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Fundraising Basics_A Complete Guide_Building Relationships
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Complete Guide_Building Relationships for Your Organization
Through Annual Giving3Fundraising Basics_A Complete
Guide_Building Relationships for Your Organization Through
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Relationships for Your Organization Through Annual
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Relationships for Your Organization Through Annual Giving9

Relationship Fundraising
How to Keep Donors Loyal
Adrian Sargeant
This article explores how relationship marketing and its variant
relationship fundraising may be used to assist nonprofits in
reducing the lapse rate of donors to their organization. Employ-
ing a postal survey of ten thousand donors to causes in a variety
of categories, the author concludes that although approximately
one in five donors might lapse because of a change in financial
circumstances, a similar number simply elect to switch their
support to other organizations. The role of the quality of service
offered to the donor in enhancing retention is also highlighted,
as are donor perceptions of the feedback they receive and the
impact they believe their gift might have on the cause.
C
HARITIES in the United Kingdom have found it increasingly
difficult to raise funds over the past ten years. The proportion
of UK households electing to support charity is now at a
twenty-year low (Pharoah and Tanner, 1998) and though
average
gifts appear to have risen to compensate, it seems clear that the
vol-
untary sector has become increasingly reliant on a hard core of
char-
ity donors (National Council for Voluntary Organizations,
1999a).
Despite the apparent contraction in the donor pool, the number
of
registered charities in the United Kingdom continues to grow at
approximately seven thousand annually (National Council for

Vol-
untary Organizations, 1999b). Indeed, this growth has caused
par-
ticular problems since many of the newer causes are inherently
more
attractive to donors than those that have been in existence for a
long
period of time. A number of hospitals and schools, for example,
have
now registered as charities for the first time; it has historically
always
been easier to raise funds for education, or a sick child, than to
secure
funding to resolve homelessness or third-world famine
(Sargeant and
Kaehler, 1998).
The contracting donor pool has made donor-acquisition activity
particularly problematic in recent times. Charities have thus
NONPROFIT MANAGEMENT & LEADERSHIP, vol. 12, no. 2,
Winter 2001 © John Wiley & Sons, Inc. 177
Note: The author gratefully acknowledges the financial support
of the Aspen
Institute in making this study possible.
switched their attention to how best to retain their donors. It has
been argued that the tools and techniques of relationship
marketing
might have much to offer the sector in achieving this goal (see,
for
example, Burnett, 1998), but to date there have been few
attempts

to empirically validate this assertion. Indeed, the retention and
rela-
tionship marketing literature is predominantly for-profit in
origin. It
is therefore my intention to begin this article with a brief
review of
the extant literature, identifying those factors that in the for-
profit
context have been found to have the greatest impact on
retention.
We shall then consider how applicable these factors might be in
the
nonprofit context and explore, through a primary study, those
spe-
cific factors that might have the greatest impact on donor
retention.
In the light of this analysis, the article then concludes with a
series
of recommendations with respect to how charities might better
employ relationship marketing to build long-term relationships
with
their donors.
Relationship Marketing
The initial conceptual development in this field is credited to
MacNeil
(1978, 1980), who discussed the long-term impact of legal
contracts
on exchange relationships. However, Berry (1983) was the first
to
coin the phrase relationship marketing; he defined it as
“attracting,
maintaining and—in multiservice organizations—enhancing
cus-
tomer relationships.” He was particularly keen to downplay the
role

of customer acquisition, seeing it only as an intermediate step
from
which the organization could subsequently build. Although
Berry was
the first to espouse the term, the concepts that were later to
form the
backbone of relationship marketing can be traced much earlier
(for
example, calls for customer loyalty; Ryans and Wittnk, 1977),
the
need to market intangible products and constant reselling
(George,
1977; Grönroos, 1981; Levitt, 1981), and the need to improve
the
performance of service personnel as a key to retaining
customers
(George, 1977; Grönroos, 1981; Berry, 1980). Indeed, even
Berry
(1995) himself considers that relationship marketing is an “old-
new”
concept. The idea of a business earning the customer’s favors
and loy-
alty by satisfying needs and wants was “not unknown to the
earliest
merchants” (Berry, 1995, p. 237).
Relationship marketing is characterized by emphasis on cus-
tomer retention and development. As Congram notes, “keeping a
client is more desirable than attracting new business” (1987, p.
177).
This is largely because successive studies have determined that
it
costs up to five times as much to recruit a new customer as to
do
business with an existing one (Harley, 1984; Petersen, 1997). It
is

