business development, fundraising industry

Nonprofits Don’t Have a Donor Retention Problem. They Have a Donor “Retention” Problem

The average donor retention rate in 2017 was 45.5 percent; 0.5% change from 2016’s
rate. The gift or dollar retention rate was 48 percent, no change from in 2016. Over the last 10 years, donor and gift or dollar retention rates have consistently been weak — averaging below 50 percent.

2018 Fundraising Effectiveness Survey Report

My friends, this is a problem. It’s no secret. This is not a recent trend. In fact, most nonprofits seem to be resigned to this as “just the cost of doing business these days”.

For every $100 they receive in donations this year, they can count on less than 50 bucks next year. That means if you’re receiving $100,000, you can reasonably expect about $50,000 next year. And likely less than $25,000 2 years from now.

This measurement of the # of dollars given year over year, or the # of donors giving year over year, is called the “retention” rate, and it’s widely considered a pretty good metric for the health of an organization.

I think it’s also indicative of deeper change that must come. But before that:

Higher “retention”, that must mean higher satisfaction, right? Keep those refrigerator magnets coming!

Lower “retention”, Uh oh, we better do something! More thank-you cards! More phone calls!

Does it work? Not according to the statistics. Otherwise, wouldn’t we see those numbers increasing rather than decreasing?

Ultimately, that is not a very good way to create sustainability, in anything you do. Bloomerang does the math for you pretty well. I was going to do this same presentation, but they beat me to it. [By like only a decade, but who’s counting?] Check it out. 

Why Does This Happen?

Is it because of competition? So many nonprofits asking for money each year that the pool is so diluted that nobody can effectively give, so they all give up and stop with the charity?

I don’t think so.

Is it because of poor “stewardship”? By that I mean, do donors not feel appreciated enough? Don’t they get enough calendars, mailing labels, stuffed animals, t-shirts, hats, note pads, coffee mugs, sweatshirts, pens, personalized phone calls, thank-you notes, birthday cards, appeals, e-mails, annual reports, invitations to special members-only events, or newsletters?

Maybe. Probably not.

Is it because the organization uses too much “we” language in their appeals, and not enough “you” language?

Maybe. More likely than either of the above. Even this, though, could just be a false front.

I don’t think this is the real problem. Anyone can replace all the “we”s in a letter with “you” without changing beliefs about those you’re writing the letter to.

I think the real problem is something deeper. More fundamental.

More at the heart of how that organization views itself, and how it views its donors.

So what? Is it even a problem? Just have another gala and raise the money that way.

Sure, there are compensations you can make to plug the $50,000 hole in your budget next year. Have that gala, or that golf tournament. Host a trivia night. Participate in a multi-channel “acquisition” campaign. Direct mail. Board member networking. Have a garage sale. Dig up the coffee can your great-great-uncle buried in that abandoned mine shaft down the old dirt road. Get the money somehow. Meet your budget. Breathe a sign of relief.

And then hitch up your belt buckle, to do it all over again.

Because those donors you just found, to meet that $50,000 gap in your fundraising plan, are going to trickle away again, at the same 50% rate, in another year. $25,000 coming in next year, $12,500 after that, $6,250 the 4th year, and so on. Did you really do anything to move the needle?

Throw them some more merch! Let them advocate for us! Remind them that they’re the heroes!

Won’t work. Hasn’t worked.

The Giving USA 2019 report shows that charitable giving in the United States is about 2% of disposable income, and has been for a while now.

Like, the last 40 years a while.

People gave 2% of their disposable income last year. They’re likely to do so the next, and next, and next. This isn’t moving off that benchmark much, if at all. That’s just how much this society cares about philanthropy.

That extra $50,000 you raised with your gala didn’t create more giving, it just shifted it around from one group to the next. Pretty much regardless of your trinkets and your mailing labels, people are going to do what they’re inclined to do.

And one of the things people are inclined to do is to think of themselves as people, not objects.

Do you do the same? Do you treat donors as people? Or as objects?

Let me read your mind:

YOU TREAT THEM AS OBJECTS.

Now, you might get quite defensive on this one.

No we don’t, you’ll say. We love our donors very, very much! We care about each and every one of them! We let them know in every communication that if it weren’t for their $10 donation, we wouldn’t be here!

Let me ask this question, then:

Do you have a “retention rate” measurement?

If yes, then the answer for “do you treat them as people? Or as objects?”, is obvious:

YOU TREAT THEM AS OBJECTS.

Because you don’t “retain” people. You “retain” forces that would, of their own volition, do something else.

What is a retaining wall? Something holding back the rock, dirt, and mud from rolling out where it would rather be.

retaining_wall
Wallis Landscape (internet search)

Are your donors “dirt” that just wants to follow the pull of gravity, but you’re putting barriers in their way?

