Recently over lunch with a major donor of a local charity, someone posed the question in the title of this post when the subject of donor retention arose.
Commercial Sector Background
Over the last 25 years, I have had the opportunity to be a board member, investor, founder and consultant to a fairly large and diverse group of commercial businesses. In every single case there has been an immense focus upon the measurement of, as well as the continued improvement of, customer retention metrics.
Retention rates are often a portion of employee, manager and executive bonus plan calculations.
Nonprofit Sector Current Situation
Over the same 25 year period, I have also served on a wide variety of nonprofit boards as well as consulted with several. The concept of donor retention is an afterthought as a key metric, at best, for most of them.
Case in point:
- Not a single nonprofit budget or budget worksheet I have seen utilized donor retention as any sort of factor
- Average charity donor retention is 40-50% versus average commercial customer retention rates of 70%-90% or higher
Thankfully, this is changing, as the awareness of how critical donor retention is has become more prevalent.
Next Steps
Every single person reading this post can help bring proper awareness of the impact of donor retention to light by:
- Sharing this post with as many others involved with the nonprofit sector as possible
- Insisting that the next annual budget worksheet has a variable added for donor retention rate
- Demanding that donor retention is a key metric being measured and posted for all to see
- Asking that strategies around donor retention be discussed in future board meetings