interesting to note that a similar pattern appears to be evident in
the
nonprofit context, with returns from donor recruitment activity
(excluding major gifts) varying between seventy and ninety
pence
per pound of investment depending on the nature of the
recruitment
1 7 8 S A R G E A N T
In the United
Kingdom the
voluntary sector
has become
increasingly
reliant on a hard
core of charity
donors
medium employed. Returns from donor development activity, by
contrast, appear much higher; ongoing development mailings,
for
example, exceed five pounds for every pound of investment
(Sargeant
and Kaehler, 1998). Customer retention thus appears to be as
much
an issue for nonprofits as it is for business.
Indeed, Raphel (1991) criticizes organizations for the mission-
ary zeal they apply to attracting an ever-larger number of new
customers, at the expense of looking after those they already

have
(see also Ryans and Wittnk, 1977). Reichheld and Sasser (1990)
give
empirical evidence for the consequences of this omission. On
the basis of an analysis of more than one hundred companies in
two
dozen industries, the researchers found that firms could improve
profits 25–85 percent by reducing customer defection by just 5
per-
cent. A business that loses customers is therefore spending more
than
necessary and wasting a most valuable asset (Liswood, 1989).
In the for-profit context, a number of studies have addressed the
primary reasons customers stop doing business with a particular
organization. De Souza (1992), for example, identified six
causes of
defection:
1. Price—customers defect because they identify a lower price
else-
where
2. Product—customers defect because they prefer the features or
design of a product offered by another supplier
3. Service—the overall quality of service offered may be better
in
the case of an alternative supplier
4. Market—some customers may be lost to the market; they may
die, move away, or cease to have a need for the product
category
in question
5. Technology—some customers may be tempted away by

alterna-
tive channels of distribution that make it easier for them to do
business, electing, for example, to buy directly from an Internet
supplier
6. Organization—equally, some customers are lost to the
organiza-
tion, as when an alternative supplier is successful in achieving a
greater “share of spend” than the original supplier; it may be
appropriate, for example, for a customer to rationalize the num-
ber of suppliers with whom it does business, even if satisfied
with the quality of service given
Translating these factors to the voluntary sector context
suggests
that donors might stop supporting an organization because they
can
no longer afford it; or they elect to give to another organization;
or
they believe that they will receive a higher standard of service
else-
where; or they die, move away, or develop a change in attitude
toward a voluntary organization and thus terminate their giving.
De Souza’s results also suggest that donors may be lured into
sup-
porting other organizations because of the ease of giving
offered by
R E L AT I O N S H I P F U N D R A I S I N G 179
an alternative, or feel that they wish to rationalize the number
of
organizations they elect to support and thus offer a greater level
of support to a smaller number of nonprofits.

It should be noted, however, that underlying these six distinct
categories, from a service-quality perspective, there are only
two types
of defection. The first of these is natural (since customer
demand for
a specific product category often has only a finite lifetime) and
the
second unnatural (caused by the manner in which the
organization
treats the customer concerned). Indeed, the relationship between
ser-
vice quality and customer retention has been explored at length
in
the for-profit literature. It has now been well established that
achiev-
ing a baseline of appropriate service quality is essential if the
longevity of a customer relationship is to be ensured. Measuring
sat-
isfaction with delivered service quality—for example, on a five-
point
Likert scale from very dissatisfied to very satisfied ( Jones and
Sasser,
1995)—found substantial differences in loyalty among groups.
Jones
and Sasser’s now-classic article established that across a range
of
industries, customers who viewed themselves as very satisfied
were
six times more likely to repurchase than customers who viewed
themselves as merely satisfied. In a bid to enhance customer
loyalty,
others have cited the importance of service quality (Bitner,
1990;
Boulding, Kalra, Staelin, and Zeithaml, 1993), relationship
quality

