This session explores the Fundraising Effectiveness Project report commissioned by AFP and the Urban Institute. The dismal news in this report can and should be an eye opener for every nonprofit engaged in fundraising. We will focus on the root causes of poor retention rates, and offer tips for improvement based on the principles of Dr. Adrian Sargeant and Tom Ahern: two world-renowned authorities on building donor loyalty. Sargeant and Ahern's principles are based upon years of research conducted in the sector and can be used by any organization, whether you are a one-person shop or a large department. We will show examples of their principles in action. The results can be astounding when put into daily use! Learning Outcomes: Be familiar with current research on donor retention and how an increase or decrease can impact your bottom line Understand how to calculate your donor retention rate Learn new donor communications techniques in order to improve donor loyalty and retention

1. What Every Fundraiser Can Do to Stop
Falling Donor Retention Rates
Amy Sermersheim
October 14, 2015

2. Agenda
• Why Does Loyalty Matter?
• Why People Lapse
• Transaction vs. Relationship Approaches
• Retention Begins with the Thank You!
• Building Commitment
• Monthly Giving
• Managing Service Quality
• Conclusion: Donor Engagement

3. Why Does Loyalty Matter?

4. Why Does Loyalty Matter?
Do you know your retention rate?
What does a 10% increase in donor retention mean in terms
of LIFETIME dollars raised?
• 50%
• 100%
• 150-200%

5. Why Does Loyalty Matter?
Improving donor retention rates by 10%
can improve LIFETIME dollars raised by?
150-200%!

6. Why Does Loyalty Matter?
To calculate your donor retention rate, simply find the number of donors
who gave to your organization in a calendar year, and the number of
donors from that same pool who made a donation in the following year.
Divide the second number by the first.
https://bloomerang.co/retention

7. Fundraising Effectiveness Project (FEP)
A project to help nonprofit organizations
measure and compare
.

8. Nearly 6 out of every 10 donors do not give again!
Why does loyalty matter?

9. Gift retention isn’t much better.
Why does loyalty matter?

10. New donor retention is even worse.
Why does loyalty matter?

11. Why does loyalty matter?

12. Donor Attrition Over Five Years
# of
Donors
Attrition
Rate
Donors
Remaining
After 1
Year
Donors
Remaining
After 2
Years
Donors
Remaining
After 3
Years
Donors
Remaining
After 4
Years
Donors
Remaining
After 5
Years
1,000 20% 800 640 512 410 328
1,000 40% 600 360 216 130 78
1,000 60% 400 160 64 26 10
Why does loyalty matter?

13. CUE THE EXPERT:
Dr. Adrian Sargeant
Bloomerang Chief Scientist
• Professor of Fundraising at Indiana University
• Professor at the Australian Centre for Philanthropy
• World's Foremost Authority on Donor Retention
• Nonprofit Times' Top 50 Power and Influence List
• Managing Editor of the International Journal of
Nonprofit and Voluntary Sector Marketing
• Renowned Author of Numerous NPO Books
• Voted 3rd Most Influential Person in Fundraising
by Fundraising Magazine
Why Does Loyalty Matter?

14. Dr. Adrian Sargeant:
“A 5-10% upward change in Donor Retention can
DOUBLE the Lifetime Value of your donor database!”
Why Does Loyalty Matter?

15. Defining Lifetime Value:
"The total net contribution that a donor generates during
his/her lifetime in your database."
Why Does Loyalty Matter?

16. Why Does Loyalty Matter?

17. Donors Who Remain Loyal are Much More Likely to Engage
with the Organization in Other Ways:
• Additional gifts in response to emergency appeals
• Volunteer
• Upgrade gifts
• Lobby for the organization
• Seek out other donors on the organization's behalf
• Buy from gift catalogue
• Promote the organization to friends and acquaintances
Why Does Loyalty Matter?

18. The cost to acquire a new donor is 6-7
times that to retain existing donors
“Taking positive steps to reduce gift and donor
losses is the least expensive strategy for increasing
fundraising Income”
Roger Craver
Why Does Loyalty Matter?

19. Why People Lapse

20. Why People Lapse
Reason % of Respondents
Can no longer afford to support 54%
Other causes more deserving 36%
Death/relocation 16%
Organization did not acknowledge my support 13%
No memory of having supported 11%
Organization did not inform me how my money had been used 8%
Organization no longer needs my support 6%
Quality of support provided by organization was poor 5%
Organization asked for inappropriate sums 4%
I found organization's communication inappropriate 4%
Am still supporting by other means 3%
Organization did not take account of my wishes 3%
Staff at organization were unhelpful 2%

21. Transaction Vs. Relationship Approach

22. Imagine yourself at a party....
Transaction Vs. Relationship Approach

23. Would it not be better to?
• Recognize donors by name
• Acknowledge their prior giving
• Tailor the communication to reflect their known interests
• Let me choose the type of communications they receive
and how and when they'd like to give
Transaction Vs. Relationship Approach

24. Comparison of Transaction and Relationship Fundraising
Approaches
Transaction Vs. Relationship Approach
Differences Transaction
Fundraising
Relationship Fundraising
Focus Soliciting single
donations
Retaining donors
Key measures Immediate ROI,
amount of donation,
response rate
Lifetime value
Orientation Urgency of cause Donor relationship
Time scale Short Long
Customer service Little emphasis Major emphasis

