AFP research shows charities struggling with donor retention

• DOI: http://doi.org/10.1002/nba.30136
• Date: 01 December 2015
• Published date: 01 December 2015

DECEMBER 2015

5

NONPROFIT BUSINESS ADVISOR

© 2015 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

Fundraising

AFP research shows charities struggling

with donor retention

New research conducted by the Association

of Fundraising Professionals shows that aver-

age donor retention rates have stalled out at 43

percent—a few notches shy of the high-water mark

of 46 percent recorded in 2005—adding urgency

to the need for investments in donor relations and

strategic fundraising.

According to Andrew Watt, AFP president and

chief executive ofcer, the 2015 Fundraising Effec-

tiveness Project Survey Report, developed by the

AFP and the Urban Institute, conrms a trend of

the past several years showing donors’ propensity

for changing their minds on which charities to

support.

“This is not a new phenomenon. One of the re-

alities the FEP makes clear is that donors do not

simply choose a few charities to support and stick

with them every year,” Watt said in announcing the

ndings. “Donors are remarkably inconsistent in

their giving, whether it’s because they lost interest

in a cause, were giving because a friend or family

member asked them, or did not like how the charity

was treating them. The charitable sector’s challenge

is to gure out how to better inspire and retain

donors from year to year.”

In addition, nonprots reported a greater loss of

donors from 2013 to 2014 than they gained through

new recruitment and enticing lapsed donors to

return to the fold—leading to a net loss of three

donors, on average.

Despite this, nonprots are keeping their heads

above water by adding actual donations at rates

slightly higher than they are losing them through

attrition. Per the FEP report, for every $100 a

charity gained over the 2013–2014 period—from

new donors, the return of previous donors and in-

creased giving from current donors—it lost just $95

from lapsed donors and donors who reduced their

prior-year level of giving, for a positive gain of $5.

While that is good news, the numbers are still

well below the rates logged before the Great Reces-

sion, the report showed. In 2004, charities lost just

82 donors for every 100 they had gained for the

year. And as recently as 2007, the net giving level

was +14—with charities losing just $86 for every

$100 they gained.

“In some ways, nonprots are in a new world

when it comes to post-recession giving levels and

behavior,” said Elizabeth Boris of the Center on

Nonprots and Philanthropy at the Urban Insti-

tute. “When the economy was strong, we worried

less about retaining donors because new donors

were easy to nd. But it’s far less expensive to re-

tain existing donors than it is to identify and nd

new donors. The search for new donors is a costly

burden for many charities.”

According to the report, striking the right bal-

ance of retaining existing donors and recruiting

new ones requires examining the net return on

investment in each gift and donor category and

comparing the results among categories. (Nonprof-

its should rst ensure that their donor tracking and

accounting systems are able to report the returns

on fundraising investment by category.)

Nonprots should compare their results category

by category with those of the FEP, not only to

see how they stack up to the benchmarks in the

report but also to see where they should invest

their resources to maximize their fundraising net

gain. Using the data in the report, nonprots can

compare their performance ratios, by gain/loss

categories, against:

• FEP Survey growth-in-giving performance

statistics for peer-group organizations selected by

level of giving, age of development program, loca-

tion, subsector, rate of growth and percentile level.

• Their own prior-period performance.

• Their performance goals.

After that, the AFP said, they should set their

fundraising budgets accordingly—that is, cost-

effective, goal-oriented and growth-oriented. Ac-

cording to the FEP report, this entails:

• Making signicant, incremental increases in

(See FUNDRAISING on page 8)