Understanding Donor Retention Rate & Growth

The importance of your nonprofit having donors that are passionate about your mission and committed to giving on a regular basis cannot be overemphasized. Donor retention and maintaining a positive donor retention rate plays a big role in your nonprofit reaching its annual fundraising goals and your overall success. In this article, we are going to dive deeper into donor retention, how to calculate the donor retention rate, and why utilizing digital recognition walls boosts donor retention.  

What is Donor Retention?

A nonprofit’s donor retention is measured by the number of donors that continue to support your mission after their initial gift is made. If your organization is able to maintain a higher donor retention rate, that is an indication of a solid donor stewardship plan. This ultimately leads to existing donors continuing to give for years to come. 

A low retention rate suggests that your nonprofit must acquire new donors to cover the operational expenses. In the end, this hurts your organization because obtaining new donors cost money, leaving less funding for programs, special events, and other important ventures. 

How to Calculate the Donor Retention Rate 

In order to maintain and improve donor retention, you need to understand how to calculate the donor retention rate. Thankfully, if your nonprofit has maintained solid donor records in your CRM, the retention rate is easy to figure up. All you do is simply divide the number of repeat donors from the current year by the total number of donors from the previous year. 

For example, say you have 150 donors who gave a repeat gift during the current year, and last year you had 300 donors total. 150/300 = .5, which is 50%. With the average donor retention rate for nonprofit organizations being around 40-45%, 50% is a sound retention rate.

Why the Donor Retention Rate Matters 

Knowing and understanding your donor retention rate is beneficial for many reasons. First, it allows your nonprofit to monitor the effectiveness of your donor stewardship plan. Second, the donor retention rate assists in establishing realistic goals for such key things as - annual budgets, donor cultivation, and donor advancement.

Finally, the donor retention rate helps identify the giving patterns of your major donors and all retained donors. In the end, this will lead to an increase in revenue, because a well-cultivated donor retention strategy is the number one factor in driving donations. 

Ways To Increase Donor Retention 

Now that we have explored what the donor retention rate is and why it is important, let’s look at a few ways to improve your nonprofit’s donor retention rate. 

Offer A Monthly or Recurring Gift Option

Donors love having the option of giving ongoing gifts to your organization. Make it clear on your donation page that they do have a choice to give on a set schedule if they choose to. This also benefits your nonprofit, because studies show that recurring donors give around 5x the amount of one-time donors over more than a two-year period. This ultimately helps you reach the goal of your fundraising effectiveness project. 

Immediately Thank Your Donors

The power of saying “thank you” cannot be denied when it comes to donor retention. Studies have shown that an astounding 80% of donors say that receiving a thank you from nonprofit organizations would persuade them to donate again. 

What’s even better is immediately sending an automated thank you out when a donor makes a gift. Follow up with a more personalized email, letter, or even a short video. Sending a quick thank you out is a great way to acquire long-term donors. 

Offer Alternative Ways to Give 

When it comes to giving, donors appreciate a variety of options. Send out occasional texts to donors with a link to a donation page, set up a “Text to Give” number, feature QR codes on digital walls or display them at special events, and make sure you inform donors on how to leave legacy gifts or give stock donations. Make giving quick and easy for your donors. 

Maintain Communication 

Frequent communication is mandatory when stewarding your donors. Donors want to know what is happening with your nonprofit and how their gift is being used. Therefore, regularly sending out newsletters, emails, and posting on social media is absolutely necessary in order to retain donors. 

Utilizing Digital Solutions to Boost Donor Retention

If you are looking for an easy, modern way to improve donor retention, OmniAlly’s dynamic Digital Donor Engagement System℠ can do it all! There are so many benefits to investing in digital donor walls, but giving your donors the recognition they deserve is a sure way to boost donor retention. 

Whereas traditional donor walls are stagnant and costly to update, digital walls are effective and can be instantly updated at the click of a button. With your digital wall, you can display donor lists, and donor profiles, share impact stories, advertise fundraising campaigns, promote special events, and even present QR codes for donors to give on the spot. 

When working on relationship building, giving donors public recognition through digital signage clearly illustrates appreciation for your donors. 

Conclusion 

Taking the time to understand and measure your nonprofit’s donor retention rate is essential to your fundraising success. In order to have a positive donor retention rate, you first need to create a strong donor stewardship plan to ensure donor retention. Offering options for recurring gifts, immediately thanking donors, maintaining communication, and recognizing donors through digital signage are all brilliant  ways to move existing donors up the giving ladder. 

Are you interested in learning more about how OmniAlly can help you increase donor retention? Contact us here.