gifts?

Transparency and accountability are paramount to an organization’s credibility and the ability to get the next gift. Having a board approved Gift Acceptance Policy assures donors that gifts will be received, acknowledged, and used for the purpose for which they were intended. The document clearly defines your organization’s intention to adhere to best practices.

The policy covers:

  • gifts that will be received (and declined);
  • who accepts gifts on behalf of the organization;
  • timeline and vehicles for acknowledging gifts;
  • procedures for acknowledging, entering, and recording gifts;
  • IRS-required language for acknowledgement letters; and
  • protocol for demonstrating to the donor the impact of their gift.

For staff, the gift acceptance policy allows them to work more efficiently and spend more time on relationship building activities with donors.

Question #8: Are your organization’s retention rates increasing?

A key indicator of an organization’s fundraising health is the continual uptick in donor retention rates. FEP 2016 reports retention rates increase based on the gift level. For example, donor retention rates for gifts up to $100 was 52%, while retention rate of donors making gifts of $250 or more is 76%. Clearly there’s a relationship between retaining a donor and an increase in giving.

Strengthening the relationship between the organization and donor requires constant attention and nurturing. Donors want to be well informed; to have the inside track on what’s happening. In other words, they want to feel special and appreciated and have the assurance their gifts are being used in the manner for which they’re intended. The benefit is an engaged and generous donor.

Engagement

Question #9: Does my organization provide opportunities for donor engagement?

Volunteering and events are gateways to financial support. Numerous studies have shown that individuals who volunteer are more likely to donate…this is especially true for Millennials.

Donors want to feel personally connected to the nonprofits they support. Through your research, be deliberate in connecting donors with experiences that are engaging and meaningful. For some, these experiences can be a one-time activity, such as done-in-a-day projects; while others require a longer commitment of time.

Engaging your donors with your organization not only benefits the organization, it benefits the donor as well. For the organization, donor engagement:

  • enhances program delivery because it provides extra hands to help;
  • offers new talent that may be recruited to serve on committees and the board; and
  • increases the flow of money to your organization because donors experience the impact of their service.

Donors get the satisfaction of knowing their involvement makes a difference. For some, relationships are strengthened with their peers because they have come together through a shared activity.

Question #10: Does your organization track donor engagement?

What does engagement mean? How do you evaluate it? What’s the best way it to measure it? Engagement can be observed through giving, volunteering, visiting, attending events, social media cues, etc. Define which of those data points are meaningful for your organization and then track them and use them to:

  • communicate with donors in ways they want to receive information about what is meaningful to them;
  • identify major gift prospects;
  • cultivate volunteers and advocates;
  • troubleshoot before lapses or attrition occur;
  • and more…

Knowing all that you can about a donor empowers you to take action to keep your most valuable asset returning to your organization as a life-long supporter.

How My Organization Scored

Score 8 – 10:  You are confident your donors are highly loyal to your organization. Your donor retention rates meet or exceed rates of 50% for gifts under $100, 60% for gifts $100-$249; and 70% for gifts of $250 or more.

Congratulations! You are mastering the art and science of a strong donor loyalty program. Your communication with donors is personalized and focused on what matters to them. You have approved policies for accepting gifts, recognizing donors, and stewarding gifts. You measure donor engagement and know how to use data to inspire giving and increase participation.

Score 5 – 7:  You feel like you have a loyal corps of donors. Yet, retention rates are not at best practice levels. You struggle to develop and change content that will attract and keep the interest of your donors.

Step it up! Time to reexamine what you’re doing and how to do better. Start by making sure your response to donors is prompt and in the manner in which they contacted you. Personalize your communication and be sure the donor does not receive the same correspondence every time he/she sends a gift.

Get the development committee busy creating policies that provide guidance to staff and clarity to donors about the kinds of gifts the organization will accept.

Work with program staff to develop engagement opportunities for donors, so when the next appeal is ready to send donors will remember the warm glow they got through volunteering.

Be generous with your appreciation and gratitude for their gift. And, be sure to demonstrate the impact of their giving.

Score 1- 5:  Roll up your sleeves! Yes, there’s a lot of work to be done…and great potential to create a dynamite program.

Organize a task force comprised of key volunteers and key donors to help develop a donor loyalty program that incorporates best practices in:

  • effective communication;
  • timely responses;
  • policies and procedures for accepting gifts, recognizing donors, and stewarding donors; and
  • collecting and managing the data so donors are retained and upgraded.

Take the time to get feedback from your constituency.

  • Inquire about the strengths and opportunities they see in the organization.
  • Seek their vision for the organization.
  • Ask how they might become more involved with the organization.

Begin with the simple tasks first, such as acknowledging gifts within three business days. Craft your messages so they are meaningful and personal.

Establish benchmarks to measure the progress of your program and make adjustments along the way.