Donor Attrition: Understanding and Addressing Donor Loss
Donor Attrition: Understanding and Addressing Donor Loss
Overview
Your organization’s ability to sustain its mission is heavily reliant on the support of your donors. While attracting new donors is crucial, retaining existing donors is equally, if not more, important.
Why? Because the cost of acquiring a new donor is five times more than the cost of retaining an existing one. And statistics show that between 40 to 60 percent of donors stop giving after the first year, and up to 90 percent stop giving after four years.
Therefore, high-quality, long-term fundraising success isn’t how many donors you fold into your donor funnel, it’s how many you keep!
The Importance of Tracking Donor Attrition
The metric used to track how many donors stop giving to your organization each year is called your “donor attrition rate.” Any donor contact management system can provide these numbers but less than 20 percent of nonprofits track donor attrition rates regularly.
What’s a good attrition rate target? If your annual attrition rate is below 15 percent, that’s superb; 15 to 20 percent is excellent; 20 to 30 percent is good; 30 to 40 percent is fair; 40 to 50 percent is poor; and above 50 percent is very poor.
You should also track attrition rates over multiple years. Meaning, how many donors gave for two years in a row and then stopped giving? How many donors gave three years in a row and then stopped giving? How many donors gave for four years in a row and then stopped giving? And so on.
Improved Stewardship Means Increased Donor Retention
Donor attrition not only tells how many donors you’re losing, it’s a key indicator of how effective your organization is at engaging and retaining its donors. Meaning you might not be losing donors – and jeopardizing your financial stability – if you did a better job to “stewarding” and retaining your donors.
Donor stewardship is all about making your donors feel valued, appreciated, happy, and engaged. These are the types of donors that become long-term donors and they are more likely to increase their contributions over time and become champions for your organization, encouraging others to support your cause.
This multiplier effect can have an enormous effect on compound giving, which is why the amount of funds some organizations raise remains stagnant, while the funds of other organizations grow at a whopping 20, 30, 40 percent a year.
Therefore, tracking attrition rates can provide essential insights into the effectiveness of your fundraising efforts and the overall health of your donor base (donor retention) and lead to a more sustainable and cost-effective fundraising strategies and tactics, all while reducing costs. Who doesn’t want that?
Top 4 Reasons Donors Stop Giving—and How to Retain Them
Understanding why donors stop giving is the first step in addressing donor attrition. Below are the top four reasons donors stop giving, along with actionable strategies and tactics your fundraising team can implement to improve your stewardship efforts and donor retention.
Lack of Personal Connection
Why They Stop: Donors who don’t feel a personal connection to your organization or its mission are more likely to stop giving. When donors feel like an ATM cash dispenser, or just another name on a list, rather than valued individuals, they may disengage and stop giving.
Solution: Personalize your interactions with donors by segmenting your communications based on their interests, giving history, and engagement level. Meet with as many donors as possible in face-to-face settings over coffee and lunch. Get to know their personal interests and philanthropic interests.
Send personalized thank-you notes, make phone calls to express gratitude and to give updates, and offer opportunities for donors to get involved in ways that align with their passions. Building strong, personal relationships with donors can deepen their connection to your organization and increase their long-term commitment.
Note: More than 65 percent of all money donated to nonprofits comes from asking people for money in face-to-face settings. Yet the “average” nonprofit spends only 5 to 8 percent of their time doing this fundraising tactic. How much time are you spending? Pro Tip: If you want to raise more money, deepen your personal relationships with donors, and increase your retention rates, double or triple the amount of time you spend asking donors for money in face-to-face settings.
Lack of Communication or Engagement
Why They Stop: Donors may feel disconnected from the organization and stop giving if they don’t receive regular updates on how their contributions are being used and making a difference. Without ongoing communication, donors might question the impact of their donations and lose interest in continuing their support.
Solution: Develop a comprehensive communication plan that includes regular updates, impact reports, and personalized messages. Share stories that illustrate how donations are making a difference and having impact, and invite donors to events or to your facility where they can see your work in action. Consistent and meaningful engagement helps donors feel valued and connected to your mission.
Over-Solicitation
Why They Stop: Constant requests for donations can overwhelm donors and lead to donor fatigue. If donors feel like they are being asked for money too frequently, or they start feeling like you’re taking them for granted, or they feel like an ATM, they may become frustrated and stop giving altogether.
Solution: Balance your solicitation efforts by spacing out donation requests and focusing on relationship-building between asks. Implement a donor preference center where supporters can choose how often they want to be contacted and what types of communications they prefer to receive. By respecting donor preferences, and sending them information in the formats they prefer, you can reduce the risk of donor fatigue and maintain a positive relationship with your supporters.
Life Changes
Why They Stop: Donors may stop giving due to changes in their personal circumstances, such as financial hardship, relocation, or changes in their priorities. While these factors are often beyond your control, they can significantly impact donor retention.
Solution: Stay in touch with donors and be sensitive to their life changes. Offer flexible giving options, such as adjusting their donation amount, pausing donations temporarily, or shifting to non-monetary ways of supporting your organization. By showing empathy and understanding, you can maintain a positive relationship with donors and potentially regain their support when their circumstances improve.
Summary
Tracking donor attrition rates is more than just a numbers game—it’s about understanding the motivations and needs of your donors. By identifying the reasons why donors stop giving and implementing strategies to address these issues, your organization can improve donor retention, reduce fundraising costs, and ensure a steady stream of support for your mission.
Ultimately, a focus on donor retention through careful monitoring and proactive engagement will help your nonprofit build lasting relationships with its supporters, ensuring the long-term success and impact of your organization.
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