It’s All Relative

Posted by Laura Otten, Ph.D., Director on November 8th, 2013 in Thoughts & Commentary

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The Urban Institute recently came out with the results of its assessment of donor retention using 2011-2012 data.  The conclusion?  Nonprofits are losing donors at a rate that does not allow them to keep pace:  for every 100 new and recovered donors gained, 105 were lost between 2011 and 2012; the year before the gain was 100 to a loss of 107.  This, according to the study, is a marked contrast with the years prior to the recession when there was a net positive year- to-year.

Those organizations raising less than $100,000 a year suffered a net loss in donors of 13.5%, while those raising more than half a million showed a 16.6% gain in the number of donors.  And those in the middle -those raising $100,000 to $500,000 – showed a net loss of 5.1%.

This is, indeed, bad news.  But it will become horrendous news if nonprofits don’t wake up and pay attention to this trend.

Neither the Urban Institute nor anyone else has offered up explanations as to why this is happening.  This small little set of data points went virtually unnoticed by most, despite the fact that it is another powerful reminder of just how crucial it is for every nonprofit not just to know who their donors are, but why they give to them.  Failure to know who is giving to you – and I don’t just mean knowing their names and addresses, but knowing who they are as people, what they care about beyond your organization, etc., and why they choose to give to you – could prove to be an organization’s ultimate downfall.

These statistics add urgency to the movement to stop looking at fundraising as a transactional activity and start looking at it as a relational activity.  Too often the focus is on attracting new donors at the risk -of losing previous donors.  Any one in sales will tell you it is easier to retain a customer than it is to get a new one.  Why aren’t we focusing on that lesson in fundraising?  Ironically, too often when funders provide a matching grant (a coveted thing to get) funders include a stipulation that some percentage (or all) of the matching funds must come from new donors!

The reality is that fundraising has become more and more complex and resource intensive; it requires keeping many plates spinning constantly.  It is no longer sufficient, and truthfully, hasn’t been for some time, to have a simple, one-dimensional fundraising strategy.  For an organization to survive, its fundraising strategy must be multifaceted and non-stop.  It must attract new donors, while also including a well-developed retention strategy.  It must speak to a multi-generation population while using all of the different methods of communication preferred by members of that multi-generation audience.  To do the “new fundraising” well and right involves a considerable investment of resources, from money to time and energy.

There may be a variety of reasons why those nonprofits that raise smaller sums of money are losing more donors than others.  I don’t care to speculate at this point.  I do, however, care to admonish.  Any nonprofit, regardless of size, which does not have a strong donor retention strategy in place deserves what it gets.  If that is loss of donors, so be it.  There simply is no excuse for its absence.  Designing and implementing the strategy is an appropriate role for any board.

 

The opinions expressed in Nonprofit University Blog are those of writer and do not necessarily reflect the opinion of La Salle University or any other institution or individual.

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