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Fundraising Metrics Research Stewardship

Reflections on teaching the Fundraising Effectiveness Project’s Donor Retention Self Assessment Workshop

Over a year ago, my friend and colleague Michael Buckley of The Killoe Group asked if I wanted to teach the Association of Fundraising Professionals’ official course on donor retention, powered by data from the Fundraising Effectiveness Project. Since my company is a data partner of FEP, I jumped at the chance.

It takes a few months to officially approve and schedule the course itself but in late January 2019, Michael and I set up in a conference room at the Marriott in Saratoga Spring, NY and readied ourselves for seven hours of data driven discussion. While he and I had spoken about the key performance indicators of FEP’s data before, we had never done an intensive all day workshop around it and were both excited and nervous to see how long we could keep the attention of our participants.

I thought it would be useful to break down the ways that the course itself is structured and the practical realities of putting this vital data set and metrics in front of actual fundraisers. Here’s what I learned from doing this course.

Overview

The AFP has put together a stellar set of resources for workshop organizers when it comes to getting the course together. A thick and well organized faculty folder was provided as well as access to a recording on how to properly teach the course. Slides were also provided to help guide both faculty and students through the material.

The Donor Retention Workshop has three primary learning objects, which we debuted upfront:

  • Identify effective practices to retain and upgrade donors to improve fundraising effectiveness
  • Prepare a donor retention plan for the participant’s organization
  • Use data from growth-in-giving reports to develop growth-oriented fundraising strategies

With these three primary objectives serving as our anchor, we started to unpack the realities of working with donations data and how to leverage the free tools that FEP has created and put them into practice.

Section One: Why Organizations Lose Donors and Money

As we kicked things off in earnest, I was nervous that putting tons of charts in front of participants would scare away the less data savvy folks in the room. Yet what was great about the course is that it starts off with a lot of great foundational information on why it’s important to pay attention to retention.

Michael and I stressed that retention is an important metric to pay attention to when addressing donor attrition (or having people stop donating to your organization). It is one of the best ways to stop revenue loss at a nonprofit as well as the easiest path to growth of the organization.

Simply looking at overall revenue profit and loss on a yearly basis is a recipe for disaster down the line, since a few large gifts may mask an underlying issue of support of your organization from your donor base. We reminded the room that their donors are not their donors and unpacked excellent research by Adrian Sargeant on lapsed donor behavior.

Section Two: How Keeping Donors Increases Fundraising Success

This is when the rubber really started to hit the road, where we dove into the harsh reality of donor retention impact on long term growth. Sargeant’s research demonstrated that increasing the level of retention by 10% would improve the net growth in giving for a “typical” charity database by 50%. We stressed that retention was both a short term and long term strategy that would never fail.

The top reason that donors stop giving to a nonprofit is that they feel that the organization no longer cares about them, which is why we stressed the importance of prompt and gratitude focused thank you communication. The ability to thank a donor in an authentic way is well demonstrated as the most effective way to keep that donor and we didn’t let our participants forget that.

Section Three: Measuring the Effectiveness of Your Fundraising Efforts

This is where the FEP data really started to come out and play. While I’m personally used to getting up to date findings from the FEP research team, it was really exciting to see how these have been folded right into the faculty curriculum to ensure that anyone teaching this course would be able to speak about the most up to date data possible.

Key findings from 2018 that we related were:

  • Larger nonprofits perform much better than small ones
  • New gifts / donor generate the largest growth in gift dollars / donors
  • Lapsed new gifts / donors represent the greatest losses in gift dollars / donors, particularly for the lowest performing organizations

One of the most effective tools that we were provided were the Kirkwood Case Studies, which were targeted discussion items around a fictional children’s education nonprofit that allowed nonprofits to identify with the issues raised in a way that they could relate with yet not feel defensive about comparing themselves to a “more successful” organization. Kirkwood was designed to be the perfect strawman, creating insightful discussion that generated some of the most exciting discoveries I’ve experienced.

Section Four: Developing a Successful Donor Retention Plan

After an excellent lunch, we got down to the business of unpacking the case studies and seeing what we could actually do with them. One area that was not included in the faculty guide but helped us greatly was the concept of developing Donor Personas.

A Donor Persona is a way of articulating messaging and strategy around a particular subset of donors. For simplicity, we had our groups work on three primary donor personas that we then crafted a strategy matrix around:

  • New Donors: one of the worst retention rates industry wide is around new donors to an organization, with the average organize losing 25% or so of their first time donors. The group came up with a great matrix to unpack strategy, tactics, and metrics around new donor engagement.
  • Lapsed Donors: this is where retention really starts to come into play, since it costs $1.25 to acquire a new donor yet can be significantly less costly to bring a recently lapsed donor back into the fold. The group came up with several strategies around how to bring a lapsed donor back into the fold that focused on providing a personalized touch.
  • Recaptured Donors: the unicorn of the retention world and the one that can cause the most stress and aggravation is trying to bring donors who have lost interest for several years in a row back into the fold. The group had some excellent strategies and tactics to address these types of donors, with a particular focus on individual and personalized outreach.

We encouraged all groups to think about how they would track this information in an effective way. What types of metrics mattered and what were simply vanity metrics with no bearing on outcomes? And in one of the most important growth points in the FEP data, we also encouraged the participants to think about retention in an omni-channel way.

The reality is that the most effective donor engagement strategies are ones that empower donors to give through a wide variety of mediums, yet with only so many hours and resources at our disposal we encouraged the group to be effective in how they would implement any of the strategies they thought of.

Section Five: Review and Apply What You’ve Learned

As we geared up for the end of the workshop, we wanted to ensure that each and every single participant would be able to walk out of the workshop with something actionable specific to their nonprofit. We encouraged each of them to come up with a goal around retention that they could work on, asking them to be SMART about their planning.

The results were fantastic. A few highlights:

  • One participant had run her actual data through the free tools provided by FEP and brought her print out of the results. We were able to sit down and develop a plan that focused on her top level donors with a realistic stewardship plan that involved personalized outreach through phone and direct mail
  • A participant who came up from New York City (!) stated that his organization focuses heavily on email campaigns that were crisis based in their messaging. As he worked through the data in the case study, he began to realize that adding another messaging layer around and educationally based outcomes report to donors would be an excellent way to create a long term relationship
  • We discussed how creating a culture of philanthropy is a two way street, where many times our organizations may be the first exposure an individual has with giving and our ability to steward new donors right away could mean the beginning of a long term relationship
  • We also discussed the importance of using data to demonstrate our own value as fundraising professionals to our stakeholders, especially as it relates to the salaries we draw. Being able to use data strategically will have an immediate effect on morale and burnout in our industry.

The workshop was one of the best educational experiences that I’ve been a part of and hope that others invest the time and very reasonable resources into implementing this course in their own communities.

Categories
Stewardship

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/

Categories
Fundraising Stewardship

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!

Categories
Stewardship

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.