(Crosby, Evans, and Cowles, 1990), overall service satisfaction
(Cronin and Taylor, 1992; Crosby and Stephens, 1987) and
handling
of service encounter failures (Kelley, Hoffman, and Davis,
1993).
Relationship Fundraising
So, what about the voluntary-sector context? Burnett (1992) was
the
first to recognize the need for what he termed relationship
fundrais-
ing and to champion a move toward dealing with donors
individu-
ally, recognizing each donor as unique in terms of giving
history,
motivation for giving, and the overall standard of care expected
from
the charities being supported. The entire relationship with a
donor,
he argued, should be viewed holistically and fundraising
decisions
taken in light of the perceived value of the overall relationship.
Relationship fundraising as a variant of relationship marketing
is characterized by donor choice. Recognizing the benefit of a
future
income stream, fundraisers are not afraid to invest in their
donors
and allow them greater flexibility over the content, nature, and
fre-
quency of the communications they receive. As Jackson (1992)
notes,
this makes people feel important and thereby fulfills a basic
human
need. Although the initial costs of implementing such a strategy
are

undoubtedly higher, the benefits in terms of an enhanced pattern
of
donor loyalty—and therefore the future revenue stream—far
out-
weigh this investment.
Charities such as Botton Village (see, for example, Sargeant,
forth-
coming) have been successfully offering donors choice in
respect to
communication for many years. Donors can choose when
communi-
180 S A R G E A N T
cation is initiated and the form that it might take. As a
consequence,
they have reported a level of loyalty twice that of the sector
average
and a response rate to mailings that far surpasses what may be
achieved by others in the sector. The last Botton Village
Christmas
mailing, for example, generated a response rate of 50 percent
from the
organization’s active supporter file.
Despite the opportunity to engage in relationship fundraising
practices, there is evidence to suggest that the voluntary sector
has
yet to seriously address the issue of customer retention. A study
by
Sargeant and Mackenzie (1998) determined that UK charities
would
typically lose 40–50 percent of their “noncommitted” donors

(that
is, those giving a series of one-time donations, rather than
commit-
ting to a regular payment from their bank) between the first and
second donation. Thereafter, charities would suffer an annual
attri-
tion rate of about 30 percent. At present, we understand little
about why this might be so. Few academic studies have
addressed
this issue, and those that have tend to be set in the context of
mem-
bership, rather than in a fundraising context per se (for
example,
Bhattacharya, Hayagreeva, and Glynn, 1995).
It is the purpose of this study to address this gap and ascertain
why donors might elect to stop supporting a particular
organization.
In light of the findings, a number of suggestions are then
offered with
respect to how a greater degree of loyalty might best be
engendered.
Methodology
The empirical research began with eight focus groups to
determine the
possible reasons for donor attrition. These were constructed to
reflect
a balance of age, gender, and socioeconomic groups. The results
were
subjected to a content analysis that determined that the quality
of ser-
vice a charity offers its donors was a central issue. Other
possible rea-
sons for lapse included a donor’s shortage of funds and the
desire to

support other charitable organizations. All the reasons that the
focus
groups identified were incorporated in a survey instrument.
A postal survey was then developed in collaboration with ten
national UK charities representing a diverse range of causes,
each sup-
plying a stratified random sample of its database. Two
organizations
were selected from each general category of medicine and
health, gen-
eral welfare, international aid, children, and animal protection.
A sample of one thousand donors was randomly generated from
the database of each participating organization. In each case,
the sam-
ple was stratified to obtain a sample of both active and lapsed
supporters. The issue here was to determine in what respect
attitude
toward the organization in question might vary between active
and
lapsed supporters. For the purposes of this research, a lapsed
donor
was defined as one who had not given to the charity concerned
during the preceding eighteen-month period. Variants of the
questionnaire were sent to both lapsed and active supporters,
with
the lapsed questionnaire including additional questions about
the
Relationship
fundraising as a
variant of

