"Proven strategies, tested tactics, and in-depth resources to help you boost donor retention and LTV."
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Donor retention is one of those big, ongoing fundraising challenges that everyone talks about but no one is quite sure how to fix.
If improving donor retention is a priority for your organization, you’re in the right place!
Our Definitive Guide to Donor Retention will provide you with straightforward strategies (that work today) that you can use to begin improving donor retention rates and LTV!
Each section below will provide some actionable steps you can take to retain more donors, plus links to valuable free resources you can download and use today! Let’s dive in!
What is donor retention?
Donor retention is the measure of donors who make more than one donation to your nonprofit organization.
Nonprofits with healthy donor retention rates have loyal donors who choose to support their cause year after year, leading to lower fundraising costs, higher lifetime value, and dependable longterm growth.
Nonprofits with low donor retention rates are perpetually forced to rely on cost-intensive acquisition and major gifts to replace the donors they lose and sustain longterm growth.
What's the difference between donor retention and donor acquisition?
Donor retention is the measure of how many donors who gave last year give again this year, while donor acquisition measures how many new donors you have gained.
Both retention and acquisition are critical to growing an effective fundraising program. And you need to acquire new donors in order to have donors to retain.
But the simple truth is that it costs much less to cultivate and retain the donors you already have than it does to continuously acquire new donors who churn.
How to calculate donor retention
You can calculate your donor retention rate by dividing the number of repeat donors this year by the total number of donors who gave last year. Then multiply that value by 100 for your donor retention rate percentage.
For example: if you have 500 donors who gave last year and 200 donors who gave again this year, your retention rate would be 40% (200 / 500 * 100).
What is a good donor retention rate?
According to the Fundraising Effectiveness Project, overall donor retention rates hover between 40-45%. Our research has shown that nonprofits who embrace a digital-first approach to fundraising see an average overall retention rate of 53% across all channels.
Keep reading for actionable tactics and strategies for using digital fundraising as the key to improving donor retention across all of your fundraising channels.
Why is donor retention important?
Donor retention has tangible benefits for your organization: it is cost effective, it creates stability, and it promotes advocacy.
1. Donor retention is cost effective: Acquiring new donors, while critical to the success of your fundraising, is cost intensive. Production costs. Advertising costs. Cultivation costs.
These are real expenses that add up fast!
The cost of retaining your donors can be up to 5x cheaper than acquisition. The more donors you can retain year-over year, the more cost-effective your acquisition efforts become. Plus…
According to our 2023 client data, revenue per donor of a recurring donor is 77% greater than that of a non-recurring donor.
2. Donor retention creates stability: When donors support your cause on a consistent basis, you can depend on their support as a recurring revenue source.
This makes planning your monthly budget easier as you can more accurately predict how much revenue you’ll bring in through donations.
When you rely solely on acquiring new donors who regularly lapse, it becomes a lot more difficult to forecast revenue for your nonprofit.
Additionally, should your donor acquisition budget shrink in the future, having a reliable donor retention strategy in place will help mitigate the impact.
3. Donor retention promotes advocacy: When donors give to your nonprofit on a recurring basis, it’s safe to assume that they have an affinity for your cause and believe in the impact of your work.
Because of this, they are much more likely to evangelize on behalf of your nonprofit to family, colleagues, and friends.
And in the ultra-competitive landscape of online fundraising, where new organizations seem to crop up daily, competing for market share and donor dollars, your recurring donors can set your organization apart through impassioned advocacy — word of mouth is still the most powerful form of promotion around!
How to Improve Donor Retention: 12 Proven Donor Retention Strategies
Below, you will find 12 impactful strategies for increasing donor retention online.
We’ll start by looking at 3 strategies for targeting often-overlooked (but incredibly valuable) donor cohorts to increase retention.
Then, we’ll take an in-depth look at 9 research-proven, metric-backed donor retention strategies based on intelligent and empathetic donor cultivation.
Improve donor retention by focusing on these 3 donor cohorts
According to data from the Fundraising Effectiveness Project, donor acquisition, dollars, and donor retention rates fell YoY in 2022.
But to understand why donor counts are falling, we first have to understand why they went up so rapidly in the last few years.
We’ve dubbed this the “COVID Bump”.
The “COVID bump” refers to the surge in donations that many nonprofit organizations experienced in response to COVID during April 2020 and December 2021.
