Is the Magic Number for Donor Loyalty $250? New FEP Research Sheds Light on Donor Retention
New data from the Fundraising Effectiveness Project (FEP) reveals startling insights and fresh strategies for charities in how they can retain donors.
The 2015 FEP Donor Retention Supplement, written by Ben Miller and Heather McGinness, is based on detailed giving data from the more than 8,000 groups in the FEP database. These organizations contained additional points, such as giving level, NTEE code and age, to help the FEP dig deeper into the data and provide new perspective.
While the original 2015 FEP report found overall donor retention at 46 percent, the supplement breaks down this data further. For repeat donors—those who had given at least two years in a row—the retention rate was 64.8 percent. But for those who were new donors—having given just once in the previous year—the retention rate was only 25.4 percent.
As one might expect, the giving level breakdowns show that retention rates increase as donors give more, with a direct relationship between gift value and loyalty. Donors giving less than $100 per year had an average retention of 53.5 percent over the last seven years, as compared to those giving $250 and above who demonstrated an average of 76 percent. Donors giving between $100 to $249 were right in the middle with an average of 65 percent.
This $250 threshold not only plays an important role in retention, but drawing upon additional research from the GiG database, we see that this segment of donors (those who give $250 or more) also generates 95 percent of revenue. Two points combine to illustrate a striking point: if 95 percent of the revenue is retaining at about 76 percent, that means 95 percent of next year’s income will be generated by a group of donors that make up just 31 percent of your overall donor file. Bottom line: cultivating and maintaining these “major donors” of $250 or above should be a major emphasis of your organization’s fundraising.
“Donor retention is a massive issue for charities, and we’re still just scratching the surface at some of this data,” said Andrew Watt, FInstF, president and CEO of AFP. “The supplement provides some food for thought in terms of retention, and I encourage fundraisers to take a look through it, especially the part about calculating the value of retention for our organizations. If we’re going to make the case that fundraising needs investments, then we’ve got to be able to show the value of it, particularly when it comes to retaining donors—which is so much less expensive than acquiring new ones.”
The supplement contains a calculation for determining the revenue generated by an increase of one percent of retention. This will give organizations a good rule of thumb for the expense they are willing to allocate toward increasing that retention.
The full supplement can be found here.
The Fundraising Effectiveness Project (FEP) is a joint initiative between the Association of Fundraising Professionals (AFP), the Center on Nonprofits & Philanthropy at the Urban Institute and several nonprofit software providers. It now includes a number of programs under the Growth In Giving (GIG) Initiative, including several tools that charities can use for free to analyze and improve their fundraising.
For more information on the FEP, click here.