relationship
marketing is
characterized by
donor choice
reasons for the lapse and phrasing questions about the nature of
the
donor’s relationship with the charity concerned in the past tense
(for
example, rather than “Charity X’s communications are always
cour-
teous,” “Charity X’s communications were always courteous”).
The resultant overall sample thus comprised five thousand
active
supporters and five thousand lapsed ones. The analysis
presented in
the next section is based on a usable response rate of 23.4
percent; it
should be noted that both categories of individual were reflected
in
the same proportion in the resultant data set. The giving
histories
of respondents were matched up post hoc to their questionnaire
responses, to enable the researcher to explore possible
relationships
between these two categories of variable.
Results
What follows is a detailed analysis of the results obtained.
Reasons for Lapse
As a first step, those donors that were known to have lapsed in

their
support of one organization participating in the study were
asked why
this was the case. Respondents were asked to check off each
reason for
quitting that applied. Table 1 reports the results obtained. It
should be
noted that 14.8 percent of the sample either indicated that they
could
not remember the reason for their lapse or left the question
blank.
The relatively low percentage of the sample indicating each
reason for lapse is significant since it suggests that the reasons
for
182 S A R G E A N T
Table 1. Reasons for Lapse
Percentage
of Lapsed
Reason Sample
Feel that other causes are more deserving 26.5
Can no longer afford to offer my support to
this organization 22.3
No memory of ever supporting 11.4
Still supporting by other means 6.8
Moved home 6.7
Death 5.2
Found X’s communications inappropriate 3.6
Not reminded to give again 3.3
X asked for inappropriate sums 3.1

X did not inform me how my monies had been used 1.7
X no longer needs my support 1.2
X did not acknowledge my support 0.9
Quality of service provided by X was poor 0.9
X did not take account of my wishes 0.7
Staff at X were unhelpful 0.5
Other 4.7
The name of the participating charity was inserted throughout
the questionnaire at “X.”
The reasons for
lapsing are quite
diverse in nature;
donors may even
be continuing to
support other
organizations and
have not become
nondonors per se
lapsing are quite diverse in nature. The results are also
encouraging
since they suggest that comparatively few donors are lost to the
sector
as a whole. Only 22 percent of respondents indicated that they
could
no longer afford to offer their support. Indeed, since the
question
asked donors why they had elected to terminate their support to
a
specific organization, it is quite possible that they were
continuing to

support other organizations and had not become nondonors per
se.
The results also indicate that many lapsed donors appear simply
to switch cause and elect to support other organizations that
they
perceive to be deserving (or potentially more so). It is also
interest-
ing to note that more than one in ten lapsed supporters appear to
have no memory of ever having supported the organization in
ques-
tion. Given that the last gift may have been made just eighteen
months earlier, it seems clear that the organizations concerned
failed
to communicate effectively with many of their donors.
Other reasons for lapse, similar to those encountered in the for-
profit sector, included death, moving house, or encountering
unsat-
isfactory service quality. This is consistent with the findings of
other
studies reported earlier in the literature review.
It should be noted that the pattern of response was remarkably
similar among the ten organizations that participated in this
study.
Only one significant difference was reported. Donors to the two
health-related charities in the sample were significantly more
likely
to cite a feeling that other causes were more deserving as a
reason for
lapsing their support. From the additional comments supplied by
respondents, it seems likely that donors in this category see
them-
selves as giving to the cause (say, cancer) rather than to an
organiza-

