Measuring Donor Participation by Giving Levels

Gift reports provide total dollars raised, a valuable summary.  But, how much can we learn about donor participation from total dollar raised?  Important clues can be found in two gift report areas from 2015-1016 research data provided by AFP’s Fundraising Effectiveness Project (FEP).

1. Donor Renewal Levels: 

Donor retention studies include measuring how many new donors acquired in 2015 renewed their first gifts in 2016.  These results were combined with returning donors from prior years for an overall donor retention rate of 45% according to AFP FEP data (see Exhibit 1).  Continued acquisition of new donors will be essential to replace the 55 percent who failed to give in 2016.  Further, a review of 2016 donors by giving levels shows a healthy rate of first-time donors at the three highest giving levels ($250 and above) at 47%, 60% and 56%, which suggests continued investment in acquisition at these levels also will be rewarded with positive gift revenues.

2. Donor Giving Levels: 

Donor participation also measures revenue from donors whose giving levels were the same as last year, gave more, or gave less (see Exhibit 2).  Upgraded donor participation between 2015 and 2016 was 42%, a   62% increase in revenue and a one-year growth rate of 108%.  Donors who gave the same (27%) were 13% of total revenue, while donors who gave less (30%) caused a revenue loss of over $1 billion (-53%) from 2015 giving, resulting in an overall 2016 increase in revenue of only 5% from these three key donor groups.

Source: http://afpfep.org/wp-content/uploads/2017/04/FEP2017Report4212017.pdf

Summary:

Donor attrition harms every nonprofit with the loss of loyal contributors and their valued gift support.  Greater understanding of how often donors give and their giving levels is essential to preserving their generous commitment.  For questions and comments on interpretations of these FEP analysis reports, contact Jim Greenfield at: fundrazer@gmail.com

To improve your donor retention results, increase revenues and receive detailed donor giving trends, submit your data to the Fundraising Fitness Test at: http://afpfep.org/tools/

[INFOGRAPHIC] 2016 National Fundraising Fitness Statistics (NFFS)

The National Fundraising Fitness Statistics (NFFS) provides over 150 metrics across giving levels to allow organizations the ability to compare performance. It is this act of measuring and comparing that allows organizations to identify areas that could be improved.

Understanding how your organization is performing is the first step to identifying strengths and weaknesses.

Take for example the Pareto principle represented in the infographic below, the standard 80/20 rule does not directly relate to non-profit fundraising. As you can see, it is actually 88 percent of the revenue being generated by 13% of the donors.

The Fundraising Effectiveness Project and the Growth In Giving Initiative Data providers have made this type of analysis possible for the first time. It is now available for free on the tools section of this website.

NFFSInfographic

AFP FEP Glossary of Terms

In 2006, the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute established the Fundraising Effectiveness Project (FEP) to conduct research on fundraising effectiveness and to help nonprofit organizations increase their fundraising results at a faster pace. The Growth in Giving Initiative (GIG) was formally established in January of 2013 with funding commitments by these three founding sponsors, Association of Fundraising Professionals, DonorPerfect Fundraising Software, and the Center on Nonprofits and Philanthropy at the Urban Institute. GIG is based on a unique, real-time, detailed gift-transaction data collection and analysis process and is designed to track several years of results for multi-year analysis of donor acquisition, retention, upgrading and other fundraising metrics within a variety of giving levels.

The AFP Fundraising Effectiveness Project (FEP) has made significant progress since inception in 2006 to define a comprehensive variety of performance criteria for detailed measurement of nonprofit fundraising performance summarized annually in the Fundraising Effectiveness Survey Report. The Growth in Giving Initiative (GIG) now provides the most comprehensive data set of its kind. This data set is transaction-based allowing unique research into donor behavior not previously available. It is now possible to research specific donor retention activities in multiple categories and terms in various FEP and GIG reports to identify separate donor and donor database responses, such as average gift, donor recapture, donor gain/loss rate, etc. The combined FEP and GIG results are the subject of a variety of studies and reports, including the 2015 FEP Donor Retention Supplement (January 8, 2016) and the special Spotlight report “Benchmarking Giving to Human Services Organizations” by the GIVING USA Institute (Issue 2, 2016).

