2013 dc dma seminar new donor trends & stewardship

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The document discusses declining trends in new donor acquisition and first year donor retention rates across several non-profit sectors from 2001-2010. It notes that acquisition is becoming more expensive while retention rates are falling. This is occurring even before economic downturns and is expected to continue afterwards. The document recommends that non-profits emphasize donor retention over acquisition by viewing donors as valuable assets, focusing on lifetime donor value rather than short-term response rates, identifying best practices, and investing in passionate supporters.

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NEW DONOR TRENDS
Target Analytics Seminar @ 2013 DMA Non-Profit Conference in DC
February 6, 2013

2/12/2013 Customer & Market Insights 1

D ECLIN E IN N EW D ON OR ACQ UISITION
2001-2010
% Change % Change
Sector Total # New Donors New Donors/Year New Donors/Year
(# of organizations) 2001-2010 2001-2007 2007-2010
Advocacy (16) 6.6 million -9.5% 14.4%
Hospitals (23) 1.2 million 17.2% -0.4%
Cultural (16) 2.2 million 5% -2%
Environmental (37) 16.4 million -23.1% -11.0%
Health Research (30) 117 million 12.5% -14.8%
Human Services (36) 6.7 million 4.7% 2.5%
Colleges (34) * 350,000 -18.9%
* The % Change for colleges is for the period 2006-2011

SOURCE: TARGET ANALYTICS

2/12/2013 Customer & Market Insights 2

D ECLIN E IN FIRST YEAR RETEN TION
2001-2010
Sector Retention Rate Retention Rate % Change % Change
(# of organizations) 2001 2010 2001-2007 2007-2010
Advocacy (16) 34.0% 27.4% -19.5% 0.1%
Hospitals (23) 21.2% 18.1% -2.7% 0.6%
Cultural (16) 33.3% 26.8% -13.7% -6.5%
Environmental (37) 29.7% 24.0% -18.2% -1.4%
Health Research (30) 20.9% 19.3% -11.7% 0.4%
Human Services (36) 30.8% 26.3% -10.9% -4.2%
Colleges (34) * 30.8% 28.1% -8.8%
* The % Change for colleges is for the period 2006-2011

SOURCE: TARGET ANALYTICS

2/12/2013 Customer & Market Insights 3

SUMMARY OF CHALLENGES

• Acquisition is increasingly more expensive
• First year retention rates are declining
• Trends started prior to downturn and will likely continue
after recovery
• Younger donors are less loyal than older donors
• Low ROI on new donor acquisition (and getting lower).
- too costly to acquire new donors to replace lapsing donors

• WHAT CAN WE DO? !!!

2/12/2013 Customer & Market Insights 4

EMPHASIZE DONOR RETENTION OVER ACQUISITION

• View donors as valuable assets!

• When acquiring new donors, factor in whether you will
retain the donor, and at what dollar level

• Fill the holes in your leaky bucket!

• Why did the donor give? Stop giving?

• According to Adrian Sargeant, Ph.D. from Indiana
University’s Center on Philanthropy
“A 10% increase in donor retention can increase the
lifetime value of the donor database by up to 200% .”

2/12/2013 Customer & Market Insights 6

FOCUS ON LIFETIME VALUE, NOT RESPONSE RATES

• Be willing to invest in your donors, e.g. thank you calls.
See Donor-Centered Fundraising – Penelope Burk

• Determine a donor’s potential early in your relationship
and allocate resources accordingly

