To help your nonprofit better understand why, what, and how to avoid the pitfalls of donor churn, it's important to understand these two metrics and how nonprofits can measure and maximize their impact on both factors.
Donor Retention and Churn
Measuring and tracking donor retention and churn is a fantastic way to measure the health of your nonprofit and the success of your individual giving campaigns.
Retention measures how many donors stick around and churn measures how many leave. Decreasing churn, thus increasing retention, is the most effective way to increase the lifetime value of your donors.
Calculating Donor Retention and Churn
You can calculate your retention rate for any given campaign, or period of time, by making a ratio between the number of donors that you began with that are still there at the end of a period by the number of those you began with. You then multiply this ratio by 100 to get a percentage.
Churn is calculated similarly, but instead you take the ratio of the donors you lost with respect to how many you began with. You then multiply that by 100 to get a percentage.
So, if you started the month with 100 donors and lost 10, your retention rate would be 90% and your churn would be 10%.
You can learn more about calculating donor retention and churn here.
Why measure donor retention and churn?
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Donor retention has a significant impact on the success of an organization’s fundraising program as the more people you can keep as active donors the more recurring revenue you have and the better off your organization will be.
You can think of donor retention as a measure of donor loyalty, since it measures how many donors stick around from one year to another. Donor retention can also be measured on a month-by-month, or on an individual campaign, basis.
How you measure donor retention impacts the insights that your data can give you.
For example, if your organization calculates its retention rate based on monthly donors, then you may want to look into optimizing retention during those months instead of annual ones. If your organization calculates its retention rate based on weekly donors, then you may want to increase donations per week rather than increasing retention overall.
A standard benchmark for nonprofit donations programs is a 20%–30% donor retention rate. Anything above that shows increased loyalty and better engagement than most organizations achieve.
It’s important to note that retaining donors who give once does not mean you retain them for life. Generally speaking, there is no way to know how often someone gives each year until they give again unless you offer them a monthly recurring giving program.
It is also import to keep your donors engaged enough to continue giving throughout their lifetime with your organization, which, over time, could amount to large sums of money!
What Causes Donor Churn?
As an organization grows larger, it can be easy to forget about donors who have stopped giving. Unfortunately, when you ignore these lapsed donors and don’t ask them why they haven’t given recently, you miss a valuable opportunity for improving your donor retention rates.
One of the best way to keep people giving is to ask them why they aren’t.
You might ask:
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What were your top reasons for stopping your donations?
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Did you stop giving due to a bad experience with an employee?
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Did you move out of state?
There are many causes of donor churn but, thankfully, that means there are many strategies for overcoming it. So, reach out to your lapsed donors and take the time to let them know that you care enough to follow up and ask them why they're no longer giving.
How Can I Prevent (or Reduce) Donor Churn?
There are a few ways you can avoid or reduce donor churn.
Always keep in touch with your donors
People who give consistently over time do so because they are invested in your cause and feel appreciated by you, so it’s important to stay on top of your thank-you letters, newsletters, texts, and emails. Send these as often as possible.
You may also be interested in Express Gratitude with Donors
Get your donors involved
You have to constantly be thinking about ways to increase engagement with your donors. You don’t want them feeling like their involvement with your nonprofit is stagnant.
Consider ways they can become involved.
- Are there opportunities for them to share their story?
- Are there ways they can take part in events?
- Are there ways you can more directly connect them with the impact of your work?
Taking these steps will help you prevent donor churn.
Pay attention to what your donors tell you
This is the most important point, so we'll say it again: Always pay attention to what your donors tell you!
If donors seem disengaged from your nonprofit, perhaps it's not worth fighting for that donation if those feelings are going to persist. It may be better to walk away than try and win back an apathetic donor.
Why donor retention is so important
According to research conducted by Jerry Miele Jr., PhD, an associate professor in the University of Wisconsin School of Business Administration, once someone stops giving at an annual fundraiser they will likely never resume giving. So, as much as we want people who stop donating with us over time to come back and support our cause eventually—they don’t!
This is why Donor Retention is so important.
It's easier to keep a donor giving than it is to get them to come back once they leave.
As important as retention rates are, churn rates prove to be just as critical in fundraising efforts. A small fraction of donors are responsible for a high percentage of revenues gained within organizations across all sectors; therefore, nonprofit organizations should prioritize improving both their recruitment and retention strategies simultaneously.
So what’s keeping donors from coming back? And why do some return every year while others stay away?
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