The FEP Glossary of Terms Appendix has been prepared to help ensure clarity in nomenclature, consistency, and broad usage of terminology used in these reports and other donor giving statistical analysis. This new FEP Glossary has been added as an Appendix to the AFP Fundraising Dictionary 2002 (online) and also can be found here.

Examples of the 68 terms in the Glossary are listed below to illustrate the measurement categories included in AFP FEP and GIG studies and reports. In addition, 21 Donor Retention Rate Formulae are listed on pages 6-8 of the Glossary to aid these calculations.

  • donor attrition rate, the number of donors who gave last year but not this year, divided by total number of donors last year.
  • donor participation rate of growth, the increases or decreases in number of donors from one or more years, divided by the number of donors in the initial year.
  • donor recapture rate, the number of previously lapsed donors who renewed this year, divided by total number of donors last year.
  • donor retention rate, the number of donors last year who gave again this year, divided by total number of donors last year.
  • overall rate of growth in giving, the net of gains and losses in giving from last year to this year, divided by total value of gifts received last year.

The AFP Fundraising Effectiveness Project and Growth in Giving Initiative will continue to provide results analysis and comparative benchmarks to aid nonprofit organizational leadership and their fundraising staff to better understand their own performance and, armed with adequate details on their donors’ performance, to increase their overall fundraising results.

The 3 Step Crash Course in Winning Back-Lapsed Donors

Nonprofits are constantly facing the problem of annual or recurring donors lapsing into inactivity.

Unfortunately, far too many organizations make the mistake of not distinguishing their lapsed donors from other donor groups.

They’ll send these lapsed donors the same correspondence as their active donors or, even worse, prematurely mark them as inactive and ignore them altogether.

But giving up on your lapsed donors is a huge mistake. Considering the high value of donor retention to nonprofits, why wouldn’t you focus on donors who have consistently given to your organization in the past?

First of all, these donors have already shown their affinity for your organization and that they’re willing to give to your cause.

Secondly, it’s more cost-effective for your organization to win back-lapsed donors than it is to acquire new ones. Because you’ve already built relationships with these donors, your organization can forgo much of the initial stewardship process, which will cut your costs (both money and time-wise) significantly.

So, in the spirit of Fundrasing Effectiveness Project (FEP) and our focus on increasing fundraising results as quickly as possible, I thought it might be appropriate to give a crash course in winning back-lapsed donors.

Step 1: Choose the right donors.

To launch a lapsed donor program, first you have to define exactly who your lapsed donors are.

While the definition will vary from organization to organization, the general consensus is that a lapsed donor is someone who hasn’t made a gift in over a year and has given to your organization at least twice.

This definition will probably apply to a good chunk of your base, so it can be helpful to narrow the requirements of your program even further.

For example, it’s probably not worth the money to focus on donors who have made gifts under $10.

You only want to focus on the donors whose contributions will bring you a return on the resources you spent winning them back.

Step 2: Choose the right channels.

When it comes to winning back your donors, some communication channels will be more appropriate and effective than others.

Lapsed major donor prospects definitely warrant an in-person visit or a phone call, but it’s likely your organization won’t have the resources to approach all of your lapsed donors through these channels.

While email appeals and typed letters might appeal to some, I can’t recommend handwritten letters enough.

Handwritten letters provide a personal touch and show donors that you really took the time and effort to win them back.

Make sure to include a handwritten return envelope and a first class mail stamp, too, in case your lapsed donors want to give again!

Step 3: Be personal and heartfelt.

The very best way to show lapsed donors that your organization cares about them, however, is by personalizing your outreach and making it as sincere as possible.

Always, always address your lapsed donors by their first name. Use any information you have on hand that will help you individualize your outreach. (Bonus tip! This is done much more easily with the help of a nonprofit donor database.)

For example, if you know exactly when and how much a donor has given in the past, you should reference the time since their last contribution and suggest the same gift size in your correspondence.

This lets your lapsed donors know you care about them personally, instead of thinking of them as merely a dollar sign.

But above all: be transparent and genuine. Tell your lapsed donors that you miss them. Compliment their kind and giving nature! Don’t be shy in letting them know just how much you value them and don’t want to lose their contributions.

