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Donor Retention vs. Acquisition: What You Need to Know

As a nonprofit professional, you know that your donors are some of the most important people. After all, without their support and funding, your organization would not be able to achieve what it has for your mission. That’s why engaging donors and nurturing those relationships are so important.

When fundraisers talk about donor engagement strategies, they’re likely referring to donor retention and acquisition efforts. In short, donor retention is how many donors continue to give while acquisition describes how many new donors give. Balancing these two efforts can be a challenge for some nonprofit organizations, and even more so in times of instability like this. 

The global pandemic has likely put a pause on your traditional engagement efforts, whether it was in-person meetings or larger fundraising events. On top of that, your donors might not be in the best financial position to make a gift right now, no matter how much they want to. Because of these challenges, nonprofits should rethink their current donor engagement strategies in order to maximize long-term success.

To fully understand how your donor retention and acquisition efforts might need to change amidst the current fundraising climate, it’s good practice to review the basics. You can do so by exploring the following questions:

  1. Is it better to retain donors or acquire new ones?
  2. What are some of the best donor retention strategies?
  3. How can you use donor retention strategies to increase major gift fundraising?
  4. How should your donor engagement strategies change in times of crisis?

Platforms like DonorSearch help nonprofits focus on their donor engagement strategies in order to maximize fundraising. Nonprofits thrive off of loyal and long-lasting donor relationships, so consider this next time you’re planning any supporter outreach. Ready to learn more? Let’s begin.

1. Is it better to retain donors or acquire new ones?

When it comes to nonprofit fundraising, there’s a common misconception that acquiring new donors should be the ultimate goal. This isn’t without reason, of course. The more donors you acquire, the larger your fundraising revenue will likely be. However, that’s not the full story.

Meeting and engaging new donors should be a priority for your nonprofit, but it should be far from the top one. In fact, retaining the same donors yields significantly more benefits than continuously trying to acquire new ones. 

For one thing, donor acquisition efforts are more costly and time-consuming than donor retention efforts. When starting new donor outreach, you likely need to do a good amount of research in order to explore every viable connection. This takes many more resources and steps than simply referring to your current donor database.

On top of being more convenient and cost-effective than donor acquisition, improved donor retention efforts also benefit your fundraising efforts overall. Consider the following reasons:

  • Donors who give to your organization over and over again have a stronger connection to your mission than those who don’t.
  • Donors with long-lasting and consistent relationships with your nonprofit are more likely to give major gifts.
  • The more you engage with the same donors, the more fundraising data you collect.

Overall, focusing on donor retention leads to better relationships with supporters and is a key driver for donor loyalty. This offers your nonprofit more consistent support, even as you continue to grow. 

However, this doesn’t mean you should forgo all acquisition efforts. While donor retention is key to sustaining your nonprofit, meeting new donors is still a huge component of fundraising. The idea is that without any retention efforts for those new donors, you’re losing out on any long-term value. Make sure to balance both of these efforts when going forward and don’t let retention strategies go by the wayside.

2. What are some of the best donor retention strategies?

The basis of donor retention is in the relationships you have with your donors. People only continue to support a cause when they trust that organization, resonate with its mission, and are confident that their contribution will make a genuine impact. This can only happen by actively engaging your donors and making meaningful connections with them. 

According to Bloomerang’s guide to donor retention, nearly 70% of donors only give once. While this gift is still appreciated, one-time donors ultimately result in a loss of your initial investment in acquiring that donor. That is why retention strategies are so crucial for fundraising success. 

