4 Truths You Need to Know About Donor Retention Strategies

There is an unprecedented need for nonprofit organizations to move away from prioritizing donor acquisition over everything to improving donor retention strategies that actually fuel growth. Recent research from Giving USA and the Fundraising Effectiveness Project finds that giving has dipped for the first time since the pandemic and so has the number of donors.

Now more than ever, nonprofits are under pressure to identify ways to strengthen donor retention engagement strategies.

Retaining donors is more than just making a strong case that your mission is worthy. It is also making connections with donors in a way that endures the test of time. The reality is that we’re in a generosity crisis. Fewer donors are returning to give to nonprofits due to a lack of engagement. That means nonprofits are under more pressure to figure out what donor retention strategies will work.

To help, Virtuous recently partnered up with the fundraising experts at DickersonBakker to expose truths on how nonprofit leaders can level up their donor retention strategies.

Responsive Nonprofits Are Nailing Donor Retention Strategies

To increase your odds of retaining more donors, it’s important to find those who have a shared interest in your mission. Otherwise, you’re investing time and energy into engaging crisis-type donors. These donors will likely give on a one-off basis and become a lapsed donor over time.

Responsive nonprofits understand that taking a donor-centered approach to fundraising is the key to retention. To establish deep, meaningful relationships, these nonprofits spend their time listening to the motivations of their current donors and making connections based on their desires and preferences.

Without actively listening to your donor base, you can’t make informed decisions about your fundraising. And without informed decisions, there’s no guarantee that your fundraising efforts will resonate with your target audience. There’s actually a good chance those well-intentioned efforts will fall flat.

Listening is a core component in adopting a responsive mindset. In fact, it’s the first step in the Responsive Fundraising Framework.

In theory, finding the time to listen to donors sounds great. But you might be asking, how much time does that kind of conscious effort take? Don’t worry—it doesn’t mean you’re spending the bulk of your time combing through data reports or manually responding to every single donor.

4 Truths to Better Donor Retention Strategies

Now that we know responsive fundraising works, what does that mean for your organization’s donor retention strategies? The folks at DickersonBakker presented comprehensive insights from “A Better Way: A National Study of Nonprofit Leadership & Fundraising in a Rapidly Changing World,” which included candid assessments from nearly 400 nonprofit leaders and frontline staff that provide deeper context and insight into how responsive nonprofits are focusing their strategic efforts.

Unsurprisingly, the study unveiled that traditional fundraising methodologies are outdated and no longer effective. This isn’t too surprising because we know that our donors have changed and expect more from us now. Modern donors live in a hyper-connected, hyper-personalized world. They log into Netflix and see a list of personalized tv show recommendations. They open up Amazon and see personalized shopping lists. This personalization means that more generic messages tend to be quickly dismissed.

Responsive leaders know that, in order to meet the evolving needs and preferences of their donors, nonprofits have to change their donor engagement strategy. They also must reposition their messaging to fit each donor segment. Otherwise, those outdated, generic fundraising appeal emails are going to inevitability get lost in the noise.

But what does that look like in practice? Let’s dig into what these fundraising leaders had to say!

Truth #1: Donor Retention Strategies Require a Responsive Feedback Loop

Getting donor feedback is essential in how well you’re retaining donors. Not only will the donor feel involved in the heart of your mission, but getting feedback ensures your fundraising initiatives are resonating with those who you are trying to gain support from.

How consistent is your team with asking for donor feedback? Unless you’re earmarking dates on your calendar to manually send out donor surveys, efforts to retrieve donor feedback can often get lost in the shuffle of your long list of to-dos.

This study finds that there’s an opportunity for nonprofits to improve the ways they’re getting meaningful feedback from their donors.

Derric Bakker, President of DickersonBakker, highlights that an emphasized focus on donor connection and retention is the path forward.

“When you look at responsive fundraising, it’s listen, connect, suggest, and learn. They’re critically important, and organizations need to do a better job of that,” he shares.

Intentional efforts to learn about your donors enable you to make adjustments to your fundraising strategy. When you actually listen to your donors, it is much easier to appeal to their interests and motivations. Those more responsive appeals are the ones that inspire lifelong generosity.

