Understanding Your Data and Improving Donor Retention
Understanding Your Data and Improving Donor Retention
Did you know that many nonprofits lose nearly as many donors and gifts as they gain each year? There’s a way to stop the churn, and it starts by understanding donor retention, your own donors and how to maximize your growth in giving.
Erik Daubert, MBA, ACFRE and Lori Hunter Overmyer, CFRE will be giving a special all-day workshop on Saturday, April 29, at the AFP International Fundraising Conference on Donor Retention: A Self-Assessment Workshop. AFP sat down with Erik and Lori and talked to them about their workshop, the test that can help all charities with their donor retention and what participants will learn from their presentation.
Q: Why is donor retention so important?
Erik: Donor retention is an incredibly important metric because relationship longevity is one key to developing deep relationships between donors and organizations. That first gift may be small, but if the donor is retained and cultivated correctly, it can lead to bigger and bigger gifts over the years and in turn, successively greater impact. And what many nonprofits miss is that a good donor retention program instills discipline in an organization's fundraising structure that institutionalizes a regular and thoughtfully considered schedule of donor recognition and appreciation.
Q: The Fundraising Fitness Test is a key part of your presentation. What is it, and how does it relate to donor retention?
Lori: The Fundraising Fitness Test (FFT) takes data and information from virtually any donor database system and calculates donor retention in a variety of different ways. By looking at donor retention for ideas and concepts like new donors, donors of various dollar amounts, repeat donors and so much more, the FFT both informs nonprofits how they are doing and enables them to have strategic conversations about how to improve the metrics once they are discovered. By truly understanding what is happening in your development program through the FFT, nonprofit executives and organizations are equipped with the knowledge to improve, enhance and change their strategies accordingly, and to communicate the necessity of such operational changes.
Q: Is the test easy to take? What’s involved in it?
Erik: Because of the great work of our volunteer team, the FFT has become easier to use for your organization. What is involved is the creation of an electronic file that can be downloaded into the test itself. For full instructions, help videos and more, check out www.afpfep.org. In a matter of minutes, you can produce invaluable and objective statistical information that can serve as your to roadmap for fundraising effectiveness. No more guesswork! During the workshop, we’re going to run through the FFT, how you can get it started in your organization, and how to use it to help your own organization.
Q: You’re both involved in the Fundraising Effectiveness Project (FEP). What’s that all about?
Erik: The Fundraising Effectiveness Project and the Fundraising Fitness Test are projects of the Growth in Giving Initiative, which is an initiative designed to help increase resources available to the nonprofit sector. The mission of the Growth in Giving Initiative is to promote and raise public awareness of philanthropy through evidence-based results analysis. The Fundraising Effectiveness Project collects data from thousands of nonprofit organizations to create benchmarks and metrics for the nonprofit community. This enables nonprofits to see how they are doing in various aspects of operating a high performing financial development program.
Lori: I became involved with FEP because, as part of my consulting work with other nonprofits, we often worked with clients who faced enormous pressure to "deliver" at the end of the year, but had little to no understanding about the most effective and efficient way to use their time and resources. The Fundraising Effectiveness Project is the antidote to throwing the proverbial spaghetti on the wall and hoping something sticks.
Q: What’s the number one thing you see organizations doing wrong in terms of donor retention and how they approach it?
Lori: I think many nonprofits underestimate the importance of retaining first time donors. The energy and resources it takes to get a donor to make a first gift is tremendous. But almost 4 out of 5 donors who make a first gift do not return to make a second gift. The retention of these donors over time is where the largest gift gains often occur, but if a donor gives one time and then leaves an organization, that effort and expense is lost. Nonprofits should work very hard to connect with first-time donors to get them to give again. Donors who give a second gift have much higher retention rates and are much more likely to give larger and larger gifts over time.
It's critical to remember that involvement through timely and appropriate communication leads to investment. The #1 reason why donors leave an organization is because they think the organization does not need their money. Communication to donors about the power of their gift is huge.
Q: What do you hope participants gets out of your session?
Erik: Our goal is to share information with participants and demonstrate the power of free tools available that can change the way they understand and view the financial development process. When class members see the power of metrics, and are provided with free tools to measure their own performance and benchmark against their own performance and that of other organizations, they leave better informed, more capable of making positive change, and empowered to create real difference in their fundraising programs.
Lori: We hope attendees will be empowered to regularly analyze their data and drill down to more specific analyses of direct mail campaigns, major gift fundraising, special events, etc. Instead of fearing what the FEP analysis might "uncover," attendees will have the tools to return to their respective organizations with a powerful tool to make dramatic improvements, and benchmark their performance against like nonprofits. Imagine the transformational shift when development staff can educate and engage their executive and volunteer leadership in this exciting process.
If you want to learn more by attending Erik and Lori’s workshop on Saturday, April 29, click here. You can learn more about the Fundraising Effectiveness Project and the FFT by going to the FEP homepage.