Often, donors don’t give again because they think the charity doesn’t have continued need or they were never informed of what happened with their previous gift. This disconnect between the nonprofit and donor can be easily ameliorated with the right donor retention strategies. Here are a couple of proven tactics:

  • Always show donor appreciation. Every time a supporter makes a gift, properly thank them in a timely manner. A good idea is to send an email as soon as the donation is received. Take a look at your fundraising tools and determine if this process can be automated.
  • Segment communications. When communicating with your donors,  keep messages as targeted and personal as possible. Segmenting your donors into groups based on metrics like “gift size” is a great way to keep your different communication efforts organized.
  • Share impact stories. Donors make gifts to organizations because they want to make a genuine difference. Encourage donors to keep supporting your mission by sharing impact stories. This lets donors know how their gift specifically helped the cause and shows them that your organization can make real change.
  • Offer a recurring gifts option. One of the best ways to encourage donors to give again is to simply include a recurring gifts option within the donation form. This is also a great alternative for those who want to give more but can’t at this time. They can instead give smaller amounts on a recurring basis, often amounting to a larger gift in the long run. This is a great choice for those supporters who might be going through financial difficulties. 

Remember that donors want to know the impact of their gifts. After all, that’s why they gave in the first place. When creating your donor retention strategy, craft your communications to ensure that you’re keeping donors’ needs at a high priority. If you fail to do so, they’ll just assume their gift got lost in a pile and they’ll likely not give again.

3. How can you use donor retention strategies to increase major gift fundraising?

Major gift fundraising is one of the top methods that nonprofits use to increase their overall fundraising. After all, some fundraising professionals say that around 76% of a nonprofit’s total gifts likely comes from just 3% of donors. This is a clear indication of how much impact major gifts have. 

But, it can be tricky to implement. Major donors only give to nonprofits that they have consistent and valuable relationships with, so just because you know a supporter has the funds to make a large gift doesn’t mean they will. This is where your donor retention strategies come into play.

For starters, take a look at your current database and determine who your major donors are. A good tip is to rank your previous donors within the year by gift size. The top gifts that make up around 75% of your total revenue likely came from your major donors. 

Then, use your same donor retention strategies to engage those major donors. If anything, you should be even more careful and thoughtful behind these engagements. Many fundraisers go the extra mile and have one-on-one meetings with their major donors.

If you want to further increase your major gift funds, the best way to do so is to invest in a prospect research tool. Prospect research is a method that involves screening your existing database for traits that align with the characteristics of a major donor. This way, you can find major donor prospects and start focusing on those relationships with them. 

4. How should your fundraising strategies change in times of crisis?

Your donor retention efforts are likely strained due to current events. With a global pandemic on our hands, donor relationships are more delicate than ever and there likely needs to be a shift in your current fundraising strategies in order to stay relevant and engaging. 

When engaging your donors during this time, it’s important to take the time to understand their situation and reposition your nonprofit as a resource for them. In order to best maximize retention efforts, consider following best practices:

  • Increase non-fundraising communications. You can instead ask your donors how they’re doing and provide helpful resources that may be able to help during this time. A good idea is to ask your donors right away how they’d like communications to be for the time being. 
  • Offer virtual opportunities and events. With many in-person interactions on a pause, this can put a strain on your donor retention efforts. Some of the largest engagement opportunities are at fundraising and volunteering events, after all. However, this is the perfect time to continue hosting virtual alternatives. Virtual fundraising events and virtual volunteer opportunities are just as accessible and engaging with the right tools and solutions. If this sounds like something you want to explore, we urge you to check out this re:Charity article on virtual fundraising software.
  • Show increased donor appreciation if a gift is made. If a gift is made during this time, make sure to amplify your appreciation. You already know that everyone is struggling in their own way, so it’s more important than ever to effectively express your gratitude. Consider even sending a handwritten letter with a token of gratitude or making a phone call so that you can personally show your appreciation.

Don’t worry if your organization is unsure of the next best steps during this time. No one could have predicted the effects of COVID-19 on nonprofit fundraising, let alone on society in general. Just remember to prioritize your donors’ needs and focus on building those important relationships.

For fundraisers, perfecting your donor retention and acquisition efforts is key to growing your organization and collecting gifts. However, don’t waste your time acquiring new donors if you aren’t doing much to retain them afterwards. It’s important to lay out a solid donor retention strategy in order to develop important relationships and maximize long term success.

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