The surge was largely driven by a combination of factors, including increased need for services and resources, greater public awareness of these needs, and a desire among many people to do something to help.
During the early days of the pandemic, people also greatly reduced their discretionary spending and spent much more time online.
As a result of this bump, many organizations are now seeing what appears to be a large decrease in revenue but is actually just a regression back to “normal” rates.
But if your objective is not to simply maintain your current level of giving, but instead inspire more people to give more generously (thus growing your program, year over year), here are three key opportunities that you can leverage to inspire greater giving:
1. Recognize the power of acquiring a donor’s email address
One great way to increase donor retention is to acquire an email for a donor who only gives offline.
Reviewing the data of hundreds of nonprofit organizations reveals that having an active email on file for a donor increases annual revenue and retention rates, even if they don’t give online!
Before we break down how this works, let’s first define the 4 cohorts of channel communication.
Offline only – donors who only make gifts offline (e.g. direct mail) and do not have an active email on file
Offline w/ valid email – donors who only make gifts offline (e.g. direct mail) but have an active email on file
Online only – donors who give online and have a home address, but do not give offline
Multichannel – donors who give both online and offline in the same fiscal year
By breaking down the difference in annual revenue and retention rates across each giving cohort, the opportunities to keep more donors and increase revenue begin to reveal themselves. Let’s take a closer look …
Below you’ll see that just by adding an email for an “offline-only” donor, the annual value of that donor increased by 73%.
But that’s not all … the retention rate for that same group also increases by 73%.
The takeaway?
Offline-only donors become much more valuable and lapse less when you acquire their email.
2. Uncover hidden monthly donors
According to Classy’s “State of Modern Philanthropy” report, recurring donors have the highest lifetime financial return — 42% above fundraising events and 440% above one-time donors!
And Network for Good reports that the average recurring donor will give 42% more over a year than those who give one-time gifts.
Lastly, according to Bloomerang, recurring donors are 6x more likely to consider you in their estate planning.
Those numbers should have your raring to start finding your hidden monthly donors. Here’s how…
1. Test Your Donation Forms
Our testing has shown adding either monthly gift buttons or tabs to your donation form can measurably boost monthly donations by increasing the visibility of the option.
Most donation platforms offer a tabbed donation form so be sure to turn this option on!
2. Find your “streak” donors.
Another place to find monthly donors is by uncovering your “streak” donors.
A streak donor is a supporter of a nonprofit who manually gives monthly donations 3 or more times for the same amount.
And while this segment of donors likely isn’t very big, their potential impact is huge!
In fact, streak donors give 69% more than traditional recurring donors.
And the average gift of a streak donor is 89% more than that of a recurring donor.
This makes a strong case for increasing engagement with your streak donors. But consider this…
While streak donors give double the average gift as recurring donors, they are also 3X more likely to lapse.
Which means it’s very important (and beneficial) to ask these donors to give monthly.
3. Focus on 2nd-year donors
Fundraisers are often so excited about new donors that they unintentionally neglect their second-year donors.
But here’s the truth: those second-year donors are not yet loyal to your cause — so stop neglecting them!
Second-year donors are the gateway to higher revenue per donor … but it’s up to you to get them there.
Key multi-year donors (those who give in 3 consecutive years) account for a lot of revenue and appear to have the lowest attrition rates.
But it stands to reason that your donors are unlikely to give in that third year if you neglect them in their second.
Retention isn’t just something that happens — it’s something you can affect! And these three strategies will help you boost retention rates so that your organization keep more donors.
9 ways to use donor cultivation to improve donor retention rates
What is donor cultivation?
Donor cultivation is the process of creating a meaningful relationship with your donors through engagement, education, and demonstration of impact.
The ultimate goal of donor cultivation is to convert your donors into recurring donors and boost lifetime value (LTV).
But to get cultivation right, your main focus should be on building a meaningful and mutually beneficial relationship with your donors.
Below, you’ll find 9 practical cultivation ideas that you can put into play right now. Many of these have already been field tested and proven to improve retention and revenue over time.
1. Send more donor cultivation emails
This idea is straightforward enough. Most organizations simply aren’t sending enough cultivation emails.
And to be clear: this does not mean you should send more appeals. Donors get appeal requests flooding their inbox every day.