• Be Donor-Centric, not Campaign-Centric

2/12/2013 Customer & Market Insights 11

FOCUS ON RESULTS, NOT EFFORT

• Set goals and measure your results

• Find peer groups and benchmark your results

• Checklist Manifesto, by Atul Gawande

• Identify best practices

• Find ways to collaborate to maximize results

2/12/2013 Customer & Market Insights 13

INVEST IN YOUR MOST PASSIONATE SUPPORTERS

• Organize yourself to recognize a donor’s passion for your
mission

• See yourself through the eyes of your donors

• Be willing to invest in your donors

• Test investments and track results carefully

2/12/2013 Customer & Market Insights 14

KEY TAKE-AWAYS

1. Emphasize donor retention over donor acquisition

2. Focus on a donor’s lifetime value, not a campaign’s
response rate

3. Focus on results, not effort

4. Identify & invest in your most passionate supporters

2/12/2013 Customer & Market Insights 16

THE BLACKBAUD INDEX
Get up-to-date data on fundraising trends and valuable analysis by leaders in the sector.

Subscribe to free monthly updates by texting "index" to 69866 or via email by
signing up at www.blackbaud.com/blackbaudindex.

2/12/2013 Customer & Market Insights 17

WWW.SOFII.ORG

A unique online resource of everything you could want to
know about fundraising from c.1500 BC to the present day
• Over 300 of the best fundraising ideas ever,
at your fingertips 24/7…for free!
• Contribute your own exhibit.
• Sign up to receive hot news and
updates.
• What three things will you do
differently, starting next week?

2/12/2013 Customer & Market Insights 18

QUESTIONS?

Chuck Longfield, Chief Scientist
chuck.longfield@blackbaud.com

2/12/2013 Customer & Market Insights 19

The document discusses declining trends in new donor acquisition and first year donor retention rates across several nonprofit sectors from 2001-2010. It notes that acquisition has become more expensive while retention rates have fallen. Several key challenges are outlined, including the need to emphasize donor retention over acquisition and focus on lifetime donor value rather than response rates for individual campaigns. The document recommends investing in passionate donors and setting goals to measure results.

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2013 dc dma seminar new donor trends & stewardship

1. NEW DONOR TRENDS Target Analytics Seminar @ 2013 DMA Non-Profit Conference in DC February 6, 2013 2/12/2013 Customer & Market Insights 1

2. D ECLIN E IN N EW D ON OR ACQ UISITION 2001-2010 % Change % Change Sector Total # New Donors New Donors/Year New Donors/Year (# of organizations) 2001-2010 2001-2007 2007-2010 Advocacy (16) 6.6 million -9.5% 14.4% Hospitals (23) 1.2 million 17.2% -0.4% Cultural (16) 2.2 million 5% -2% Environmental (37) 16.4 million -23.1% -11.0% Health Research (30) 117 million 12.5% -14.8% Human Services (36) 6.7 million 4.7% 2.5% Colleges (34) * 350,000 -18.9% * The % Change for colleges is for the period 2006-2011 SOURCE: TARGET ANALYTICS 2/12/2013 Customer & Market Insights 2

3. D ECLIN E IN FIRST YEAR RETEN TION 2001-2010 Sector Retention Rate Retention Rate % Change % Change (# of organizations) 2001 2010 2001-2007 2007-2010 Advocacy (16) 34.0% 27.4% -19.5% 0.1% Hospitals (23) 21.2% 18.1% -2.7% 0.6% Cultural (16) 33.3% 26.8% -13.7% -6.5% Environmental (37) 29.7% 24.0% -18.2% -1.4% Health Research (30) 20.9% 19.3% -11.7% 0.4% Human Services (36) 30.8% 26.3% -10.9% -4.2% Colleges (34) * 30.8% 28.1% -8.8% * The % Change for colleges is for the period 2006-2011 SOURCE: TARGET ANALYTICS 2/12/2013 Customer & Market Insights 3

4. SUMMARY OF CHALLENGES • Acquisition is increasingly more expensive • First year retention rates are declining • Trends started prior to downturn and will likely continue after recovery • Younger donors are less loyal than older donors • Low ROI on new donor acquisition (and getting lower). - too costly to acquire new donors to replace lapsing donors • WHAT CAN WE DO? !!! 2/12/2013 Customer & Market Insights 4