How to Listen To Your Donors

You can be a responsive listener through two different strategies:

1. Reviewing the donor insights that already exist in your responsive nonprofit CRM, such as wealth data, social influence, email open rates, website visits, event attendance, volunteer history, and more.
2. Sending donor surveys via email or conducting one-on-one donor interviews via phone calls where you directly solicit feedback from your supporters.

Instead of bogging your development staff down with a manual process that involves tedious data entry and static spreadsheets, invest in a tool that can break down giving and engagement metrics into custom and simplified dashboards. That way, your team is able to focus more on doing the work they love while having easy access to the mission-critical data that they need.

Truth #2: Staff Turnover Affects Donor Retention Strategies

According to this study, there’s a perception divide between leadership and frontline staff. While those in C-suite leadership roles believe that they are exhibiting effective leadership qualities, frontline staff members are giving leaders a lower rating.

Out of the nine attributes measured in the study, frontline staff rate current leadership the highest for their strong character and the lowest for their emotional intelligence and communication skills.

While leadership and frontline staff agree on what skills make a leader effective, they disagree on how effective current leaders are in displaying those skills. The top two skills—emotional intelligence and honest communication—especially play a crucial role in the success of an organization—it’s how leadership builds trust with its frontline staff.

This growing divide between how leaders perceive themselves and how their team perceives them is creating a higher risk of staff turnover. This not only affects the internal workflow and processes of the organization—it also takes a toll on your donor retention strategies.

How Internal Disconnect Hurts Donor Retention

If there’s tension between staff and leadership, there’s a good chance your team is too busy navigating the internal problems to be able to create truly responsive donor experiences that inspire retention. That’s probably the best-case scenario. In the worst-case scenario, there’s a complete lapse in donor communication and follow-up from your organization due to employee turnover or burnout. That lapse in communication is guaranteed to lead to donors slowing down their giving or stopping altogether.r

On the major gift level, it can take a gift officer years to build that deep bond and nurture the donor into making a significant gift. Major donors will notice when they’re assigned a new gift officer and might even jump to the conclusion that all might not be well within the organization. The incoming major gift officer might even have to start building that relationship from square one, especially if there was no proper transition process between gift officers A and B.

Often, donor retention strategies are focused solely on things such as marketing and communication plans, major gift strategy, etc. While donor retention is about the donor, nonprofits need to also pause and take a look internally. Fundraising leaders are not going to move the needle on their donor retention number if they aren’t enabling their team with the culture and tools that they need to succeed.

In fact, this is so important that setting up a good internal structure is one of the foundation steps of the responsive maturity model.

To learn the steps you need to take to become a more responsive nonprofit alongside shoring up these internal structures, check out our free e-book: The Responsive Maturity Model.

While retaining your nonprofit staff should be a top priority, a good fundraising platform can also help to ease the pain of inevitable employee transitions. For example, with Virtuous, your major gifts team has a few tools that can help them be better at their jobs while they are in the role, but also make the transition of major donor portfolios much smoother when the need arises.

Organization Groups

In Virtuous, you can assign individuals to an Organization Group for a wide range of reasons: identify portfolio assignments, align individuals with staff who support them directly, or track donors for different chapters within a larger organization. Organization Groups make it easy for you to track members of that particular group, and the information lives in Virtuous—so if a team member transitions to a new role, all of their previous activity lives on in the platform.

Automation Workflows

Virtuous’ powerful automation tool has many use cases, such as automated donor journeys, omnichannel marketing campaigns, and more. For major gifts officers, one particularly powerful use case of our automation is automatically adding or removing contacts from those Organization Groups. For example, if someone is added to your database with certain wealth indicators and lives in a certain region, you can set those up as triggers to add that individual to a particular group.

That means if your nonprofit is going through a period of transition, no potential donor will fall through the cracks. As you onboard new team members, the automation will continue scanning and assigning donors and prospects—so your new team member has an up-to-date portfolio ready to go.

Major Gift Pipelines

For years, the for-profit world has had the advantage of powerful pipeline software that gives them visual insights into where prospects are in the process and predictive analytics that make financial planning more reliable. With Virtuous, nonprofits finally have access to these same tools. Not only does the Major Gift Pipeline help major gifts officers manage their portfolios better, but it also means if someone transitions out of the role, fundraising leaders aren’t lost wondering about the status of those donor prospects.