What we’re talking about is sending greater amounts of value-driven emails that don’t have a donation ask in them at all, so that when the time does come to ask for a donation, your donor will feel better about raising their hand because they know what an impact you’re making
A cultivation email has no donation ask. Its only purpose is to give your donor something of value that will cause them to engage with your organization on a deeper, more emotional level.
Here’s a quick case study where sending one cultivation email per week led to a 21% increase in revenue.
How Increasing the Number of Donor Cultivation Emails Impacts Revenue
In this experiment, the organization realized they had been asking for donations almost twice as often as they were sending donor cultivation emails. So they wanted to know what would happen if they added one cultivation email each week?
This organization split their file in half and ran an A/B test.
The control group received the normal email cadence. The treatment group received an additional email per week that was purely cultivation.
After running this experiment for 3 full months, the result was clear. Increasing the frequency of donor cultivation emails increased revenue among existing donors by 21%.
It even increased lapsed donor revenue by 14%.
Case and point: Send more cultivation emails.
2. Welcome, thank, and confirm new subscribers within the first two days
We all know that first impressions in any type of relationship can set the foundation for things going forward. If you make a poor first impression, it can be hard to recover.
But on the other hand, making a great first impression can instantly win people over.
I believe that the essence of email marketing is all about personal communication and building real relationships – even at scale. That’s why if I you ever reply to a “marketing” email that I send, I’m going to see it and send you a personal reply back.
So if you want to start off your relationship with a new donor or subscriber on the right foot, you need to communicate with them as soon as they come on your file. Or at least in the first couple days.
These first emails that you send are going to be your most consistently high performing emails. Here’s a quick screen grab of the top metrics from our current welcome series.
These 4 emails average a 49.8% open rate and an 11.3% click rate. (Don’t worry about the clicks in email 1. All we’re hoping for is a reply.)
For comparison’s sake, a recent digest email of ours had a 40% open rate and a 6% click rate.
What does nonprofit communication look like in the first 2 days?
Well … not great.
A recent study we conducted found that out of 199 organizations, 48% of nonprofits sent zero emails in the first two days after we signed up for their email list.
Not even a confirmation email.
You can see the breakdown of the different types of communication we received in the first 45 days in the chart below.
The pro-tip here is simple. Make sure you communicate with new donors and subscribers when they first come on your file.
If you don’t, you’re missing out on a huge engagement opportunity.
Want to learn more about optimizing your communication strategy? Click below to get eight emails you should send in a new donor’s first 45 days!
3. Don't ask donors to do too much at once
One fatal mistake that we as marketers and fundraisers are always tempted to make is to ask people to do too much all at once.
But asking people to do too much can create decision friction that causes them to do nothing at all!
Read more on the different types of friction, here.
The same concept applies in cultivation emails.
In one case study, we found that asking our donors to do just one thing at a time can make a significant impact on donations.
Yes, we said donations – not clicks.
How the Focus of a Donor Cultivation Email Affects Donations
In this experiment, this organization was already sending a weekly cultivation email every Saturday. Their typical donor cultivation email was written in a relatively personal nature and included links to multiple pieces of content to engage with.
Sometimes they sent articles. Sometimes they sent podcasts. But there were always multiple links, I.e. multiple calls to action. But what would happen if they asked readers to do just one thing?
To test this idea, they split their file in two and sent the control group their normal donor cultivation email with multiple links. The treatment group received emails with just one link.
Asking donors to engage with just one article at a time led to a 27% increase in donations over the span of three months.
So when cultivating your donors to do just one thing at a time. It may make a significant impact on revenue.
4. Show you care by being human and personal
Creating relationships is foundational to what we do in fundraising. We have to care for our people and treat them as individuals.
In our new donor welcome study, we found that almost 70% of the cultivation emails didn’t come from a human or individual.
That means they came from the organization or some other non-human approach. But we have found that emails sent from a real person create a lot more engagement.
Even the subject line that we use is so critical to make our emails human and personal.
For instance, we tested a subject line that just says, “I want to help you.” Which sounds like something you’d write to a friend.
And as a result, we saw a 25% increase in opens.
In another A/B test, we simply added, “Hi, Jeff,” to an email. That’s it. The result?
A 270% increase in clicks.
So there’s a tremendous benefit to using personal language. But what about email design? Do your emails look like they are being sent from a human?
