Is your fundraising on a treadmill? Do you acquire donors one year only to lose them the next? You may be experiencing donor churn. Your rate of donor churn significantly impacts your organization’s sustainability and long-term success. Donor churn is the constant turnover of new donors in your giving program. The churn refers to the percentage of donors lost each year after their first gifts.
A typical nonprofit will lose a shocking 70%+ of its new donors the following year. Once these donors lapse, only 4% are recaptured, returning to give the next year: 96% are lost forever.
If they do return, you can expect to lose an additional 40% each year. Churn impacts every aspect of your fundraising program:
- It creates a constant race to acquire new donors
- Feeds the inability to put resources toward cultivating meaningful relationships with current donors
- Makes it difficult to develop a robust cohort of legacy donors
- Wastes time and resources now and creates donor base that never seems to grow
Let’s look at some numbers. The cost of replacing your donors every 3 to 5 years is enormous. The lost revenue is even more shocking: The folks at Boomerang produced a detailed report on the high cost of donor churn, using data from the Fundraising Effectiveness Project. They put together a table that shows how a small improvement in retaining donors who give a modest $200 gift can increase your organization’s fundraising revenue.
At the 5-year mark, the group with reduced churn is providing more than double the financial support as the group with more typical churn. After 10 years, the annual impact is more than 5 times that of the group with the typical attrition rate. At 15 years, the organization will have captured 50% more revenue.
Reducing your churn creates more than just increase revenue. For example, a larger number of engaged donors means you have more opportunities to cultivate major and planned gifts. When your churn goes down, you are giving donors the chance to build their relationship with your mission over time and cross the threshold into becoming planned giving prospects
What can you do to reduce your churn rate?
Improve your stewardship practices and support- even in the face of the continuing pandemic
- Use technology and the tools you have available through your donor database and email providers.
- Survey your donors and ask them how often they want to be contacted
- Review your email data and pay attention to what interests your donors and what they ignore
- Create short videos from your clients’ perspectives that bring the impact of your organization to life
- Start a YouTube channel and post virtual tours of your program or a day in the life of a service delivery staff member
Go back to basics:
- Stop viewing your ‘smaller’ or newer donors as not worth the investment of stewardship resources.
- Audit your thanking, acknowledging, and engagement practices to make sure they are donor-centered
- Run a few reports through your donor database software or download your file to Excell to create a baseline of how many donors have given 2- 3- 5 years or more
- Be sure you are putting a similar effort into thanking and engaging your newer donors who may be giving smaller amounts, as you are those who are giving more significant amounts
- Strive for 0% errors on the basics: donors want to be thanked promptly, for the correct amount, with their names spelled correctly, with acknowledgement that their gift was used for the purpose it was given
- Be sure to describe the impact of their gift on your organization’s mission and the people it serves- why their gift matters, not just how it will be used
- If you are using video technology to stay in touch, use all the tools your platform offers to engage with your donors
- Shorter gatherings
- Break out rooms
- Polls and music breaks
- Analyze what churn costs your organization in terms of lost revenue and increased expenses and shift your focus to reducing your churn
- Measure it, track it over time and take steps to improve it.
- Reassign portfolios to include contact with new donors at all giving levels
- Ask board members to email thanks to new donors
- Get other volunteers involved in calling new donors
Bottom line: Don’t accept churn as a given. Take steps today to jump off the treadmill and make improving your churn rate a priority.
What is your organization doing to reduce churn? Leave a comment and join the conversation!