How many donors give again each year?
How a non-profit works out its donor retention rate, looks at it by group of donors, and spots the donors it is losing before the income drops.
By Achekam · · 5 min read · For Non-profit businesses in South Africa, Nigeria, Kenya
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
Most fundraising reports count what came in: total donations this year, the size of the gala's takings, the number of new donors from the year-end appeal. Fewer reports ask the harder question. Of the people who gave last year, how many gave again?
That number tells a board more about the health of an organisation's support than any single campaign result. A non-profit can raise more money than last year while quietly losing most of its existing donors and replacing them at great effort. When the new-donor drive slows, the income falls, and nobody saw it coming.
Retention is churn turned around
Businesses measure the opposite of retention. Harvard Business Review, quoting Professor Jill Avery, defines customer churn rate as the percentage of customers who end their relationship with a company in a particular period: the customers who left during the period divided by the total customers at its start. HBR's article The Value of Keeping the Right Customers explains the measure and why it matters.
For a non-profit, the donors who "leave" are the ones who gave last year and not this year. Turn the churn calculation around and you have donor retention:
Donor retention = donors who gave last year and gave again this year ÷ all donors who gave last year
A worked example in words. Take the list of everyone who gave at least once in the last financial year. Count how many of those same people or organisations have given at least once in this year. Divide the second number by the first. The result is your retention rate; the rest of the first group are the donors you lost.
Two rules keep the figure honest. Count donors, not gifts: a monthly giver who gave twelve times is still one donor. And match people properly: a donor who gave once under a personal name and once through a family trust should not appear as one lost donor and one new one.
A figure that arrives late
HBR describes churn as a lagging indicator, quoting a software company's vice president of services: by the time churn rises, it is six or eight months after the company actually failed the customer. Donors behave the same way. The thank-you that never went out, the report on the project that was never sent, the phone call that went unreturned all happen months before the donor quietly fails to give again.
So watch the earlier signs during the year:
- Donations not acknowledged within your own target time.
- Monthly debit orders or standing orders that stop or bounce.
- Pledges whose instalments are overdue.
- Major donors who have not heard from anyone in the organisation for months.
None of these is the retention rate itself. Each is a reason it will be lower next year.
Which donors are you losing?
One overall rate hides most of the story. HBR, again quoting Professor Avery, recommends looking at churn by customer segment to show which types of customer are at risk and may need attention. For donors, useful groups are:
| Group | What to compare |
|---|---|
| Monthly givers | How many lapsed versus how many are still giving |
| Event donors | Whether people who gave at the gala gave again outside it |
| Major donors | Each one individually, not as a percentage |
| First-time donors | How many made a second gift within the year |
First-time donors usually deserve the closest look, because a single gift made in response to an emergency appeal says little about whether that donor will stay.
Keeping a donor usually costs less
Amy Gallo writes in HBR that, depending on the study and the industry, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. That research is about businesses, not charities, but fundraisers will recognise the pattern: an appeal to strangers needs advertising, events or paid channels, while a thank-you and an update to an existing donor costs very little.
The practical lesson for a board is to set a retention target alongside the income target, and to fund the work that keeps donors as seriously as the work that finds new ones.
Thanks and acknowledgement come first
The Donor Bill of Rights says donors have the right to be assured that their gifts will be used for the purposes for which they were given, and to receive appropriate acknowledgement and recognition. Those two rights are also the two strongest reasons a donor gives again: they were thanked, and they were told what their money did.
Donors, gifts and counts in the Non-profit pack
Achekam's Industry CRM includes a Non-profit & fundraising pack. It calls customers Supporters and keeps Donors, Donations and pledges by fund and campaign, Volunteers with their shifts, and Grant applications. Because donors and their donations are kept in the same pack, the two lists you need for the retention calculation, last year's donors and this year's, come from the same records rather than from separate spreadsheets.
The pack's donor welcome workflow takes care of the first steps that keep a donor: it calls and thanks the donor, records their preferences, confirms the gift reached the bank, sends a receipt or acknowledgement, and sends an update on what the gift made possible.
The home-page counts come from records, tasks or the ledger, and none is typed in by hand. They cover things such as open records, records in a stage, overdue tasks, tasks due today, key dates in the next 7 days, won this month and revenue this month. An overdue-tasks count that keeps climbing is an early warning in its own right. Retention itself is a yearly figure you work out from the donation records, by group, as described above.
Start with last year's list
Pull last year's donors, mark who has given again so far this year, and look at the gaps by group before the year-end appeal goes out. For the thank-you process itself, read welcoming and thanking a new donor, and for what donors are entitled to expect, the Donor Bill of Rights.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