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6. EMPHASIZE DONOR RETENTION OVER ACQUISITION • View donors as valuable assets! • When acquiring new donors, factor in whether you will retain the donor, and at what dollar level • Fill the holes in your leaky bucket! • Why did the donor give? Stop giving? • According to Adrian Sargeant, Ph.D. from Indiana University’s Center on Philanthropy “A 10% increase in donor retention can increase the lifetime value of the donor database by up to 200% .” 2/12/2013 Customer & Market Insights 6

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8. EMPHASIZE DONOR RETENTION OVER ACQUISITION • View donors as valuable assets! • When acquiring new donors, factor in whether you will retain the donor, and at what dollar level • Fill the holes in your leaky bucket! • Why did the donor give? Stop giving? • According to Adrian Sargeant, Ph.D. from Indiana University’s Center on Philanthropy “A 10% increase in donor retention can increase the lifetime value of the donor database by up to 200% .” 2/12/2013 Customer & Market Insights 8

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10. EMPHASIZE DONOR RETENTION OVER ACQUISITION • View donors as valuable assets! • When acquiring new donors, factor in whether you will retain the donor, and at what dollar level • Fill the holes in your leaky bucket! • Why did the donor give? Stop giving? • According to Adrian Sargeant, Ph.D. from Indiana University’s Center on Philanthropy “A 10% increase in donor retention can increase the lifetime value of the donor database by up to 200% .” 2/12/2013 Customer & Market Insights 10

11. FOCUS ON LIFETIME VALUE, NOT RESPONSE RATES • Be willing to invest in your donors, e.g. thank you calls. See Donor-Centered Fundraising – Penelope Burk • Determine a donor’s potential early in your relationship and allocate resources accordingly • Be Donor-Centric, not Campaign-Centric 2/12/2013 Customer & Market Insights 11

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13. FOCUS ON RESULTS, NOT EFFORT • Set goals and measure your results • Find peer groups and benchmark your results • Checklist Manifesto, by Atul Gawande • Identify best practices • Find ways to collaborate to maximize results 2/12/2013 Customer & Market Insights 13

14. INVEST IN YOUR MOST PASSIONATE SUPPORTERS • Organize yourself to recognize a donor’s passion for your mission • See yourself through the eyes of your donors • Be willing to invest in your donors • Test investments and track results carefully 2/12/2013 Customer & Market Insights 14

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16. KEY TAKE-AWAYS 1. Emphasize donor retention over donor acquisition 2. Focus on a donor’s lifetime value, not a campaign’s response rate 3. Focus on results, not effort 4. Identify & invest in your most passionate supporters 2/12/2013 Customer & Market Insights 16

17. THE BLACKBAUD INDEX Get up-to-date data on fundraising trends and valuable analysis by leaders in the sector. Subscribe to free monthly updates by texting "index" to 69866 or via email by signing up at www.blackbaud.com/blackbaudindex. 2/12/2013 Customer & Market Insights 17

18. WWW.SOFII.ORG A unique online resource of everything you could want to know about fundraising from c.1500 BC to the present day • Over 300 of the best fundraising ideas ever, at your fingertips 24/7…for free! • Contribute your own exhibit. • Sign up to receive hot news and updates. • What three things will you do differently, starting next week? 2/12/2013 Customer & Market Insights 18

19. QUESTIONS? Chuck Longfield, Chief Scientist chuck.longfield@blackbaud.com 2/12/2013 Customer & Market Insights 19

Editor's Notes

Use of premiums2/3 yr ROI not list response rates and cpdrInclude planned giving in long term return
Adrian Sargeant, When people stay around, they do things like upgrade their gifts, [give more often], contribute to galas and even volunteer. All those things you can put a dollar value on.”
Most donors aren’t trying to hide their interest in your organization.They are waving their arms to be noticed. Tell story of someone calling to change their address

2013 dc dma seminar new donor trends & stewardship

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Editor's Notes