For many nonprofit organizations, fundraising is critical to an organization’s ability to implement programs, support its beneficiaries, and serve its mission. In an increasingly competitive funding environment, retaining existing donors becomes critical to ensuring success for nonprofit organizations.

Unfortunately, donor retention rates hover around 40% which means for most nonprofits, they are in a perpetual cycle of trying to attain new donors. Many organizations appear content with that strategy and continue to focus their fundraising efforts on acquisition. They spend their time and financial resources replenishing a progressively leaky donor bucket overlooking the chance to build important donor relationships. They are challenged to retain current donors and turn those making one-time gifts into repeat donors. So why does this matter?

New Donor acquisition is costly – it can cost up to $1.50 to raise $1.00 when it is coming from new donors, while using existing donors will be significantly less, $.20 or less per dollar raised.

Because retaining donors cost less when fundraising, tapping into that base can increase revenue. A small improvement of just 10% in donor retention rates can exponentially increase revenue for nonprofits who keep donors engaged with the organization, because a retained donor has a lifetime value considerably greater than a one-time donor and is critical to building the donor pipeline, with most successful major, principal, and legacy gifts occurring after five years of continuous giving. They are more likely to upgrade their giving, and utilize more complex giving vehicles, as well as serving as advocates and volunteers for the organization.

Successful donor retention strategies require a shift in thinking about donor giving as transactional to donor commitment as relational. Instead of concentrating on a nonprofit’s current financial needs, the focus is on strategy and the organization’s long-range vision for the future. When a nonprofit organization emphasizes building donor relationships, they change the dynamic. The donor is at the center which fosters a committed and dedicated connection to the nonprofit.

Donor retention efforts are not meant to be a standalone strategy. They require an organizational commitment to developing the donor relationship. This strategy becomes significant in creating an environment that inspires donor loyalty and a meaningful connection with the nonprofit organization. Recommendations for increasing donor retention include:

Developing personal relationships

• Segment communications: by constituency, area of support, interest, commitment level, communication channel
• Individualize attention and conduct personal outreach: let donors know you see who they are, make personal calls, initiate unique activities, create special communications.
• Develop donor journeys: create action plans based on specific donor activity.

Increasing a donor’s identification with the organization

• Utilize surveys to understand what is important to donors and what motivates them to give
• Create timely messaging that aligns with donor motivations.
• Seek ways to connect what a donor values with an organization’s mission.

Emphasizing impact reporting

• Utilize existing marketing materials to focus on the impact donors make to the nonprofit organization’s ability to fulfill its mission.
• Be distinctive in communications highlighting how the nonprofit is unique in serving the needs of the community.
• Provide information that differentiates the nonprofit and is hard for competitors to emulate.

As donor giving trends continue to show decline, donor retention strategies become even more critical to generating revenue for the needed programs and services of nonprofit organizations. An organizational commitment to developing the donor relationship becomes significant in creating an environment that inspires donor loyalty and a meaningful connection with the organization. Nonprofits should take a measured approach to their fundraising strategies that balances donor acquisition and donor retention in a thoughtful and deliberate manner to ensure fundraising and organizational success.

Developing a strategic donor retention program in combination with a robust cultivation plan could increase potential revenue for a nonprofit organization, expand its donor and volunteer base, and ensure its success in fulfilling its mission.

Lori Johnson is a 2023 graduate of the Masters of Nonprofit Leadership and Management program at Arizona State University and a member of the Nu Lambda Mu Nonprofit Honor Society. She is currently the Executive Director, Development Services at John Muir Health Foundation where she is part of a team that helps donors realize the difference they make in the lives of patients and families in the communities served by this regional health system. Her team includes Donor Relations and Stewardship, Events, Annual and Special Giving, Employee Giving, Marketing and Communications, Prospect Development, and Foundation and Government Grants. 

Image by Lillian Finley

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