tion. They may thus remain loyal to the cause but simply switch
their
support to a related organization.
Distinguishing Lapsed from Active Supporters
Analysis of donor demographics and lifestyle highlighted few
dif-
ferences between active and lapsed supporters. Age, gender,
occu-
pation, and income all appear unrelated to a propensity to lapse.
It
was interesting to note, however, that the strength of one’s
religious
conviction appears significantly related to lapsing behavior.
Respon-
dents were asked to indicate how important religion was in their
life on a five-point Likert scale. A chi square test confirmed
that
those with a strong religious conviction were likely to exhibit
an
absence of discrimination in their giving behavior. Additional
com-
ments supplied on the returned questionnaires suggested that
this
was because these individuals felt the need to spread their
support
around a wider pool of charities than those with a lower degree
of
religious conviction.
A number of other differences between active and lapsed
supporters were highlighted in the analysis, notably in terms of
their
perception of the beneficiary organization. Let us consider them
in
detail.

Perceptions of Service Quality
To investigate the impact of perceived service quality,
respondents
were also asked to assess the quality of their relationship with
the
organization in question, and in particular to assess the quality
of ser-
vice offered. An adapted version of the measurement instrument
SERVQUAL (Parasuraman, Zeithaml, and Berry, 1988) was
employed
for this purpose, and a five-point Likert scale was used (1 �
strongly
disagree, 5 � strongly agree). Lapsed supporters were asked a
similar
set of questions, but the phrasing was altered to present the
state-
ments in the past tense. The aggregate results across the sample
as a
whole are reported in Table 2.
Feelings of confidence that the funds are being used
appropriately
and feeling that the gift was having the required impact were
both
rated highly by respondents. It is also interesting to note that
each
SERVQUAL statement is rated above 3.0. This suggests that
charities
are generally rendering an adequate level of service to their
donors.

Overall Satisfaction
To investigate this issue further, overall satisfaction with
service was
also computed. This was taken as the mean of all responses for
each
respondent. Clearly, this could vary from 1 to 5 in the same way
as
the original statements. The results are reported in Table 3.
184 S A R G E A N T
Table 2. Perceptions of Service Quality
Mean
Statement Score
I feel confident that X is using my monies appropriately. 4.08
X’s communications are always courteous. 3.94
X’s employees have the best interests of society at heart. 3.92
X is the charity most likely to have an impact on this cause.
3.87
When X promises to provide a service to society, it does so.
3.84
I feel safe in my transactions with X. 3.75
Their communications are visually appealing. 3.72
X keeps me informed about how my monies are being used. 3.66
Employees in X are always courteous. 3.61
X’s communications are always timely. 3.60
The behavior of X’s employees instills confidence. 3.52
Employees in X have the knowledge to answer my questions.
3.49
X’s employees have the best interests of their supporters at
heart. 3.47
X makes me feel that it is always willing to help me if I have a
query. 3.43
Employees at X are never too busy to speak to me. 3.36

X always responds promptly to requests I might have for
information. 3.34
X gives me individual attention. 3.30
X has employees that give me individual attention. 3.30
X writes to me at the times of the year I find most convenient.
3.18
Employees of X seem to understand my specific needs. 3.14
When I have a problem, X shows an interest in solving it. 3.11
The name of the participating charity was inserted throughout
the questionnaire at “X.”
The results are somewhat disappointing. Almost all donors
express a feeling of neutrality or satisfaction, but very few
appear to
be “very satisfied” with the quality of service rendered. This is
par-
ticularly relevant since further examination of the data set
indicated
that those who were very satisfied were 1.8 times more likely to
make
a further donation (that is, remain active) than those who were
merely satisfied. These results parallel the work of Jones and
Sasser
(1995), although it should be noted that the multiple is much
lower.
It seems, however, that improving the overall level of
satisfaction
could improve the level of donor loyalty. An ANOVA test
comparing
the opinions of active and lapsed supporters also confirmed that
per-
ception of overall service quality was significantly lower in the
case

of lapsed donors (f � 12.049, significance level 0.000).
Expectations Versus Performance
Aspects of the charity service offered to donors were also
investigated
by examining a range of specific issues that the focus groups
had
determined were central to the nature of the donor-charity
relation-
ship and donor perceptions thereof. Nine aspects of this
relationship
were examined in total; respondents to the survey were asked to
indi-
cate their expectations with respect to each dimension and also
their
perception of how well the charity in question had delivered to
this
target. Table 4 presents the findings of the analysis.
The final column of the table indicates whether or not the mean
performance score has exceeded the mean expectation score. It
seems
Table 3. Overall Satisfaction
Level of Satisfaction Percentage of Sample
Very dissatisfied 0.00
Dissatisfied 1.40
Neutral 54.0
Satisfied 36.8
Very satisfied 7.8
Table 4. Expectation and Performance Dimensions