What strategies for winning back-lapsed donors have worked for your organization in the past? Let me know in the comments!

What Drives Donor Loyalty? Findings from the Latest Donor Research

We have a tradition of presenting “sneak peeks” of our donor research at AFPFC prior to releasing it to the greater public. We believe it’s important to do this to garner the reactions and questions from fundraising professionals out in the field every day. And, of course, because we can’t wait to share our findings! It is through the feedback from AFP members that we’re able to create research reports that are not just reflective of what’s going on with today’s donors, but that also contain actionable information.

At AFPFC this year, we gave a sneak peek of our latest Donor Loyalty Study. In this year’s study we went beyond donor engagement and dug deep into what drives donor loyalty. We surveyed 1,136 donors in the United States who made at least one donation to a nonprofit organization in the past 12 months.

Here are a few key findings:

  • Donating is personal. While this may seem like a given, it is overwhelmingly true for all types of donors. The three main reasons people donate to nonprofit organizations are very personal in nature – they have a deep passion for the cause, they believe the organization depends on their donation, or they know someone affected by the nonprofit’s mission.

Reasonsfordonating

  • Volunteering and events play a big role in driving loyalty. Seventy-three percent of those who volunteered and 74 percent of those who attended an event say they are more likely to donate. This is especially true for Millennials, 52 percent of whom say they’re more likely to donate after volunteering for an organization. While you might not ask your volunteer coordinator to write a fundraising appeal, he or she may play a major role in a potential donor’s experience and the decision to donate again.
  • Content is NOT just king … it’s money. Nearly 75 percent of respondents say they might stop donating to an organization based on poor content. This is a real wake-up call for the sector. How you communicate with your donors is one area where you have the MOST control (the content you create), and really need to spend time and energy building out a solid content strategy. Are you spending as much time crafting your email content as you are on your direct mail piece, for example?

Content

  • Quality, length, and frequency matter. Adding to the findings above, the quality of content you are sending to donors really does matter. Seventy-two percent of donors say receiving well thought-out, polished content is important to them. A majority of donors would like to hear from the nonprofit they support at least monthly, and prefer short, self-contained content (short emails, letters/articles, or videos under two minutes long). It may be time to rethink that monthly newsletter and consider how you can break up that content into smaller snack-size pieces that are more personalized to your donors’ interests.
  • Donors trust nonprofits to spend money wisely. By and large, donors trust the nonprofits they support to spend their money wisely (93 percent). In this study, we also attack the “Overhead Myth” head-on, asking donors how they feel about their money going towards “overhead.” A majority of donors are fine with their money going to things like setting up for events, publicizing the mission, reaching out to volunteers and other donors, and even staffing or administrative costs.

Reactions

Overall, donors want to hear from you, and they want to hear about the personal impact their donation is making. When in doubt, ask your donors how they want to be engaged, and then follow through with their preferences.

There’s so much more actionable data in the full Donor Loyalty Study. We’d love to hear your thoughts on our findings and specific topics we should dig deeper into with next year’s research.

Confessions of a Fundraiser

Being a fundraiser for over 20 years and living in a community with a professional fundraisers organization not affiliated with AFP International, I thought I was doing a great job keeping up with the trends in the field.  After all, I have an advanced degree, attend professional development workshops and webinars, read books and articles, and, I always make my fundraising goals.

Then about five years ago, a small group of professionals started a local AFP chapter.  Still, I didn’t bite.  I didn’t know much about what AFP had to offer and it seemed expensive compared to the other local non-affiliated organization.

Last year, a colleague asked me to get involved in planning our local AFP National Philanthropy Day conference, which lead me to join the chapter’s board, become a Chamberlain Scholar and attend the International AFP Conference for the first time.
I went early to the AFP conference to attend a workshop on donor retention.

It was at this workshop on donor retention that I learned about AFP’s Fundraising Effectiveness and Growth In Giving Projects and the incredible information gleaned. That proverbial light bulb went off along with a little knot in the pit of my stomach.

