Do you know your donor retention rate? It’s one of the most important metrics you can track—it can teach you so much! On top of helping you understand how well you engage donors after their first gift, your donor retention rate can guide you as you plan future fundraising campaigns, messaging, and community outreach.
Let’s take a look at how (and why) to track your donor retention rate.
The Donor Retention Rate Formula
If you’re just looking for the formula, here you go:
How to Calculate Your Donor Retention Rate
This is a fairly straightforward formula: You’ll divide the number of donors who gave last year and this year by the total number of donors who gave to you last year. Multiply the resulting number by 100 to find your donor retention rate.
Just as a note: You can do this for time periods other than a year! Try calculating a donor retention rate for campaigns, events, or other periods. Take GivingTuesday as an example: You could always use this formula to find the percentage of donors who gave to both this year and last year’s campaigns.
Example Donor Retention Rate Calculation
Here’s what this looks like in real life. Say you had 3,400 total donors last year. 750 of them gave again this year.
When you plug these numbers into the formula, you get:
(750 / 3,400) X 100 = 22.05%
Your donor retention rate is 22%.
Why Track Your Donor Retention Rate?
Understanding your donor retention is important for a ton of reasons, but we’ll try to keep it to three:
- Retaining donors is more cost effective than acquiring new ones, and tracking your donor retention rate helps you understand how effectively you’re keeping your supporters engaged.
- Retaining donors results in a broad base of individual supporters, which means your organization’s revenue is relatively stable.
- Understanding your donor retention rate gives you insight into your engagement strategy, messaging, appeals, and other important elements.
Let’s take a closer look at each of these points.
Retaining Donors Is Cost-Effective
Let’s get really practical for a second.
Reaching new people, getting them excited about supporting your work, and inspiring them to make their first donation takes a ton of time and resources—including money. When those donors give repeatedly, you get a better return on that investment.
Retaining your existing donors is much more cost-effective than constantly working to acquire new ones.
Say you spend $15 to reach a new donor. They make a $20 donation, and you never hear from them again.
You’ve netted $5.
Now say you spend $15 to reach a new donor. They make a $20 donation, and you follow their gift with a great thank-you letter. Maybe you send them a new donor welcome email. Because you’ve made a great impression on them, they decide to give another $20 a month later.
You’ve netted $25.
Now let’s be clear: While this example focuses on the financial benefits of donor retention, there’s much more to it than simply dollars and cents. A good donor retention plan will prioritize building relationships between you, your donors, and the community they help when they give.
Prioritizing that relationship will lead to future gifts—but you have to lead with that personal connection.
Retaining Donors Builds Stability
An important part of building a stable, sustainable fundraising program is maintaining a broad base of donors.
Think of it this way. Imagine you rely on five major donors that represent 40% of your organization’s total revenue. The remaining 60% of your revenue comes from individual donors.
One of your major donors decides to support a different nonprofit next year. Another is giving more cautiously due to some economic uncertainty, and they give half their usual donation.
How much of your revenue has to be replaced?
Now imagine you have five major donors that represent 20% of your organization’s total revenue. The remaining 80% comes from small-dollar donors.
Your major donors decide to pull back on their giving—but the repercussions are a lot more manageable because they represent a smaller overall percentage of your revenue.
When you diversify your revenue sources, you can mitigate a lot of risk. But that requires a broad, deep donor base.
Donor retention is the best way to build that base.
When you track your donor retention rate on a regular basis, you’ll be able to notice any changes in your donor base and take steps to keep donors engaged, reactivate lapsed donors, and preserve those valuable relationships. This is one of the single most effective ways to build a stable, sustainable nonprofit!
Your Donor Retention Rate Is Versatile
How did this year’s annual campaign compare to last year? Was your GivingTuesday appeal compelling to the people who donated to you last year? Is your new messaging strategy resonating with your donors, or are they losing interest?
Your donor retention rate can help you answer all of these questions.
Was your donor retention rate at 19% last year and 22% this year? Congratulations! Your annual campaign (and your donor retention strategy) were really effective.
Did you inspire 5% of last year’s GivingTuesday donors to make another gift this year? You have tons of room to launch a re-engagement campaign before the end-of-year fundraising season concludes.
Has your donor retention rate gone up since you implemented your new communications plan? That’s a clear sign that your donor base appreciates your new messaging—keep it up!
Does your donor retention rate reveal that year-end donors are more likely to stick around than donors you engage during the rest of the year? You can look at the different ways you’ve engaged that group of supporters and apply the same concepts to your broader community.
Your donor retention rate can give you deep insight into your donors’ preferences, passions, and behaviors. It’s a valuable metric for tracking your organization’s overall health, but it’s useful in so many other ways!
What’s Your Donor Retention Rate?
Do you know what your donor retention rate is? If you don’t, now’s the perfect time to begin tracking this important number—you’ll use it in so many ways!
While we’d argue that your donor retention rate is one of the most important metrics to keep an eye on, it’s most helpful when it’s used alongside other performance indicators. Want to learn about another metric that will make you a more effective fundraiser? Here’s a rundown of how and why to track your donor acquisition rate.
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