25. From a donor's perspective, relationship fundraising addresses
how an organization...
• Finds you
• Gets to know you
• Keeps in touch with you
• Tries to ensure that you get what you want from it in every
aspect of its dealings with you
• Checks that you are getting what it promised you
• Seeks your advice and input
• Shows it values you
Think about how a good friendship develops...
Transaction Vs. Relationship Approach

26. Transaction Vs. Relationship Approach
A donor "timeline" of
relationship building
History of every event with
the constituent.
Important retention
information

27. Retention Begins with the Thank You!

28. Retention Begins With The Thank You!

29. Retention Begins With The Thank You!

30. Retention Begins With The Thank You!

31. Retention Begins With The Thank You!

32. Retention Begins With The Thank You!
Acknowledgment Principles
• Acknowledge online gifts within 1 hour
• Acknowledge offline gift within 48 hours
• First-time donors who get a personal thank you within
48 hours are 4x more likely to give a second gift.
• Be different than the rest (Handwritten!)
• State exactly what the monies will fund
• Call ALL new donors
• A three-minute thank-you call will boost first-year
retention by 30%
• Call or see in person as often as possible

33. Retention Begins With The Thank You!
Who can do the thanking?
• Board members
• Volunteers
• Director of Development
• Executive Director

34. Retention Begins With The Thank You!

35. Building Commitment

36. • Committed donors are likely to remain loyal even when
the quality of service is not optimal or when there is
negative publicity about some aspect of the organization's
work
• With commitment a donor's support continues through
good times and bad
Building Commitment

37. • Commitment Drivers...
o Concern - Donors are likely to be
committed if they believe they are
valued and that the organization has
their welfare at heart
o Exercise of choice in frequency and
content of communications
o Provision of benefits - social, emotional,
or tangible rewards (access to
information, premiums)
Building Commitment

38. Commitment Drivers…
• Respect - up to date data (entered correctly), regard for
privacy and professionalism in data management and
manipulation
• Involvement - the greater the number of ways an
individual engages with a nonprofit, the greater the
commitment he/she will feel
Building Commitment

40. • Commitment Indicators
o Recency and pattern of giving
o Individual donations vs. sustaining donations
o Number of years of giving
o Upgrades/downgrades
o Event attendance
o Volunteer activities
o Opens your emails
o Clicks links in your emails
o Unsubscribes from emails
o Visits your web site
o Has stated communication preferences
o Initiates interactions
Building Commitment

41. What You Need to Know About Your Donors
• Why did they start giving to your organization?
• What are their expectations of your organization?
• What communications do they want to receive?
• How do they want to give?
• How else might they give?
• Are they interested in supporting your organization in other
(non-monetary) ways?
• What particular aspect of your organization's work interest
them?
Building Commitment

42. • Action Plan for Building Donor Commitment
o Match fundraising program to donor needs
o Constantly reinforce the value to the donor
o Develop new-donor communications and ask for
feedback
o Explain full-range of services
o Develop donor recognition programs
o Measure satisfaction and retention
o Analyze complaint data
o Identify relationship issues and failures
Building Commitment

43. Monthly Giving

44. Monthly Giving

45. “Monthly giving appeals not only to younger donors
who find it convenient and easy, but also to older
donors, who are more likely to live on a budget. But,
regardless of their age, monthly donors will often
give for decades, are more loyal than even the most
consistent annual donors, and are far more likely to
leave bequests”
- Harvey McKinnon
Monthly Giving

46. Monthly Giving
Source: Target Analytics, 2015 DonorCentrics TM US Recurring Giving Benchmarking Analysis

47. • Impact on Donor Loyalty
• Tend to give for four to seven years
• Communication balance improved - no need to ask for
donation in each communication
Monthly Giving

48. • Getting Started
• At the minimum, offer the opportunity online
• Who to target
• Show the price points: $10 a month can do X, $20 a month can do
Y…
• Ask as soon as possible after the 1st gift
• Appeals
• Newsletters
• Incoming calls
• Thanks
• Keep in touch
Monthly Giving

49. “Two words: Monthly giving. Regular/monthly or
sustained gift programs are currently revolutionizing
the economics of fundraising. If your nonprofit
doesn’t have one – it should get one. Lifetime values
are 600-800% higher than would be the case in
traditional annual fund giving. It’s also more
resilient in the face of changes in the economy.”
-Adrian Sargeant
Monthly Giving

50. Managing Service Quality

52. It is important to recognize that donors' perceptions of how
good the organization is at program delivery and
administration are driven to a great extent by completely
unrelated variables.
Managing Service Quality

53. Managing Service Quality

54. • The better an organization is at solving complaints, the
higher its retention rate
• Donors who complain are more loyal than those who do
not even though they are not able to obtain any
satisfaction!
• Think of complaints as opportunities....opportunities to
keep donors loyal!
Managing Service Quality

55. So....

56. • Try to understand and record why a donor is giving to you
• Focus on a relationship approach rather than a
transactional one
• Work to build commitment
• Pay attention to service quality
Remember:
“A 5-10% upward change in Donor Retention can
DOUBLE the Lifetime Value of your donor database!”
So....

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58. Questions?
Amy Sermersheim
amy.sermersheim@bloomerang.co