Mean Mean
Dimension Expectation Performance
Asking for appropriate levels of support 3.17 3.48 (�)
Leaving it to me how much to donate 4.23 3.68 (�)
Thanking me for my support 2.66 3.68 (�)
Responding quickly when I contact them 3.39 3.48 (�)
Demonstrating they care about their supporters 3.06 3.51 (�)
Being polite in all their communications 3.89 4.00 (�)
Informing me about how money is spent 3.80 3.84 (�)
Not asking me for support too often 3.79 3.59 (�)
Making me feel important 1.87 3.27 (�)
clear that charities perform well at asking for appropriate sums,
demonstrating they care about supporters and thanking donors
appropriately for their support. The only areas where they
appear to
fall short of donor expectations are leaving it to the donor how
much
to donate, and not asking for support too often.
These aspects of the charity relationship might need to be
improved if overall donor satisfaction is to be enhanced. It is
inter-
esting to note that lapsed donors rated charity performance on
the
variable “informing me how my money is spent” as significantly
lower than did active supporters, suggesting a further means by
which retention can be enhanced.
Service Quality and Donor Longevity
As a final step, the twenty-one attitudinal statements were
subjected

to a factor analysis to determine the underlying dimensions of
non-
profit service quality. The results are reported in Table 5. The
last row
of the table indicates that 61.28 percent of the variance in the
full
set of attitudinal variables can be attributed to the three factors.
What follows is a brief description of the factors identified in
the
analysis.
Factor One: Responsiveness. Individuals scoring highly on
respon-
siveness (since many of these statements relate to the nature of
the
organization’s response to donor behaviors) tend to agree that
they
received personal attention from the organization in question.
They also believe that the organization responded to their
specific
needs, that staff had the ability to answer questions, and that
staff
were willing to respond quickly should a query arise.
Factor Two: Feedback. Individuals scoring highly on the
feedback
factor appear to be satisfied with the feedback they receive from
the
organization in question. They believe it to be timely,
courteous,
appealing, and convenient. They also tend to believe that they
receive
adequate feedback in terms of the use to which their funds have
been
put and they feel confident that their monies have been used

appro-
priately.
Factor Three: Effectiveness. Individuals scoring highly on
effec-
tiveness clearly feel that the organization cares about the full
range
of its stakeholders. They feel that the organization honors its
promises and in particular delivers the desired impact to the
benefi-
ciary group. They also feel that the organization will do this in
a way
that recognizes the needs of both supporters and society in
general.
Given that attendance to the needs of a variety of stakeholders
is typ-
ically a goal for most nonprofits, it was felt on balance that this
factor
should be labeled effectiveness.
The attitudinal factors were employed to explore the
relationship
between delivered service quality and the longevity of a donor
rela-
tionship. Matching questionnaire responses post hoc with
details of
an individual’s giving history made it possible to identify how
long (in
years) an individual had remained loyal to a particular
organization.
186 S A R G E A N T
A regression analysis was then conducted with the variable

“years
of support” as the dependent variable. The results are reported
in
Table 6.
The overall fit of this regression model is quite satisfactory.
The regression explains 28 percent of the variation in years,
and the adjusted coefficient of determination is 23 percent. In
addi-
tion the f test rejects the hypothesis that none of the regressor
has an
effect on years with an empirical significance level of 0.000
percent.
It seems clear from the analysis that those donors remaining
loyal to
a charity for a long period of time have significantly more
positive
perceptions of the feedback they receive than those who do not.
Loyal supporters also tend to exhibit more favorable beliefs
with
respect to the use to which their funds are being put.
Table 5. Service Quality Factors
Statement F1 F2 F3
X is the charity most likely to have an impact
on this cause. 0.60
When X promises to provide a service to society,
it does so. 0.61
I feel confident that X is using my monies
appropriately. 0.61