While I always make my fundraising targets, have I done everything possible to build a strong, sustainable fundraising program for the organizations I served?  The truth is, I did, based on intuition though and general theories and best practices.  I was lucky.  Still in the back of my mind, could I have done even better had I possessed this new knowledge? I think so.

What I didn’t do as well, however, was educate staff, board members and volunteers based on hard facts and research, on the strategies and resources I was implementing.  Herein lies the problem.  I don’t think I’m so different from a lot of my colleagues.  Particularly when I hear so many colleagues are struggling with getting the right resources to fundraise effectively, or are questioned or even prevented from initiating better fundraising strategies, or unable to get rid of those sacred cow events that don’t produce.

Thanks to the tangible, concrete information gained through the Fundraising Effectiveness and Growth In Giving Projects as well as other research projects, the field of fundraising has evolved and achieved a higher level of sophistication and so have I.  My analytic, strategic planning, and creativity have all sharpened and improved my decision-making.  As a member of AFP, with this research under my belt, I know I am more effective as a fundraiser and as a leader in my nonprofit community.

AFP FEP Glossary of Terms

The AFP Fundraising Effectiveness Project (FEP) has made significant progress since inception in 2006 to define performance criteria for measurement of nonprofit fundraising results.  The Growth in Giving Initiative (GIG) was added in 2012 to track several years of results for multi-year analysis of donor acquisition, retention, upgrading and other fundraising metrics and statistics within a variety of giving levels.

Because a variety of specific categories exist to identify differing donor actions, such as acquisition, retention, upgrades, etc., these categories are used throughout FEP and GIG reports.  The FEP Glossary of Terms has been prepared to ensure clarity in nomenclature, consistency, and broad usage.

This new FEP Glossary of Terms is now being released as a “Exposure Draft” (January 22, 2016) for public comment, after which it will be added as an Appendix to AFP FEP and GIG reports and to The AFP Fundraising Dictionary Online.

If you wish to offer comments and suggestions on the terms and their definitions in the FEP Glossary of Terms, please do so on or before April 12 to Cathlene Williams, AFP Coordinator to the AFP Fundraising Effectiveness Project, at: Cathlenewilliams@cox.net

The FEP Glossary of Terms is divided into four sections in order to correspond directly to the metrics included in FEP and GIG reports that define the analytics used and performance formula described:

  • Group A:  Terms Relating to Donor Retention Strategy
  • Group B-1:  Terms for Donor Retention Rates
  • Group B-2:  Formulas for Donor Retention Rates
  • Group C:  Terms Relating to FEP Gain/Loss Reports

A few examples of FEP Glossary terms illustrate the separate measurement categories and the formulas used:

  • Group A:  donor acquisition, the process of identifying and acquiring new donors.  AFP Fundraising Dictionary (2002); and
  • Group A:  donor upgrade, the activity by which a donor increases his or her level of giving.  AFP Fundraising Dictionary (2002)
  • Group B-1: includes a variety of comparative analysis terms, such as new donor acquisition rate, new donor retention rate, repeat donor retention rate, etc., along with the mathematic formula for each in Group B-2.
  • Group C: captures a variety of terms for gain/loss measurement, including: lapsed donors, recaptured donors, repeat donors, same donors, downgraded donors, and more.

The AFP Fundraising Effectiveness Project and its related reporting units (see “Reports” section of this FEP  website), Fundraising Fitness Test (in the “Tools” section) and the overall Growth in Giving Initiative are designed to aid nonprofit organizations and their fundraising staff to better understand their own performance and, armed with adequate details on donor retention performance, to increase their results.

Why Donor Retention Matters and How Stewardship Plays An Important Role

This post originally appeared on ADRP and was republished with permission.

In my role as a Regional Collaboration Manager for YMCA of the USA, I travel throughout my assigned region helping local YMCAs to maximize the effectiveness of their fundraising efforts. Recently my teammates and I were working with a YMCA to analyze their fundraising metrics and identify opportunities to improve their development work. We were using the Fundraising Fitness Test, a free tool that was introduced by the Growth in Giving Initiative through AFP and the Urban Institute. Using the Fitness Test, we were able to start to see some of the inner workings of their campaign strategies. One portion of the test examines donor retention numbers, and this portion revealed some very interesting things. Continue reading