What is the best fundraising idea of 2016? Focus on retention! Yep, in the nonprofit sector, donor retention is imperative to the success of current and future fundraising campaigns. In this article, I discuss how fundraising software can be used to enhance your retention prospects at your 501c3 nonprofit.
Review a Donor Database Which Helps Your Retention
Every development officer knows that new donor acquisition and raising money year after year is a costly endeavor. This is why effective donor retention strategies will help your organization boost donor loyalty and engagement, and help to reduce your nonprofit’s marketing expenses at the same time.
Donor retention strategies can be as simple as celebrating your donors’ generosity with frequent communications to foster more meaningful relationships with them, and sharing important instances which demonstrate exactly how their gifts are making a difference in your organization’s work. When donors feel truly valued by your organization, they’re more likely to continue to give to your cause and recruit new donors in the process. What can (should) a fundraising database be able to do to help?
Viewing Donor Trends in Fundraising Software Database
1st, everyone in the organization must see how your campaigns are working from day to day and month to month. Fundraising Software solutions that compile a database of your donor trends will help you to realize the value of retention as it applies directly to your non-profit organization. Monitoring donor activity over time allows you to track the progress of your organization’s charitable earnings and see where and how your donor retention percentages might increase so you can get the most out of your fundraising campaigns.
For instance, if you can improve your donor retention by just 10%, original donors will remain loyal to your organization for an average of four years longer. This generous time frame allows for potentially larger gifts as well as granting you the opportunity to arrange legacy gifts from your most benevolent donors. While you may have seen a similar statistic with regards to the value of retaining customers in the for profit world, the stat holds up in the nonprofit world too.
Direct Marketing In The Donor Database
2nd, I believe it’s important to be able to communicate better in order to continually delight your donors. Today, you need to have an email marketing solution integrated or better yet one which is robust enough to handle the workload inside the donor database. This alone can help with retaining donors through direct email marketing. It has been proven that ongoing personalized correspondence increases the likelihood of their involvement in your capital campaigns. With higher donor retention, you can shift some of your focus to upgrading those existing donors, as they’re more likely to give greater gifts the longer they remain loyal to your organization.
Peer to Peer Donor Engagement
3rd, knowing how your constituents are related to one another in terms of their relationships will enhance your capabilities to leverage that into other similar donors. I read a statistic which underscored this fact recently which basically outlined if just one out of every three retained donors manages to entice a new donor either through solicitation or referral, your organization’s donor pool will continue to grow exponentially with each passing year. And, in tandem with the donors that your organization approaches on its own it could be even more impactful. Again, not too far from the idea that testimonials help to bring in more business, donors recruited by existing donors are generally more likely to have a higher retention rate, further expanding the revenue generation for your non-profit organization.
A considerable amount of the data cited here I must say can be attributed to reading and following a lot insights from Jay Love, Founder of Bloomerang. More recently, he recently participated in the 2016 Nonprofit Leaders Network Telesummit, a series of interviews with top fundraising experts conducted by Kirsten Bullock, CFRE, MBA. In his session, Jay explored the current state of donor retention and examined how and why nonprofit leaders should transform their organization’s culture into one of donor-centricity, rather than acquisition. Here is a quote from Jay when asked about what is donor retention and why is this a key leadership issue:
Donor retention is really the foundation for the funding of most nonprofits’ missions because those individuals, some of the research that’s been done, we know that in 2015, 88% of the dollars for the average nonprofit came from 12% of the donors. Most of the time, those are not first-time donors. So, those are donors that have been retained going into more than one year for that.
So, the donor retention is basically how many donors or what percentage of your donors are you able to keep from one year to the next? So, it’s a pretty simple mathematical formula, sort of like a fraction. If, for instance, you had 1,000 donors in 2014 and you were able to retain 550 of those in 2015, then you would have 550 over 1,000 or a 55% donor retention rate, which by the way, compared to the national average, would be considered to be quite stellar.
So, if you are starting a nonprofit or simply need a fundraising idea to help improve your development efforts, find a database which will help with retention.
Just to be clear, we do not sell or support any donor database solutions, but we believe that a fundraising database is absolutely vital to the continued success of your organization, and we can help find the right one for you. I believe you have to appreciate what they can do in order to help those find what they are looking for in a solution.
For more information about the various donor software solutions on the market today, contact us today. Until next time, keep SmartThoughts in mind.