X keeps me informed about how my monies
are being used. 0.69
The behavior of X’s employees instills confidence. 0.59
X always responds promptly to requests I might
have for information. 0.65
X makes me feel that it is always willing to help
me if I have a query. 0.74
Employees at X are never too busy to speak to me. 0.82
I feel safe in my transactions with X. 0.60
X’s communications are always courteous. 0.67
X’s communications are always timely. 0.65
Employees in X are always courteous. 0.72
Employees in X have the knowledge to answer
your questions. 0.77
X gives me individual attention. 0.85
X has employees that give me individual
attention. 0.85
Employees of X seem to understand my
specific needs. 0.81
X’s employees have the best interests of their
supporters at heart. 0.65
X’s employees have the best interests of
society at heart. 0.65
Their communications are visually appealing. 0.72
X writes to me at the times of year I find most
convenient. 0.74

When I have a problem, X shows an interest
in solving it. 0.70
Eigenvalue 6.59 3.88 2.40
Variance explained 31.36 18.48 11.44
In interpreting these results, it is important to note two impor-
tant caveats. First, although the results suggest a relationship
between
two of the attitudinal factors and donor longevity, causality has
not
been established. Donors exhibiting a high level of loyalty may
develop favorable perceptions as a consequence of their
relationship,
or their favorable perceptions may predispose them to
continuing
their association for a long period. Further research would be
neces-
sary to establish which is the case.
It is also important to note that in some cases the value of the
dependent variable may have been significantly understated,
thus
biasing the model. Since the sample comprised lapsed and
active
givers, it is possible that many of the active portion of the
sample
may still have many years of loyalty yet to exhibit.
Conclusions
Despite these caveats, the results suggest a number of ways in
which
nonprofits may seek to retain their donors. There may be little a
non-

profit can do to facilitate retention of those donors who
experience
a change in their financial circumstances; however, much can be
done to deal with many of the other common causes of lapse.
Only
22 percent of donors appear to lapse because they can no longer
afford to offer their support to the organization in question.
Given
that some of these may still be supporting other nonprofits, this
result is encouraging, since it suggests that though a number of
donors will be lost to a particular nonprofit they may not be lost
to
the sector as a whole.
Indeed, more than 26 percent of lapsed donors typically lapse
because they perceive that other causes are more (or perhaps
equally)
deserving. If charities are to succeed in retaining this category
of
donor, the literature suggests that they need to find ways of
improv-
ing satisfaction and deepening the bonds that exist between
them and
their supporters. Given that this study has highlighted the
impor-
tance of feedback and perceived effectiveness, it seems that one
way
in which nonprofits might achieve this goal is to ensure that
they give
ongoing and specific feedback to donors as to how their funds
have
been put to use, in particular the benefit that has resulted for the
ben-
eficiary group. If this feeling of impact on the cause is
strengthened,
it seems less likely that donors will view other causes as being

more
deserving than those they already support.
188 S A R G E A N T
There may be
little a nonprofit
can do to
facilitate
retention of
donors who
experience a
change in
financial
circumstances;
however, much
can be done to
deal with other
common causes
of lapse
Table 6. Regression Analysis: Years of Support
Variable Coefficient Significance
Effectiveness 0.527 0.020
Feedback 0.927 0.001
Responsiveness 0.210 0.564
Constant 1.229 0.000
R2 � 0.278; R