Our New Donor Welcome Series Study found that 97% of the emails received were HTML templates, meaning they look like a marketing email. In other words, they look like they were sent from an organization, not a human.
But when we test this “best practice” by stripping down our emails to look more human, we see an 83% increase in clicks and a 29% increase in donations.
The takeaway is simply to make every element of your emails as human as possible to cultivate a meaningful relationship with your donors.
5. Show you care by listening and recognizing
In our recent study on new donor welcome series, we found that only 6% of the cultivation emails that we receive ask donors to take a survey or reply to the email.
But here’s the thing: donors love to give feedback, and you should welcome it. You can even do this right after their gift.
This email is from Heifer International. It says, “Where did you first hear about us?” You can select it. And then on the bottom it says, “Your insight is important and we couldn’t be more happy to have you here. Share your thoughts on what we’re doing well and what you think we could do better.”
They’re soliciting people’s feedback through surveys the moment they give. We’ve also even tested this on our donation forms.
The version on the left is your typical donation format, has the gift array, information, the address or credit card information.
The treatment version added a questions that says, “Where should we focus our efforts?” And it was a dropdown where people could click it to voice their opinion of where they thought this organization should be investing their time and resources.
Asking them for their opinion led to a 34% increase in donations.
6. Show you care by reconnecting to your cause
Emotions are short-lived, they’re short-term. But feelings remain. They can be sustained.
So how can you build on this initial emotional response from our donors and build an army of advocates and fans who love our cause?
One way to accomplish this is by reconnecting to the cause your organization is fighting for.
You hear all the time about showing impact, but we rarely see it done well.
Save The Children saw a remarkable response after the initial couple of weeks and months of the Ukraine war.
And to continue reconnecting their donors to this cause, they continued sending emails about the difference their donors are making.
This one marks six months since the war in Ukraine began and restates the urgency and the impact donors are making.
Another organization did some relief work in Ukraine and they actually sent someone to be on the ground and distribute some of these supplies that they had raised funds for.
Then they sent an email that shares a couple of videos they were able to record of the women and men and children their donors were helping. The email linked to their website where people could watch the videos.
They instantly showed the impact that their donors were having. They built on that initial emotional response that they had gotten from people making a gift and continued it with showing them the impact.
7. Show you care by celebrating your donors
Anniversaries, birthdays, the birth of a new baby, buying a new home … all of these are things that we celebrate.
And when you know someone celebrating some sort of milestone, what do we do?
We probably send them a text or maybe a call or maybe we send something in the mail. So why can’t we do that with our donors?
UNICEF ran a really remarkably simple (but impactful) test where they split their file and sent one half thank you calls and the other half thank you calls PLUS a birthday call.
And what they found was a huge 25% increase in the people who received the birthday call!
Even more than that, many of these donors said that this was the only phone call that they had received on their birthday. Simple. Human. Remarkable. Effective.
8. Show you care by responding to complaints
Customer service in the fundraising space is usually handled by the smallest team in the organization.
They’re probably sent to the basement in some dark hole and the success is measured how?
The fewest number of calls and the shortest call time.
But what if you actually encouraged people’s feedback by letting them know you want to hear complaints or issues that they’re having?
Donor Voice ran a really interesting study around this very thing. They looked at what happens when you actually make the organization’s phone number visible for people to call — even if their complaint was not resolved.
Unsurprisingly, retention increased when they were solving complaints. That’s a no brainer.
But what’s really interesting is that just by opening the lines of communication, they saw a 9% increase in retention when no complaint was present and an 18% increase in retention when they couldn’t resolve the complaint.
Just opening up the opportunity for a donor to voice concerns can have a measurable impact on donor retention!
9. Show you care by surprising and delighting
One organization we work with, WUNC, sent out an article that just said, “Hey, I recently read this article. It really resonated with me. I was troubled by some of the things that I read. I thought you would be interested in it as well.”
The cool thing about that is that it connects the content to the reader and to the organization. And it’s just a really simple touch point to say, “Hey, I was thinking of you. I thought you would find this valuable as well.”
In another example, a local Dallas radio station responded to a rainstorm that caused a ton of flooding.
This organization has nothing to do with the emergency response (they don’t send people out on the ground or provide any support for natural emergencies), but they were concerned about their donors.
