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December 3, 2021
A Donor Audit Lets You Benchmark Progress
A nonprofit needs an in-depth analysis of its donor base to help assess the effectiveness of a direct response program.

A donor file audit also provides your organization with benchmarks to assess the overall health of your programs and is donor-focused, as opposed to campaign-focused.

Maura Szendy, who has led the strategic direction for several large nonprofits, including Special Olympics and Doctors Without Borders, proposes the following questions that a “good” file audit will answer:

When do my new donors break even? Important donor information a file audit will provide includes the number of new donors, the number of types of new donors (e.g. premium, non-premium, events, straight ask), whether new donors make up for lapsed donors, and how long it takes to recoup the investment in new donors.

How much is my core donor group worth this year, and what was it worth last year? How many core donors (multi-year donors) gave again this year? Is their frequency of giving greater than in the other donor groups? (It should be.) What number and percentage of the core renew? What is the number of gifts, average gift, and annual worth per renewal of your core?

Are my donors upgrading? Downgrading? Are they changing their average gift? Is it low, medium, high? To change the average gift amount, advised Szendy, you might need to offer a different gift array and/or package strategies.

How do my first-year, multi-year, and lapsed renewal rates compare to last year’s rates? The cost to reactivate a lapsed donor is generally less than the cost to bring in a new donor, so allocate your budgets accordingly. If renewal rates are low (below 30 percent), Szendy recommended changing up the mix of lists you used in the acquisition program.

How many new donors are giving a second gift, and how long does it take to get that second gift? Are renewal rates different by type or source of donor? Renewal rates of 30 percent and below are a big problem, because that means that 70 percent of new donors don’t give again. You want to shoot for around 40 percent, although today the industry standard is somewhere around 35 percent.

How do giving patterns differ by donors, based on the type of program (e.g. premium, non-premium, events, or straight ask)? Never assume one size fits all.

Which segments of the file need improvement and should be subject to new testing, and which should be subject to more investment? If you find that your renewal rates are not good enough, said Szendy, you might need to develop a conversion series, or a group of mailings targeted toward maximizing the response rate of new donors. Further, she advised changing your acquisition strategy to include a different list mix and package strategies, as well as changing acknowledgements by tailoring your messaging for new donors.

According to Szendy, donors who give to multiple programs within the same organization have the greatest retention rate and, therefore, are your most valuable donors. Once you identify these donors using the audit, said Szendy, “Invest in this group.” To offset cost, Szendy recommended cutting back on your low value, long-lapsed donors, and using first class postage for the more valuable donors, which despite up-front costs, usually generates a high response rate.

Similarly, invest in your multi-year donors (your core) by offering them more ways to give (e.g. planned giving, monthly giving, high dollar clubs).

Regarding lapsed donors, when the file audit is completed, you will have learned that not all lapsed donors are created equal. And, according to Szendy, the size and quality of your lapsed donor pool directly relates to the success of your first- and multi-year renewal efforts. “Develop new reasons for them to get interested and excited about you again,” offered Szendy. “And try to treat recently reactivated donors like new donors. Keep them excited.”

Republished with permission from The Nonprofit Times.
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