Donor Retention Key to Fundraising Success
(Nov. 10, 2008) The second Fundraising Effectiveness Project (FEP) report underscores the findings of the first study—namely that donor retention remains the biggest stumbling block for most charity’s fundraising efforts.
More than 600 new data sets were added to the second FEP report, but the numbers were remarkably the same compared to the first preliminary results: for every $6 that charities raise in new gifts, they lose $5 through donor attrition.
Overall, the 890 respondents to the FEP raised $1.01 billion in one year and $1.09 billion the next, for an overall increase of $76.7 million and a growth rate of 7.6 percent.
Improving Fundraising by Identifying Gains and Losses
However, the FEP drills deeper into the numbers by examining the gains and losses that make up the overall growth rate and determining gain/loss ratios.
“What makes the FEP so useful for charities is that they can compare their fundraising totals in a variety of ways with other organizations and identify key areas where they can work on improving,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “By examining different groups of donors, charities can see where they need to work harder in retaining donors and becoming better stewards.”
In the survey, gains are calculated by looking at the increase in money raised from year to year in certain categories of donors, including:
- Money gained from new donors in current year
- Money gained from recaptured donors (former donors who did not give in previous year)
- Money gained from upgraded donors (donors who increased their gift from previous year)
Losses are determined by calculating the decrease in funds in other donor categories, including:
- Money lost from downgraded donors (donors who gave less in the current year than in previous year)
- Money lost from lapsed new donors (new donors in the previous year who did not give in current year)
- Money lost from lapsed repeat donors (repeat donors in previous year who did not give in current year)
In the study, gains from new donors represented a 25.8 percent growth rate, while money raised from recaptured donors was 13.4 percent and upgraded donors was 24.4 percent, for a total growth rate of 63.6 percent.
Losses from downgraded donors were 22.3 percent, while money lost from lapsed new and lapsed repeat donors represented 15.4 and 18.2 percent decreases. Adding the loss categories together results in a total loss ratio of 55.9 percent.
By adding the total gains ratio and the total loss ratio together, the survey reveals the overall growth of 7.6 percent. This type of detailed information is important for charities wanting to calculate how their fundraising results compare with other organizations.
The FEP report (in the Attachments section below) contains steps on how to use the results to benchmark your own organization’s fundraising and determine areas for improvement.
How to Participate
The annual Fundraising Effectiveness Surveys are ongoing and open to all nonprofit organizations. There is no charge to participate, and participating organizations receive access to the survey performance data. All information supplied by survey respondents is kept strictly anonymous and confidential, and results are reported in aggregate form only.
A critical element in the success of the FEP has been the cooperation and support of numerous donor software firms. At AFP’s invitation, these firms have assisted with the design of the surveys and are ready to help their clients respond to the surveys. All of the firms have developed, or are in the process of developing, “all-electronic” software modules for the FEP surveys that eliminate the need for their clients to key the fundraising performance data manually into AFP’s web-based survey instrument. By working with the donor software community in this way, AFP is able to increase survey response rates, ensure greater accuracy in the data gathered, significantly save participating organizations on data-entry costs, and speed the data analysis process.
The members of the AFP Donor Software Workgroup listed below collectively serve more than 50,000 nonprofit clients. If your donor software provider is not on this list, please ask them to participate. AFP and the other sponsors of the FEP encourage all firms to help their clients respond to the survey. If your software provider is not participating, you will find an AFP survey form with instructions here.
- Blackbaud (The Raiser’s Edge™)
- Compass Technologies
- Donor2/Campus Management Corporation
- DonorPerfect Fundraising Software
- FundTrack Software (PhilanthrAppeal®)
- MatchMaker FundRaising Software
- Metafile Information Systems Inc. (Resultsplus!)
- Mission Research (Giftworks)
- PledgeMaker (SofTrek)
- ROI Solutions
- Sage Software
- Telosa Software (Exceed!)