Donor Retention: A Crash Course & 11 Winning Strategies

By susanlienau | February 1, 2024 | Philanthropy Operations

To have the greatest impact on its constituents and the broader community, your nonprofit must prioritize its financial health. The stability that comes from having a steady stream of revenue (and using your money wisely) empowers you to deliver your mission now and for years to come.

Many factors play into financial stability, including your organization’s ability to manage its money effectively or keep some funds in reserves should unexpected needs arise. However, one of the most important factors in your nonprofit’s financial health is donor retention, which refers to your ability to build lasting relationships with donors and encourage continual giving.

Of course, it can be difficult to know how to assess your current donor retention rate and make a plan to improve it. That’s where this guide comes in. We’ll cover:

If you’re looking for guidance on how to secure your nonprofit’s financial future through a stronger donor retention strategy, you’re in the right place. Let’s dive in.

Click through to contact Averill Fundraising Solutions for assistance in boosting your organization's donor retention.

The Fundamentals of Donor Retention

Before we dive into some ways you can improve donor retention at your organization, let’s go over the basics.

What is donor retention?

This image and the text below it define the term donor retention.

Donor retention is a measurement of how many of your donors continue to give to your nonprofit after giving one gift. It is the opposite of donor lapse, the measure of donors who used to give to your cause but have stopped giving.

As you learn about donor retention, you’ll also come across the term donor acquisition. This refers to your nonprofit’s ability to bring new donors into its community. Your acquisition efforts will be most successful when you’re able to retain those new donors over a long period of time!

Donor Retention Rate: How to Calculate It & What to Aim For

To determine how well your organization is retaining donors, you’ll need to calculate your donor retention rate, which is the percentage of donors that continue to give to your nonprofit over a certain amount of time.

To calculate donor retention rate, use this equation:

This image and the text below describe how nonprofits can calculate their donor retention rate.

Donor Retention Rate = (# of Donors Who Gave Last Year and This Year / Donors Who Only Gave Last Year) x 100

Simply put, you’re adding up the number of donors who gave last year and this year and then dividing that number by the total number of donors who gave last year. Then, multiply the resulting number by 100 to yield a percentage.

While this equation allows you to calculate your year-over-year retention rate, you can also use it to calculate retention rate for other periods of time, like month-to-month. Additionally, you can calculate your donor retention rate for specific programs or campaigns.

Here’s an example: Say you had 1500 donors donate to your nonprofit last year. Of those donors, 850 continued giving this year. So, here’s how you would calculate your retention rate:

850 / 1500 = 0.567

0.567 x 100 = 56.7%

Thus, the year-over-year donor retention rate is 56.7%, meaning that over half of your donors continued to donate this year after giving last year!

Calculating your donor retention rate will likely bring up one big question: What is considered a “good” donor retention rate?

The average donor retention rate across the nonprofit sector stays around 40-45%. According to AFP’s Fundraising Effectiveness Project (FEP), donor retention was at 42.6% in 2022. And the latest research from FEP shows that the year-to-date donor retention in Q3 of 2023 was at 30.7% (though this number likely rose with the year-end giving season).

While your nonprofit can use the industry standard as a benchmark, it’s more important to focus on boosting your donor retention rate as compared to your own organization’s past rates. For instance, a jump from a 15% donor retention rate to a 30% donor retention rate represents massive progress in your relationship-building and stewardship efforts and is an accomplishment to be proud of!

Why Donor Retention Matters

High donor retention isn’t just nice to have—it benefits your nonprofit in many different ways. Specifically, great donor retention allows your nonprofit to:

This image and the text below list the benefits of donor retention for nonprofits.
  • Have a stable source of income over time. As mentioned above, financial stability is critical to your nonprofit’s long-term sustainability. Donations from individual donors are especially important for stabilizing your finances. When you successfully retain these donors, you can be confident that they’ll continue to support your mission for years to come.
  • Increase donor lifetime value (DLV). DLV tells you the overall value a donor will provide to your organization as they stay involved throughout their life. To find it, multiply the average length of time as an active donor by the average donation amount and then multiply the resulting number by the average frequency of donation. As you retain your donors for longer periods of time, and, by so doing, encourage them to continue to give or even give more or give more frequently, you can increase your average DLV and see better long-term results for your organization.
  • Work toward long-term growth goals. The stability that comes from having a strong community of donors supporting your cause allows you the flexibility to focus on long-term growth goals rather than just trying to keep your doors open each month. Your team can have the bandwidth to improve your organization’s programming or launch a major campaign.
  • Acquire new donors. When your nonprofit develops a reputation as an organization that values its donors and builds lasting relationships with them, you’ll have an easier time acquiring new donors and growing your community of supporters.

Clearly, focusing on donor retention can be a game-changing move for nonprofits interested not only in financial stability but also growing their communities and scaling up their operations over time.

11 Donor Retention Strategies For Your Nonprofit to Try

Now that you understand the importance of donor retention, you’re probably wondering what you can do to boost your own organization’s donor retention rate. Here are 11 winning strategies for your nonprofit to leverage:

This image and the text below list several strategies for boosting donor retention for nonprofits.

