If you're a fundraiser or nonprofit development professional, you've likely heard the term "donor retention." It's one of the hottest topics of discussion in the nonprofit sector.
But what is donor retention? And why is it important?
Quite simply, donor retention is a measure of how many donors continue to donate to your organization. Nonprofits with a high donor retention rate have long-term supporters who come back year after year. Nonprofits with a low donor retention rate need to continually acquire new donors or larger gifts to keep up.
So why is this a big deal?
Let's say you get donations from 1,000 supporters in year 1. If your donor retention rate is 40%, only 400 of those will make a second donation in year 2. After 5 years, only 10 of the original 1,000 will still be supporting your organization. Think of how much acquiring those 1,000 donors cost in time and money, only for a small handful to be retained.
Still not convinced?
Let's say your donor retention rate is 41%. You have 5,000 donors, who each make a $200 gift. After 10 years, at that retention rate, you would have collected $820,859 (not counting new donor acquisition). If your donor retention rate is 51%, that same donor pool would have netted you $1,277,208.
That's right - just a small change in retention could cost your organization thousands of dollars.
According to the Fundraising Effectiveness Project, the average donor retention rate among nonprofits is only 39%.
Do you know your donor retention rate?