Unlocking the secret to a stellar donor retention rate is the dream of every nonprofit. Dive in to discover the challenges and solutions that lie ahead.
An increasing donor retention rate continues to be the north star of metrics for nonprofits, yet each year, many organizations are met with a minimal jump in retention, or worseโa decline. If youโre one of the organizations wondering why youโre investing so many dollars in donor acquisition efforts only to find that itโs even more difficult to retain a donor, youโre not alone. It’s even more frustrating when you put in the effort to connect with major donors, but then they disappear after those one-time gifts.
Combating donor attrition rate is a big frustration for many nonprofits across the globe, and thereโs no simple solution to unlocking a higher average donor retention rate. However, what if we told you that giving a little extra love and attention to detail to your value proposition in your fundraising efforts could make all the difference? This is exactly what digital optimization expert Nathan Hill of NextAfter discussed during the Responsive Nonprofit Summit.
What the Data Tells Us About Donor Retention Rate
Recent data from M+R tells us that one-time online donation retention sits at 29%. Unfortunately, itโs even lower for first-time donors, sitting at a glaring 16%. While this is a very slight improvement from 2021โweโre talking a mere 1%โitโs still a dip from pre-pandemic levels.
The slowing of growth, or lack thereof, in donor retention year after year isnโt a new problem our sector is facing, itโs one that nonprofits have been grappling with for a while. According to the Fundraising Effectiveness Project, in 2005, nonprofits lost a staggering 82 donors for every 100 donors gained.
At Virtuous, we know that thereโs a generosity crisisโone that significantly impacts the way nonprofits are retaining current donors. To help the nonprofit sector better understand the intricacies of donor attrition and how nonprofits can better retain their online donors, we partnered with NextAfter to release โThe Comprehensive Online Donor Retention Benchmark Report.โ
Read on to learn what we found.
Revenueโs Impact on Donor Retention Rate
First, letโs look at how effective nonprofits are with donor retention based on their size. We want to see if annual revenue has an impact on a nonprofit’s average retention rates.
Itโs reasonable to assume that an organization that has, letโs say, $100 million in annual revenue can retain a higher percentage of donors than an organization that has $1 million. After all, the more revenue an organization has, the high the retention rate, right?
The simple answer is maybe. The Donor Retention Benchmark Report found that 32% of organizations with a budget of $1 million to $5 million were high performers in retaining donors compared to 33% of those that had a budget of $100 million or more.
โAs revenue increases for organizations that have larger budgets and resources, there are fewer low-performing organizations in terms of donor retention. Now, that doesn’t guarantee that if you have more revenue, you have better retention,โ Hill explained.
While larger organizations may have access to additional resources like technology and talent that can attribute to a higher average donor retention rate, the data tells us that smaller organizations manage to achieve high retention rates without access to these resources as well.
Donor Retention Rate Differences by Cause Area
To no surprise, cause area plays a significant role in how well an organization can retain its donors.
The chart above shows us:
- Faith-based and international affairs organizations have the highest retention rates
- Public policy and health organizations have the lowest retention rates.
Thereโs a commonality between these organization typesโwhile faith-based and international-focused organizations have deep-rooted values that remain mostly unchanged throughout the year, public policy and health organizations are driven by current events, politics, or in-the-moment donations.
This leads us to believe that retention and true affinity to an organization are based on shared values and core beliefsโan everlasting reason why donors giveโnot short-term messaging like an immediate disaster or what the latest event in the news cycle is.
The Correlation Between Recurring Giving and a Healthy Donor Retention Rate
Many organizations have long looked to improve their recurring giving strategy to boost their retention rates. After all, the more monthly donors who give to your organization, the higher your donor retention rate will be. Don’t forget that if a supporter gives monthly, their donor lifetime value goes up as well.
But how does intentionality in recurring giving impact retention rates overall?
Our data shows that the highest performers in donor retention have the most active regular donors. But we also want to point out that, while recurring giving is an important factor in donor retention, itโs not the only factor.
We also looked at recurring donors by vertical, and what we found was consistent with an earlier finding: cause area matters.
The data tells us that arts, public policy, faith-based, and international-focused organizations are the ones with the most recurring donors. The takeaway is that good donor retention rates combine value-focused fundraising and an investment in building a recurring giving program.