1. Focus on relationship building.

Donor retention is all about forming lasting connections with the people who support your mission. Not only does relationship building allow you to get to know your donors better and understand their needs and preferences, but it also communicates that you see and value them as people, not walking ATMs.

To build strong relationships, prioritize regular communication. Whether your communication efforts take the form of an email, phone call, text message, or informal meeting over lunch, this is the best thing you can do to ensure you get to know your donors, keep them updated on what is going on at your organization, and have natural opportunities to invite them to consistently give.

2. Tailor your communications to your donors’ needs and preferences.

To form genuine and lasting connections, you need to communicate with your donors in ways that resonate with them. You can do this in many ways, but here are a few of our favorites:

  • Lean on your donor data. Your nonprofit likely already has a lot of information about its donors and their behavior. Use your database to review what you already know about your donors, such as who is subscribed to your email newsletter or who enjoys attending events at your facility. These details can help you create communications that grab donors’ attention.
  • Survey your donors. There’s no need to view tailoring your communications as taking a shot in the dark. Go ahead and ask your donors what their preferences are! Create a short survey with a few open-ended questions about your communications strategy. When you get your completed surveys back, make sure to add the information from them to your database.
  • Used personalized messaging. Would you rather receive a letter from a nonprofit that starts with “Dear Donor” or “Dear [Your Name]”? People will always prefer to see messages from your organization that are personalized to them. Go even further than a personalized salutation by including nods to past donations or other types of participation in your work.

You’ll find that different groups of donors will likely have different communication preferences. You can adjust your communications strategy to reflect this by using segmentation, the process of grouping people into segments based on shared characteristics. For instance, you might create a segment of donors who prefer to hear from your organization via email and another segment that prefers text messaging. This ensures that you can personalize your communications in a sustainable, scalable way.

3. Invite your donors to be ambassadors for your mission.

Donors will deepen their investment in your cause when they have the opportunity to take ownership of part of your mission. This is why it’s effective to invite your donors to be ambassadors for your organization. You can do this in several ways, such as:

  • Asking donors to run a peer-to-peer (P2P) fundraising campaign on your behalf
  • Encouraging donors to share your social media posts with their networks
  • Inviting donors to advocate for a partnership between their employer and your organization
  • Having donors provide testimonials about what it’s like to give to your organization, which you can then share in a variety of ways

Your goal in inviting your donors to be ambassadors for your work is to make them feel like they’re part of your nonprofit’s team. Make sure to thank them for their efforts and let them know how they’re making an impact by spreading your message.

4. Keep an eye on your donor data.

Your donor data will be a constant source of insights as you work to improve donor retention at your nonprofit. Review it often to identify trends in who your donors are and how they behave, as well as which outreach, fundraising, and stewardship strategies are working to engage and retain them.

By proactively monitoring your donor data with retention in mind, you can more easily identify issues as they come up and quickly work to address them. For instance, you might see that your donor retention rate is falling during the summer months as your organization is between fundraising campaigns. Once you have that information, you can act on it to re-engage donors who may be losing interest in your organization, paving the way for better retention.

5. Thank your donors.

Showing donors that you appreciate their donations and other forms of support is one of the best things you can do to boost donor retention. A thoughtful thank you can remind your donors that your organization is mindful of them and the effort they put forth to help further your mission, which can encourage them to continue to give and stay engaged.

Follow these tips to thank your donors in meaningful ways:

  • Be prompt in thanking donors for their gifts, sending your thank yous within one to two days after receiving donations.
  • Use your donors’ preferred names and pronouns in your messages, and mention the donation amount.
  • Share how the donor’s gift will impact your constituents.
  • Use language that conveys sincerity and gratitude.
  • If possible, have someone at your organization write the thank you and sign it to make it feel more personal.

Remember to refer back to what you know about your donors’ communication preferences when thanking them. Some donors may prefer to receive a handwritten note in the mail while others may appreciate a thoughtful email!

6. Demonstrate the impact your donors have on your mission.

To be motivated to give again and again, your donors need to know that when they donate to your nonprofit, they’re actually making a difference.

Show them that they’re having an impact on your cause by regularly sharing updates about how your organization is using their donations to move its mission forward.

You can do this in several ways, whether through your organization’s annual report, regular blog posts on your website, or in messages to individual donors. Whatever way you decide to share your impact, consider taking your efforts a step further by asking a few beneficiaries to share how your donor have improved their lives. This will give your impact-sharing efforts an extra personal touch.

