Penelope has just taken the stage, as I hurriedly gobble down my last bites of lunch. Pardon any funky grammar -- I'm focusing on content. Penelope started her original research to identify interesting ways to recognize giving, but the question evolved into an exploration of donor loyalty. What causes donors to give to the same organization, year after year? This question is actually about what makes organizations more profitable.
The thing that increases net profit is donor retention. Widening your donor base and gaining new donors may generate gross revenue, but to fundraise more efficiently, retention is key.
Three keys to donor retention:
1) Acknowledge donors promptly in a meaningful way. What is prompt? Receiving a thank you letter by mail within 2 weeks of giving a direct mail gift is considered to be prompt by donors. For online gifts, the expectation is shorter.
One big change over Penelope's years of surveying donors is that most donors are getting acknowledged much more quickly, within 1 week instead of sometimes months. However, this is now a new standard, because there has been such improvement in this area. Side Fundraising Nerd plug: technology is the key to prompt and accurate acknowledgements.
How about meaningful?
The expectation is not only that the thank you be personalized with name and address, but donors are also hoping to receive a letter that seems like it was tailored for them.
Penelope reviewed 500 thank you letter samples in one day!
Speak to and about the donor, rather than the gift ("thank you for your generous gift" vs. "you remembered to give to us").
Thank you letters do inspire donors to give more and stay loyal. Penelope says this is the most powerful way to increase profit.
2) Donors want to give to specific causes. Many organizations
3) Donors want reports in meaningful and measurable terms.
This is directly related to #2. When a gift is given to the general operating fund, the message is about the brand, not the impact.
Donor attrition is 90% across organizations! After 5 years, only 1 in 10 donors continue to give. This number is even smaller in high-solicitation organizations. If we could just increase retention by 5%, we'd improve bottom-line fundraising by close to 50%. This is because many donors are giving well below their current means (test gifts). If we could engage and retain them, they'd likely give more.
Donors give to the brand the first time, but after that, they become investors. Investors are looking for results and meaningful feedback on their investment.
65% of donors who make a first gift never make a second gift. I really like how Penelope is connecting this issue to the nonprofit bottom line and profit.
Click here to see all posts from Penelope Burk's talk. In addition to donor relations, she shared some fascinating information and ideas on talent management: why fundraisers leave, and what organizations can do to keep them.