Improving Donor Retention for Nonprofit Organizations

Organizations experience sharp declines in donor retention rates. Donors choose to continue donating to an organization based on the impact they perceive their donation to make. The better the perceived impact, the higher the donor retention. Organizations need a more effective way of showing their donors quality impact metrics and expressing their genuine gratitude to remain financially stable.
People Impacted
$ 31B
Potential Funding
I have this challenge
the problem
Nature and Context

According to the 2014 Fundraising Effectiveness Survey Report for 2012 - 2013, the average donor retention rate is only 43%. This donor retention rate can significantly impact the operation and effectiveness of nonprofit organizations which spend much of their time developing relationships with potential and current donors.

It is generally more cost-effective for organizations to retain and motivate an existing donor than it is to seek a new one. Reductions in gift losses are often the most cost-effective strategies for maximizing net fundraising gains.

Symptoms and Causes

The nonprofit sector has a problem. And it’s a major problem. It hurts nonprofits’ bottom lines, affects their ability to keep their programs funded, and leads to wasteful spending. The problem is donor attrition. The overall retention rate for nonprofits in the study was under 50%. That means only 45.5% of donors who gave to nonprofits in 2016 made another gift in 2017. (MightyBlog).

the impact
Negative Effects
  • Low donor retention rates reduce net fundraising gains by requiring expenditure on development operations.

  • Reduction in net fundraising limits the effectiveness of operations and inhibits the potential social impact of nonprofit organizations.

  • Communities generally served by public interest and nonprofit organizations are then forced to rely on sub-optimal resource allocation.

Economic Impact

The 2018 Fundraising Effectiveness Project report summarizes data provided by five donor software firms: Bloomerang, DonorPerfect, Neon, Blackbaud, and ClearView. These five firms provided anonymized gift transactions for all of the nonprofits using their software. According to this report, Gains of $6.008 billion in gifts generated from new, upgraded current and previously lapsed donors were offset by losses of $5.762 billion through reduced gifts and lapsed donors. This means that, while there was a positive $247 million net gain-in-giving, every $100 gained in 2017 was offset by $96 in losses through gift attrition.

Success Metrics
  • Increased donor retention rate.

  • Growth in year-by-year net fundraising gains.

  • Increased value of services provided to target communities.

who benefits from solving this problem
Organization Types
  • Nonprofits

  • Schools and Universities

  • Startups

  • Public interest and nonprofit organizations.

  • Target individuals and communities.

Ideas Description

Donor information is highly sensitive, which would require an adequate solution to be privacy-focused as well as efficient to optimize a nonprofit's resources.

Effective communication of donor impact is critical in retaining regular donors.

Tech Solutions and Services

Here are some solutions featured on X4Impact that are helping nonprofits improve and track donor engagement to further their impact:

Fundraising and Engagement takes advantage of the full Microsoft stack with its best-in-class cloud infrastructure through Azure, business intelligence and reporting capabilities, and other nonprofit-specific applications to help nonprofits engage more effectively with their donors to raise critical funds to continue their mission.

Network for Good - Simple. Smart. Fundraising Software. We built our all-in-one fundraising software for small nonprofits making a big difference. Let’s grow your good together.

Salsa is Powerful Nonprofit Software for Donor Management, Nonprofit Marketing, Online Fundraising, and Online Advocacy.

Bloomerang has pooled together the latest in best practices for donor engagement and retention to create a simple donor database solution that helps nonprofits decrease donor attrition and increase revenue. Plugging in the latest technologies and delivering them with a clean, modern interface, our cloud-based system is your “go-to” for better fundraising.

Flourish Change is a micro-donation and donor analytics platform that helps nonprofits maximize their fundraising. Nonprofits that partner with Flourish can put forward specific projects for their donors to support and can keep them up to date through a current news feed. The platform also offers donor analytics and relationship tools for nonprofits to directly communicate with their micro-donors.

Mightycause is a modern, all-in-one platform for nonprofit fundraising, donor management, marketing, crowdfunding and more. Your supporters are so much more than transactions. Donor engagement doesn't have to end at the donate button. Mightycause helps you grow and share your journey with supporters, all while saving money.

Donorbox has one simple mission: Provide nonprofits with simple, effective tools to manage their fundraising activities and connect with donors on a deeper level.We believe that nonprofits should not face technology barriers when helping others. To solve this, we built Donorbox so that every nonprofit can raise donations online with ease.

Hello Donor helps schools and non-profits reach, engage and increase donations with their supporter's friends, family and social network. It solves all these issues in one package by making it very simple for schools and nonprofits, on a peer-to-peer basis, to reach their audience, engage with them, and through creative means, increase donations with digital change round-up on a recurring basis.

ReliablyME empowers grant-funded organizations with objective, evidence-based behavioral outcomes data that serves as a leading indicator of impact in order to reduce funders' perceived risks and increase the size and duration of their funding commitments. ReliablyME also helps improve client/beneficiary behavioral outcomes by empowering them with commitment-based nudging technology that accelerates in-program and post-program progress and recognizes them with a character credential that opens doors to opportunities.

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