Thanks to Leslie Allen, MBA for providing this guest post!
Donor retention is definitely an important metric in fundraising: maybe even the most important metric. But if you think about it, it doesn't really exist on its own. It’s part of the ecosystem of fundraising and it depends on other pieces to survive.
Retention (renewing your donors) doesn't happen without acquisition (getting new donors), and it depends totally on attrition (losing some of your donors), which occurs naturally even in the face of the best stewardship.
The key is to determine how all three of these pieces work together so that your unique fundraising program thrives.
We see the interaction between acquisition, retention, and attrition in terms of a Leaky Bucket.
Your donor file (the people who give to your organization) is like a bucket. New donors come into your bucket through acquisition efforts, like direct mail, events, or board contacts. Some stay in the bucket and even upgrade their gifts over time. But, all donor files have attrition or donors that lapse or do not repeat their gifts. This attrition forms the leaks from the bottom of the donor bucket.
These things are not separate from each other, but instead form an equation that is different for every organization. Your challenge is to figure out what is going on in your file and then to make adjustments that take advantage of your organization’s unique assets and strengths.
We generally see three different types of leaky buckets.
The Classic Leak in Your Bucket: There are proactive efforts to bring new donors into the organization, but existing donors are not renewing and are dripping out the bottom of the bucket.
- There is not enough effort being put into stewardship and renewal of donors.
- The level of acquisition is not high enough to replace natural attrition.
- The organization has changed communications and/or solicitation channels without bringing its donors along.
How to fix it:
- Work to engage the donors in a closer and closer relationship (think: friendship) with your organization so that they are inspired to give again. Most donors want to know, “What have you done with my money?” and “How have I made a difference?”
- If you change channels of communication, let your donors know and put more attention on converting them to the new channels.
- Increase acquisition efforts so that you bring in at least enough donors to replace the ones you are naturally losing – and more if you want to grow!
The Second Gift Leak: New donors are being recruited, but those same donors are not making a second gift and are immediately leaking out the bottom of the bucket.
- The organization is acquiring donors through one channel (like direct mail) and then trying to renew them using another (like online).
- The main channel of acquisition is events.
- The organization is acquiring donors using a message that is not connected to its core narrative.
- The organization is using “peer-to-peer” fundraising to bring in donors.
- The organization is using premiums like tote bags and address labels to bring in new donors.
How to fix it:
- Ensure that your acquisition efforts are “true” to your organization and its story. While some acquisition methods may yield impressive results by offering totebags, using celebrity endorsements, or having flashy events, acquisition has to ultimately reflect your organization and the work it does.
- Create a robust welcome system for your event and peer-to-peer donors.
- Renew using the same channel of communications as often as possible. Ask donors what communications channels they want to use.
The Slow Leak:Even though strong retention efforts are in place, the donor file is shrinking as donors “naturally” leak out of the bucket when they die, move, or change interests.
- The organization hasn’t invested in a sustainable channel of acquiring new donors.
- There are no efforts to re-engage lapsed donors.
How to fix it:
- Find a level of donor acquisition that works for your organization. Don’t just assume that new donors will come in. Make a goal and measure your progress towards it!
- Put together a specific effort to reactivate donors who no longer give to you. They are more likely to come back on board with your organization, making them less expensive and more engaged.
Note: this last scenario can happen as organizations shift from lower value to higher value fundraising. Don’t forget to take your fundraising strategy into account when you do this analysis. If your dollars are increasing and you intentionally want to focus on fewer donors, then your bucket may be fine.
The key is to know.
So take a moment to download The Leaky Bucket workbook and plug in your numbers, and determine what kind of Leaky Bucket you have. The workbook will also give you more specific strategies for what to do to seal up those leaks!
And then let us know how it went. Did you learn something? What’s your next move?
Leslie Allen, MBA, has spent more than two decades raising money for social change organizations. Along with partner Ann Goldman, Leslie founded Front Range Source, a Boulder-based consulting firm serving nonprofits around the world. Leslie is currently Vice Chair of the Board of Trustees of the Community Foundation Serving Boulder County and serves on the Board of ActionAid USA.