They were concerned that maybe they got hit by the flood or they lost their home or maybe lost their car, and so all they did was send an email that said, “Are you okay? I just want to make sure that you and your family are doing all right.”
They saw over a hundred email responses from this email! Things like, “Thank you, Matt, for checking in on us,” or, “We were unaffected by the rainstorm in these past 24 hours, thanks for checking on us. We appreciate your thought and effort.”
Imagine what’s going to happen when we go to ask them for a donation after we’ve shown genuine care for them in these simple ways just by checking in.
Paying it forward: the impact of cultivation on donor retention
Cultivating your donors isn’t just the right thing to do — it also has a measurable impact on donor retention. Here’s some proof of the value in investing in cultivation.
This organization simply added one additional cultivation email into their usual email cadence. That’s it. Just one email.
And as a result, they saw an 80% increase in engagement, an 8% increase in donations, and a 21% increase in revenue. There was no additional ask, they just cultivated them with one additional email every week.
Another organization tested a welcome series that was very focused on their organization and tested it against a welcome series that was focused on delivering value to their subscribers.
“Hey, we’ve got this content that I know you’re going to find valuable.” The result?
A 920% increase in donations from this automation series.
Another organization we work with had traditionally weekly newsletters, event and concert announcements, contests, and solicitations.
But there wasn’t a whole lot of thought put into the mix of emails. And only 19% of their current emails were cultivation-based. So we suggested revamping the series to be more human, more personal, more value focused.
We sent weekly cultivation emails that were one-to-one communication, rather than promotional. We encouraged a reply back. We increased value and added stewardship.
This approach led 52% of their emails being cultivation emails.
And as a result, they saw a 71% increase in open rate, a 7% increase in click, and ultimately a 110% increase in online donations.
Ready to put it all into action? Start here!
Maybe you’ve heard the expression, “The best time to plant a tree is 20 years ago. The second best time is today.”
And so the most important part of improving donor retention is getting started. Keep it simple by doing this:
- Start by building these two automation series: new subscriber series and new donor series. But don’t stop there. Also commit to sending more cultivation outside of these automations. Continue sending your newsletter but also add in at least one cultivation email every single month.
- Pick up the phone. Even if you use an automated service to leave voicemails. Do this 4X per year. No donation ask.
- Send a simple direct mail postcard. You can do it twice a year, maybe in November before your year-end fundraising campaign and again in the spring. Try to time these a few weeks before you begin a fundraising campaign. Again, no donation ask.
New Subscriber Welcome Series:
New Donor Welcome Series:
Ongoing Multi-channel Communication
FAQs
Nonprofits can measure the impact of retention strategies by tracking key metrics such as donor churn rate, lifetime value, and engagement scores before and after implementing changes. Advanced analytics and A/B testing can provide insights into what works best.
Common challenges include limited resources, difficulty personalizing communication at scale, and tracking the right metrics. Overcoming these challenges often requires investing in CRM systems, training staff in data analysis, and focusing on strategies that offer the highest return on investment.
The impact of communication frequency on donor retention is crucial; it’s about finding the right balance. Too much communication can overwhelm or annoy donors, leading to disengagement. Conversely, too little communication can make donors feel neglected and undervalued.
Nonprofits should aim for strategic communication that feels personal and relevant to the donor. This means segmenting your donor base and tailoring the frequency and type of communication to match their preferences and history with your organization.
We suggest regular updates that show impact, appreciation messages, and timely appeals, all based on the donor’s engagement level and feedback.
Wrapping Up
Enhancing donor retention is pivotal for nonprofits aiming for sustained growth.
This comprehensive guide highlighted methods to retain more donors by focusing on strategic donor cohorts and leveraging empathetic, value-driven communication.
Donor retention strategies include acquiring email addresses for better engagement, identifying potential monthly donors, paying special attention to second-year donors, and employing a range of donor cultivation tactics such as personalized communication and demonstrating impact.
Implementing these methods can significantly increase donor retention rates, fostering a stable and growing supporter base for your nonprofit.
By taking the practical steps outlined in this definitive guide on donor retention, you can significantly increase donor retention, boost lifetime value, and create the kind of meaningful relationship that transforms your donors into your most fervent supporters and advocates.
Want to take the guesswork out of retaining your donors? Click below to start your 30-day FREE trail of the NextAfter Membership and take our comprehensive course on building New Donor Welcome Series, completely free of charge.