7. Offer flexibility in how your donors can give.

If you want your donors to give more than once, make sure you’re offering flexibility in how they can give. This makes the process more accessible and convenient no matter what donors have going on in their lives. Here are a giving options you might offer:

  • Recurring giving or monthly giving program: Sometimes a big donation can feel overwhelming. A recurring giving program breaks down donations into manageable chunks, allowing donors to simply fold in their donations to their regular monthly expenses. Plus, these programs often result in more revenue for your nonprofit over time. For instance, a donor may decide that instead of giving a one-time donation of $10, they’ll give $5 each month. This means that after a year, that donor will have given a total of $60!
  • Suggested donation amounts on your online donation page: Say a donor is planning to give your nonprofit $20. They arrive on your donation page and see that instead of typing in their donation amount, they can simply click a button that allows them to donate a suggested amount of $25. Including suggestions like this can speed up the giving process and increase the chances that donors give a little more than they initially planned to.
  • Text-to-give: This donation method allows supporters to text a keyword to a designated number and either get a link to your online donation form or donate straight from their texting app. Since donors use their phones throughout their day, this can be a great way to encourage regular giving and make it easy to follow through.
  • Mail-in donations: While donating online is becoming more ubiquitous, don’t overlook the importance of mail-in donations. Let your supporters know that you offer this option and provide clear instructions for where they can send checks or money orders.
  • Educate your donors about employer matching gifts: Matching gifts allow your donors to increase their donation’s impact without reaching back into their wallets. Empower your donors to find out if their employers offer matching gifts by embedding a matching gift database on your donation form. This will allow them to verify their eligibility and start the matching process. Plus, according to Double the Donation, 1 in 3 donors say they’d give a larger gift if they knew matching was an option.

When it comes to giving options, your goal should always be to make the process as fast, easy, and convenient as possible for your donors. On top of offering a variety of options, be sure to maintain your organization’s donation tools so that the giving experience is always a positive one.

8. Ask your donors for feedback.

Show your donors that you care about their experiences with your organization by asking them for feedback. Do this by sending out a survey with questions like:

  • What did you like about our last fundraising campaign? What didn’t you like?
  • What do you like about our email newsletter? What do you think we should change?
  • How often do you visit our nonprofit’s website? What do you think could be improved on the website?
  • What is something you’d like our organization to start doing? What is something you’d like for us to stop doing?

Note that your request for feedback will only be effective in helping you strengthen donor relationships if you actually take that feedback into account and act on it. As you implement your donors’ feedback, make sure to communicate that you’re working on making positive improvements to your operations based on their thoughts to ensure they feel heard.

9. Offer additional ways to be involved.

Donating money isn’t the only way for donors to support your nonprofit. In fact, when a donor gets involved in multiple ways with your nonprofit, it can deepen their love for your cause and their commitment to seeing your organization succeed. For example, VolunteerHub asserts that volunteers are 66% more likely to give monetary gifts to the organization they volunteer for than those who do not volunteer.

Let your donors know about additional ways they can get involved, such as:

  • Volunteering
  • Attending events
  • Following your organization on social media
  • Giving in-kind donations
  • Providing pro bono services

While most of these involvement opportunities take a low or moderate amount of effort, there may be instances where you want to extend an invitation to a donor to take on a more intensive opportunity, like serving on your board or participating in a feasibility study for a major campaign. This is especially appropriate for major donors.

10. Be transparent.

If your organization is untrustworthy or doesn’t follow through on its commitments, you will be hard-pressed to find donors who want to engage with your nonprofit and give on a regular basis.

Avoid this issue by being transparent with your community, sharing the good as well as the not-so-good. Your donors will appreciate this candid look at what is working well at your nonprofit as well as what your organization is working to improve, and they’ll see your organization as more human and trustworthy.

11. Encourage planned giving to help your donors secure their legacy.

Planned giving helps donors lock in their legacy now, and it can be an excellent strategy for paving the way for consistent engagement and giving throughout a donor’s life.

Educate donors of all ages and life stages about planned giving and how they can set up their own planned gift, whether that takes the form of a charitable bequest, charitable remainder trust, or a beneficiary designation for a life insurance policy or retirement fund.

How Averill Fundraising Solutions Can Help Your Organization Boost Donor Retention

Even with airtight strategies on your side, you may still encounter challenges when it comes to retaining your donors. This is why many nonprofits choose to work with a fundraising consultant, like Averill Solutions!

This is a screenshot of the Averill Fundraising Solutions website.

When you work with Averill Fundraising Solutions, you’ll learn how to do your job as a fundraiser better, which gives your team the time, bandwidth, and enhanced strategies it needs to nurture donor relationships and encourage continued giving from its community.

Here are some of the services our firm offers to help your nonprofit improve how it fundraises:

  • Capital campaign planning
  • Feasibility studies
  • Annual fund consulting
  • Strategic planning consulting
  • Embedded interim fundraising management staffing
  • Leadership training
  • Executive search

No matter the specific service you need, we tailor our solutions and strategies to your organization, helping you make the decisions that are best for your organization’s long-term health and your specific community of beneficiaries and donors.

If you’re ready to work with a professional fundraising consulting firm that offers unparalleled expertise in fundraising strategy and understands what donors need from the organizations they support, consider partnering with Averill Fundraising Solutions!

Donor retention makes a big difference in your nonprofit organization’s ability to be successful now and in the future. Use this guide to begin assessing your own organization’s donor retention rate and begin making positive progress toward building strong and lasting relationships with the donors who want to see you accomplish your mission.

Want to learn more about the world of fundraising? Check out these resources:

Click through to begin working with Averill Fundraising Solutions and improve donor retention at your nonprofit organization.

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