–2 � 0.231; F � 3.015; � � 0.000.
The feeling of identity or association with a given cause seems
to be a major reason for concern. It is particularly disturbing to
note
that so weak is the association between the nonprofit and donor
in
some cases that one in ten lapsed supporters have no memory of
ever
having supported the organization concerned. This clearly needs
to
be addressed.
Service quality was also identified as a key issue and seems to
be
as much a prerequisite to nonprofit customer retention as the
litera-
ture suggests it is in the for-profit sector. Lapsed donors have a
sig-
nificantly poorer view of the quality of service they receive
than active
supporters do; in particular they tend not to regard the
organization
as giving them adequate feedback on how their donation has
been
used. This is a finding supported by the results of the regression
analy-
sis, which suggested a link between the extent to which a donor
might
be satisfied with the feedback received and the overall longevity
of the
relationship with the organization. Donors viewing the
communica-
tions they receive as informative, courteous, timely, appealing,

and
convenient appear to remain loyal for a greater period of time.
The issue then becomes how best to achieve this perception.
The
results of this study suggest that to engender loyalty, charities
need
to improve both the quality of their communications and the
choice
they offer in that respect. The relationship-fundraising
approach,
described earlier, allows the donor, once recruited, to select the
pat-
tern of communication he or she wishes to receive. A few
charities,
for example, currently offer donors the opportunity to specify
how
frequently they would like to hear from the organization,
whether
they would like news about how their gift has been employed,
whether they would like such news but not additional letters
asking
for money, and so on. The results of this survey suggest that
such
practices are likely to improve perception of the quality of
commu-
nication received and thereby enhance loyalty. It is also worth
not-
ing that by taking the step of asking donors to specify how they
would like to be treated, one is in effect engaging the donor
with the
organization and requiring the person to think through the
desired
nature of the relationship. The donor thereby requests the
commu-
nications he or she will subsequently receive, moving the

organiza-
tion’s approach to marketing away from “intrusion” and toward
“invitation.”
Given recent developments in database technology, there is no
reason that even small charities cannot manage the requirements
of
their individual donors and ensure that each receives a pattern
of communication identical to what the individual has specified.
The
results of this study suggest that this enhances the overall level
of sat-
isfaction and ultimately, as a consequence, donor loyalty.
A further aspect of this study concerned donor expectations
with
respect to both the frequency of communication and the sum of
money demanded. There was evidence that donor expectations
regarding these issues were currently not being met. It thus
seems
clear that charities could also offer donors some choice over
whether
The results of this
study suggest
that to engender
loyalty, charities
need to improve
both the quality
of their
communications
and the choice

they offer in that
respect
or not they wish to be asked for a specific sum. Some donors
may wel-
come guidance about the appropriateness of certain gift levels.
Others
may prefer to take such decisions themselves and not be
prompted by
the charity. Again, there is no reason charities should not
capture this
information and use it to inform the communication strategy
employed. Moreover, consideration of relational issues such as
donor
lifetime value would ensure that where specific sums are
requested,
they are appropriate given the financial ability of the donor.
Asking donors to specify what relationship (if any) they prefer
to have with an organization therefore appears to offer
considerable
utility. Indeed, if donors can be given an additional opportunity
to
interact with their chosen charity, it seems ultimately rather
unlikely
that they will lapse simply because they have no memory of
ever hav-
ing supported the organization concerned.
The consequences of failing to embrace these relationship-
marketing techniques for the sector appear all too evident.
Donors
are likely to complain increasingly that they are overmailed and

inun-
dated with requests for inappropriate sums of money. At a time
when
the sector should be striving to widen the appeal of charities
away
from a comparatively small section of society, charities should
be
actively demonstrating that they care for their supporters and
that
giving to charity can be a pleasant and rewarding experience.
Other-
wise it seems clear that the British public will continue to react
to
burgeoning donor communications in a way that must be
avoided at
all costs—with consummate indifference.
ADRIAN SARGEANT is professor of marketing and chair of
the Centre for
Voluntary Sector Management at Henley Management College
in the
United Kingdom; he is also author of Marketing Management
for Non-
profit Organizations and editor of the International Journal of
Nonprofit and Voluntary Sector Marketing.
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192 S A R G E A N T

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