Truth #3: Fundraisers Want New Donor Retention Strategies

An overwhelming majority of survey respondents—regardless if they sit in a leadership or fundraiser role—would like to shift their fundraising strategies to something that is more effective. Overall, 45% of nonprofits believe that their team should value donor retention over other factors like increases in giving, net revenue, and gross revenue growth.

These nonprofits want to see more prioritization in retaining and developing current mid-level and major donors. To achieve that, nonprofits are willing to deprioritize the acquisition of mass-market donors.

“We see the trend in how giving is changing and the fact that fewer donors who give gifts under, let’s say, $500 are continuing to give right now,” Andrew Olsen, CFRE, Senior Vice President of DickersonBakker, explains.

Because these mid-level and major donors have already made a gift to your organization, you know your mission resonates with them on some level. Plus, with more capacity to give compared to the lower-dollar donors, they have a higher potential for donor lifetime value.

Truth #4: Effective Donor Retention Strategies Are Relationship-Centered

To boost your donor retention rate, you need to explore ways to foster deep, meaningful relationships. Knowing the type of relationship you have with your donors will give you a clearer idea of what improvements need to be made to meet your retention goals.

For instance, if your donor retention rate is low, but you have a steady lift in giving numbers each year, this might signal that your organization does a great job at establishing its value proposition for the initial gift. However, because retention remains stagnant, your gift acknowledgment and follow-up communications plan might not be as personalized or touching as you think.

This study makes it clear that more nonprofits are beginning to realize the effect relationships have on donor retention. In fact, there’s a strong desire among study respondents to prioritize donor relationships over near-term revenue.

While it’s no surprise that fundraisers value relationship-building, the real challenge comes in when you consider the levels and the number of donors each organization has. What the research clearly tells us is that the way we treat our major donors is great, but it would be even better to be able to treat every donor with that level of care.

The Key to Donor Retention? Donor Journeys

The effectiveness of your donor retention strategies relies on how well you can build meaningful relationships at scale. If giving is intrinsically personal, and we certainly believe it is, and donor retention is a key metric for nonprofits, which this research indicates is true, then creating responsive donor experiences should be the cornerstone of your fundraising strategy. The most effective way to accomplish this is through automated, responsive donor journeys.

You may be asking, but isn’t automation robotic or impersonal? Automation doesn’t remove the human element, it elevates it! You can create responsive donor journeys that automate manual tasks. This means your team can make more calls and meet more donors because they are sending fewer emails.

Imagine a world where your donors are getting hyper-personalized emails directly responding to their engagement activity, but your team didn’t have to spend hours doing manual work to get those communications out. Many nonprofit fundraisers feel like they are just barely staying afloat with all of their responsibilities and goals. Automating these manual tasks frees up your team to really focus on the most high-impact work to create lifelong relationships with your donors.

Retain More Donors By Adopting a Responsive Mindset

There’s an increased emphasis on donor retention—one where nonprofits are using retention to measure fundraising success. While personalized, relationship-building retention efforts were once exclusively used to cultivate major gifts, it’s now becoming a standard practice for all donor types.

The Benefit of a Responsive Nonprofit CRM

Responsive nonprofits lean on their nonprofit CRM to help them work smarter, not harder. With responsive donor management software like Virtuous, nonprofits can easily segment out donor reports and tailor marketing communications specific to each segment. With the right tools elevating your donor retention strategies, you are going to see better results, quicker.

One way a responsive fundraising platform can help you improve your donor retention strategies is through automated workflows. The ability to create automated, responsive donor journeys means you have the time, resources, and tools to treat every donor like a major donor.

In practice, this looks like organizations such as A Kid’s Place Tampa Bay which is using responsive fundraising to create donor retention strategies that work. With automated donor journeys, they have been able to scale their marketing efforts by 30%. On top of that, they know it is working because their email open rates have increased by 17%.

Conclusion

Find out how pairing a responsive fundraising mindset with learnings from your donor management software can transform your transactional donor relationships into ones that foster trust and deep connection by reading our donor retention playbook.