By Regenia Bailey / Guest Column
Most nonprofit organizations are just wrapping up the busiest time of year for fundraising. End-of-the-year appeals — via letter, email or through personal conversations — motivate new and current donors to contribute to the organization’s work.
Every year, however, organizations lose a portion of their donors. Typically, these donors are replaced with new donors, so in many organizations, this donor loss goes unnoticed.
Even when it is noted, annual donor loss is something that organizations have come to accept. This is unfortunate, because poor donor retention makes it more challenging for an organization to be financially sustainable. The cost of acquiring a new donor can be up to five times the cost of retaining a current donor.
Add to that the fact that the average size of a contribution from a new donor tends to be lower than the average contribution from a current donor, and it’s easy to see why an organization should take steps to address donor attrition.
Slowing donor attrition
Attrition occurs when a donor just doesn’t feel a strong enough connection to an organization to continue supporting it. This is often due to the transactional nature of many organization/donor relationships. The organization sends a letter; the donor sends a contribution; the organization may or may not send a thank you letter acknowledging the gift. This, along, with the occasional newsletter or fundraising event invitation, is the regular interaction that many organizations have with their supporters.
Whether intentional or not, these organizations are treating their supporters like ATMs. Donors eventually leave to seek more fulfilling relationships with organizations that treat them better by getting to know their interests and reasons for supporting the organization.
Like any good relationship, building stronger connections with donors takes time and energy. The information flow becomes more of a conversation — not just one-way requests and reports from the organization to the donor. Donor engagement means that the organization takes the time to learn more about a supporter’s interest in the organization’s work.
This increased understanding may or may not lead to larger gifts from a donor, but it can increase the likelihood that the donor will feel connected enough to the organization and its work to continue providing support to it. This leads to greater sustainability in the organization’s fundraising efforts because it does not continually need new donors to replace donors that leave, but can actually grow its base of supporters.
The board’s role
It’s part of the board’s job to ensure that the organization’s fundraising efforts are sustainable. This starts by the board understanding the net dollars that fundraising efforts bring to the organization and how these contributions are divided between those from new donors and those from current supporters. The board then understands if funding the organization requires regular acquisition of new donors because it isn’t retaining its current donors or if donor acquisition is actually growing the organization’s base of support. If donor retention is a problem, the board should take steps to address this.
First, the board must make sure that the organization’s basic fundraising systems have adequate resources and are working well: gift acknowledgements are accurate, warmly written,= and sent in a timely manner; donors’ names are spelled accurately; and donor contact information is up-to-date. Keeping these basic systems in good working order is critical to an organization’s fundraising efforts.
Next, as part of its fundraising activities, the organization should have regular conversations with its current donors. Board members are ideally positioned to do this. In many cases, the organization’s supporters are the board members’ friends and colleagues. Often, board members are reluctant to ask people for support, but have no problem in thanking a supporter for a recent gift and having a conversation to learn more about the donor’s interest in the organization.
To ensure that the information gathered by board members in these conversations becomes part of the organization’s institutional memory, it is helpful to have a staff member accompany board members on these donor visits. The staff member can help answer donor questions and provide follow-up information as necessary. Once the organization understands the donor’s interests, it can better tailor its interactions with the donor based upon this information.
People’s lives change, so every organization will experience a certain level of donor attrition. It’s important, however, that the board does what it can to address the problem in order to strengthen and increase its donor base and build a more financially sustainable organization.
Regenia Bailey is the founder and owner of Bailey Leadership Initiative LLC. She works with organizations from all sectors on strategic positioning and organizational effectiveness. For more information or to comment on this column, reach her through her website: www.baileyleadershipinitiative.com