The Role of Value Proposition on Donor Retention Rate
The reality is that your nonprofit is swimming in the sea of more than 1.5 million other charitable organizationsโand thatโs just in the US alone. Because of this, your value proposition is what sets your organization apart from all of the others.
Your value proposition explains to the donor why they should give to you and not another organization. It should outline the problem that exists, what youโre doing to solve it, and why you deserve their support. As youโre working hard to make your case for support, remember that your value proposition isnโt your mission statement, and itโs not an incentive.
The Value Proposition: Elements to Consider
Now that you understand why your value proposition is so important to your nonprofitโs messaging, letโs talk about the important elements:
- Appeal: How badly does your ideal donor want to make this impact?1
- Exclusivity: Can your ideal donor make this kind of impact somewhere else?
- Clarity: How quickly and easily does your ideal donor understand what youโre communicating?
- Credibility: Does your ideal donor believe and trust you?
Donation Page Copy
Did you know that adding value-focused copy on the online donation form for your nonprofit organization can lead to increased generosity? In an experiment with CaringBridge, NextAfter found that including just an additional line of value-focused copy on the donate page led to a 21% boost in donor conversion.
โThese one-off tactics have minimal impact on long-term retention. But donation page copy can greatly improve performance at the point of conversion, and if weโre not converting people well on the donation page, how can we ever expect them to retain well if weโre not doing the essential things to help them say yes at the point of giving?โ Hill shared.
If you want to kick it up a notch, consider crafting a strong proposition copyโone that helps the ideal donor understand the problem, the solution, and how their donation makes an impact. Through experimentations with two separate organizations, strengthened value-focused copy led to an increase in donor conversion of at least 116%.
The good news is that there is a lot of room for nonprofits to grow and improve by adding clear and concise language around their value proposition. Research finds that value proposition scores across the board hover around 1.7 out of three.
A Note About Donate Button Placement
Theoretically, It should be extremely easy for someone to go to your website and locate your donate button. Especially because if someone is visiting your website, they have some level of intention to give, so why isnโt your donate button the first thing they see?
Our research found that in looking at donate button visibility, one-third of nonprofits still have a low-contrast donate button on their homepage. You may be questioning whether or not a high-contrast donate button makes that much of a difference, but the truth is that it makes a world of a difference. So much so that one experiment with Dallas Theological Seminary saw a 190% increase in donor conversion.
โSo what might be something we typically overlook or donโt think is going to be so impactful might be one of the most simple and impactful things that you can do right now to provide clarity to someone considering giving to you,โ Hill said.
While donor retention might not be solely dependent on the ease of your website navigation, a lack of clarity can prevent someone from giving at all.
The Key to Improving Donor Retention Rate
As a recap, the way to achieve a better retention rate is the sum of:
- Values-focused fundraising
- Strong recurring giving program
- Clarity in the giving process
- Copy on the donation page
- Strong value proposition copy
Also, if you don’t know your current donor retention rate, you may want to re-evaluate your donor database. A good nonprofit CRM will make it easy for you (and your whole team!) to see and track your donor retention rate over time.
Get Personal with Your Donors
The secret to deciphering a successful donor retention strategy? It might not be so secret at all. At the end of the day, if you want to retain more long-term donors, you have to apply personalized donor engagement strategies to achieve stronger donor relationships. Effective fundraising is responsive, and that means youโre listening, connecting, and learning from your donor base.
Communicate with Clarity
Don’t make the mistake of assuming that just because someone stumbles across your website, they know exactly what your organization is about. Itโs important to put in the effort to thoroughly explain what problem youโre trying to solve and how their generosity can make a difference in the world.
Share the Impact
And once they do give to your organization, it’s even more important to send donors personalized communications with your responsive donor database about the impact they are making on your organization. That way, you add to your retention efforts, and donors continue to feel good about sharing their generosity with your cause. Plus, building those strong relationships will help encourage donors to become loyal supporters along the way. They might even participate in other waysโlike volunteering or advocacy.
Need help with automating personalized and optimized marketing communications that will help you build better relationships with donors? Chat with one of our responsive fundraising team members.
โก Bonus Content
At the end of every year, fundraising and development teams huddle together to brainstorm ways to tackle their biggest challenge: donor retention. In a recent episode of the Responsive Nonprofit Podcast, Nathan Hill, VP of NextAfter Institute, shared insights into the key ingredient in donor retention.
