Why is Donor Retention Rate So Important?

Darrell Law is the VP and Chief Growth Officer at Infinity Concepts. He’s a 20-year veteran leader of a multi-campus megachurch and international television and radio broadcast ministry. Darrell specializes in maximizing results out of limited resources. Whether developing fundraising strategies, creating donor retention programs, launching humanitarian outreaches on the other side of the world, or implementing marketing and assimilation strategies to grow a local church, Darrell’s passion is to help clients achieve their goals and fulfill their mission. 

Acquisition of new donors is a critical piece of any healthy fundraising program. Your organization will always need a steady stream of fresh new donors, but what about your existing donors? Research consistently shows that it almost always costs more to acquire a new donor than it does to retain an existing donor, making your donor retention rate a very important metric to track. It’s vital to nurture your relationships with existing donors with an eye toward retaining them as donors. 

What Is Donor Retention Rate? 

Your donor retention rate is an indicator of how well you’re handling donor relationships. It’s the measurement of how many donors continue to make donations to your organization year after year. 

Unfortunately, across the nonprofit sector, donor retention rates are low and continue to get worse. According to the Fundraising Effectiveness Project, the average donor retention rate was 43.6% in 2020. Less than half of all donors gave again following their initial gift. That’s the lowest rate since the Fundraising Effectiveness Project started tracking retention data. 

If you have a high donor retention rate, then it indicates you have a loyal base who believes in what you do. A low retention rate signifies you need to do a better job engaging and keeping your donors. You should immediately find out the cause. 

Without sustained donor retention, nonprofits cannot effectively grow. 

How to Calculate Donor Retention Rate 

1. Generate a list of donors from 2020 and determine the number of unique donors. 
2. Of those 2020 unique donors, how many gave again in 2021? 
3. Calculate the percentage of donors from 2020 who renewed in 2021. Specifically, take your answer to #2 and divide by your answer to #1, then multiply by 100. For example, let’s say you had 2,000 unique donors in 2020 and of those donors, 876 gave a gift in 2021. [876/2,000 = .438] X 100 = 43.8% retention rate. 

Ways to Boost Your Donor Retention Rate 

1. Offer Recurring Gift Options – Recurring gift options give donors the opportunity to give on a regular basis through auto debit. Be sure your online donation forms and direct mail reply forms give an opportunity for a recurring gift. 

2. Thank Donors – You should thank your donors as soon as possible after you receive their donation. The confirmation screen is helpful, but go an extra step and mail an acknowledgment letter that expresses your appreciation and shares how their gift makes an impact. 

3. Offer Different Ways to Give – Besides the traditional way of mailing in a check, invest in software that offers online donation forms, text giving, a PayPal integration, etc. 

4. Communicate Regularly and Use Multiple Channels – Donors should regularly hear from you, so they know what impact is being made through your organization’s efforts. Be sure to use all your channels to communicate with your donors and followers: direct mail, social media, and email. Monthly communication is a good frequency for direct mail and email, and at least three posts per week on social media. 

Final Thoughts

The average recapture rate of lapsed donors is 5%. If donors stop giving, the chances of them ever giving again are very small. This is why it’s so important to retain your donors. Ready to learn more? Check out these additional resources to help improve your donor retention rate: 

• Donor Retention: The Essential Guide for Fundraising (qgiv.com) 
• 7 Fundraising Metrics Every Nonprofit Should Track | Infinity Concepts 
• How To Improve Donor Retention and Re-Engage Lapsed Donors With Email – Qgiv Blog 

About Infinity Concepts

Infinity Concepts is a brand communications agency specializing in crafting strategic and innovative marketing communications programs to the Christian community. Infinity Concepts has been recognized as America’s leading voice in effectively messaging, motivating, and inspiring response in the Christian community. Infinity Concepts also provides effective branding strategies, fundraising counsel, and media placement.