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September 30, 2020
 
Unlocking Donor Value Is Key to Nonprofit Financial Health
Book - Retention Fundraising
Since replacing donors costs so much more than keeping them, nonprofits ought to invest mightily in retaining existing supporters, a point persuasively made in Retention Fundraising: The New Art and Science of Keeping Your Donors for Life.

“Today, as more and more donors abandon ship, the cost of replacing them has grown so great as to be no longer affordable for most nonprofits,” writes Roger Craver, whose long fundraising career garnered him the Direct Marketing Association’s Lifetime Achievement Award.

He underscores the point by noting that the average nonprofit has a 60% to 70% change of obtaining additional contributions from existing donors vs. a 2% chance of receiving a gift from a prospect.

Despite this reality, too many nonprofits, he contends, spend substantial sums trying to acquire new donors instead of retaining the ones they already have. Craver’s book seeks to correct this wayward focus by providing practical guidance based on solid research.

Higher donor retention is based on what Craver describes as a two-step map:
  1. Identify your most and least committed donors
  2. Identify the experiences that lead or detract from high levels of commitment
Understanding your donors’ commitment will let you direct resources to the most highly committed donors and less in those who are less committed. Craver describes how to calculate a commitment score for each donor and cites research that has shown that high-commitment donors generate 131% more revenue over three years than low-commitment donors.

Perhaps one of the book’s most valuable insights relates to what constitutes best practices in donor retention. Craver writes: “Too many of us accept an oversimplified set of generic best practices [e.g., the “thank you” within 48 hours, giving clubs, special events] as sufficient for causing donor behavior.” Such practices are not wrong; they just don’t automatically influence retention, he contends.

Instead, Craver identifies seven key drivers of donor commitment, among them how well your donors perceive your organization’s effectiveness in achieving its mission and the extent to which donors feel they are part of an important cause. Craver discusses each key driver and provides examples of organizations that have acted on them effectively.

He goes further by showing how to calculate the dollar value of increasing retention rates and determining “the ultimate metric” ”“ the lifetime value of donors. Calling lifetime value “the most significant measure for benchmarking and steering your fundraising efforts,” Crave notes that “it remains one of the most overlooked and least understood metrics in our trade.”

How much to invest acquiring and retaining donors can only be assessed in terms of their lifetime value to the organization, and, according to Craver, “Failure to invest substantially in the acquisition and care of new donors is a certain prescription for extinction.”

With more than a million nonprofits in the United States, donors have never had so many choices which to support. Which is why all nonprofits, regardless of size or mission, owe it to themselves—and their donors—to use scarce resources as effectively as possible. A good place to start, Craver argues, is to retain as many committed donors as possible.

Retention Fundraising: The New Art and Science of Keeping Your Donors for Life is available from Emerson & Church, Publishers.
Reviewed by Peter Lowy

Originally published in October 2014
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