The latest report by the Fundraising Effectiveness Project finds that U.S. donors’ “stickiness” has loosened.
For every 100 donors charities gained in 2014, compared with a year earlier, they lost 103 through attrition, for a net loss in donors of 3%, according to the report.
And for every $100 nonprofits brought in last year, they lost $95 as previous donors stopped giving or gave less, for a net gain of 5%.
The Fundraising Effectiveness Project was set up by the Center on Nonprofits and Philanthropy at the Urban Institute and the Association of Fundraising Professionals to conduct research on fundraising effectiveness and help nonprofits bolster their money-gathering efforts.
The project’s 2015 report was based on 8,025 responses for 2013–2014 from U.S. nonprofit organizations. These responses reflect a total amount raised of $6.7 billion, for an average of $833,475 raised per group.
The report found that growth-in-giving performance varied according a charity’s size, based on total amount raised:
- $500,000 or more raised resulted in an average 10.4% rate of growth
- $100,000 to $500,000: average 3.1% rate of growth
- Less than $100,000: average loss of 7.8%
New gifts and donors accounted for the biggest growth in gift dollars and donors, a pattern most pronounced in groups with the highest growth-in-giving ratios.
On the other end of the spectrum, the greatest losses in gift dollars stemmed from repeat and downgraded gifts, particularly to charities with the lowest growth-in-giving ratios.
The biggest losses in donors came from lapsed new donors across all growth-in-giving categories.
The report said that the median donor retention rate in 2014 was unchanged at 43% from the 2013 rate. This means that just 43% of 2013 donors repeated their gifts to participating nonprofits in 2014.
The gift retention rate grew by one percentage point to 47% from 2013 to 2014. That is, 47% of dollars raised in 2013 were raised again by participating charities in 2014.
The report noted that donor and dollar retention rates had consistently averaged below 50% for the past nine years.
According to the report, most charities found that pursuing strategies for reducing donor and dollar losses was the least expensive way to boost net fundraising gains—especially for nonprofits that are sustaining losses or achieving only modest net gains in gifts and donors.
How to do this? Commenting on the new findings in The Chronicle of Philanthropy, Penelope Burk, president of Cygnus Applied Research, suggested that retention came down to three donor preferences:
- Prompt, meaningful gift acknowledgements
- Opportunities to give to specific programs rather than unrestricted funds
- Hearing from the charity what their gifts had accomplished
Increasing the frequency of solicitations would not be effective, she said, as donors were shunning programs such as direct mail because these appeared costly and might be swallowing up their entire contribution.
The report recommended that charities incrementally increase their fundraising budgets, measure the gains and losses on those investments and increase those investments based on performance results.