What else might you “retain”? You could retain an asset, like buying a municipal bond or a stock certificate. You retain these and hold on to them, so that they appreciate in value. You have control of them; you choose what to do with them, when to dispose of them, and you get the value from them.

So – if you think of “retaining” your donors, doesn’t that mean you think of them as objects to be manipulated for your benefit?

Look at all the tips and tricks that will help you “increase” your donor retention rate: 12,800,000 results.

Will those work?

Perhaps. If you want to continue thinking of your donors as “assets” that you control. If you wish to continue to view your purpose as “stewarding” those major gifts and the

It’s a matter of mindset.

I believe that how you think of your donors will eventually shine forth in all your actions.

When you speak of “retaining” donors, that tells me that you believe that those donors want to do something else, but you want to hold them back from that very thing. You want to redirect their donations to you, not to the animal shelter down the street.

You want control.

You want power.

You want authority.

You want an asset that you can manipulate, direct, and, ultimately, bend to your will.

You haven’t done the hard work of enticing that donor to give again, because your mission aligns with her desires.

You aren’t trying to attract the right kind of donors.

You aren’t trying to woo those donors over and over and over again, and get them to be faithful in their giving to you year over year over year.

Instead, you’re trying to manipulate them. You’re trying to control them.

And it shows.

How does it show?

It shows up as 45% year-over-year giving!

It shows up in conferences, seminars, webinars, and blog posts about “boosting your retention rate”, as if that was simply another manipulable feature of your organization, like dumping a faster processor into your CPU, or pouring some nitrous oxide in your turbocharger to squeeze every last little bit of speed out of this thing before it blows up.

I think there needs to be some fundamental reframing of the words that organizations use to describe themselves, and their donors.

One of the first is this one – retention.

Let’s all say it one more time, then let’s retire it together. RETENTION is a metric we used to use, but will no longer.

Because nonprofits don’t have a retention problem. They have  a “retention” problem. The problem is not the donors, it’s in the organizations themselves and how they think.

Fixing this problem is going to be deeper than just changing a few terms.

It’s going to require full-scale reorientation of how your organization views itself and the world around.

For a simple start, make a small change.

Instead of retention, why not think of reporting your “donor faithfulness rate”?

It would be the same numbers. You wouldn’t even have to change your data processes, just re-title a few slides in your presentation deck.

100 donors last year, 45 donors this year. 45 / 100 = 45% Donor Faithfulness.

 

health-greatest-gift-contentment
courtesy QuoteOasis.com

On the surface, it doesn’t look much different.

But that’s the important point.

The surface isn’t what matters. That’s just the tip of the iceberg.

It’s about recognizing who has authority in the relationship between donor and organization. Retention is all about the organization and its achievements, and says that the organization has the power. Faithfulness is all about the donor, and her desires, and recognizes her authority to walk away at any time.

If you measure a retention rate, but then try to turn around and talk about how much you love your donors and give them a “personal touch” through trinkets and baubles and window dressing,  there’s going to be a disconnect.

They will be able to feel it.

They’ll be able to sense that you don’t really care about them. They’ll be able to sense that you’re really more concerned with your own goals and meeting your own objectives.

They may not be able to express it in words, but they will express it in action.

By giving somewhere else next year.

And searching for that relationship that they’re missing.

The relationship they thought they were getting by giving to your mission in the first place.

The relationship that you’re now missing out on, because they’re wandering off somewhere else.

***

note – this is one of a series of blogs about the language we speak and the unintended effects of our wording. The first was Stop Saying “Thank You”. More will follow.

fundraising industry, local, nonprofit profile, regional

Some GiveSTL Day 2019 Statistics

GiveSTL Day is a one-day campaign for St. Louis-area nonprofit organizations. The appeals are generally made through electronic solicitation and social media, but there are no real rules, so organizations can run their campaigns how they wish.

Some of my favorite organizations participate: Spirit of Discovery Park, the Humane Society of Missouri, even the Sierra Club. This is a way to bring the whole community, both organizations and donors, together in a spirit of cooperation and healthy competition.

It’s usually scheduled in the first week of May. I first heard about it in 2018, and this year, 2019, I paid a lot closer attention. I’ve been looking at some 2019 results, and I’ll share a few highlights with some take-aways for those planning to participate next year.

1. Aggregate Results Don’t Really Help Much For Individual Organization Understanding

There were 887 organizations signed up. Of those, 842 received donations, with total donations (including prizes) over $3,000,000. That’s a lot of money, but it’s also not very helpful to individual organizations trying to learn how to make GiveSTL Day a success for them.

For the rest of these analyses, I’m using the GiveSTL Day data that shows results by individual organization, which does not include prizes so the total is only $2.89 million. This is an average of $3,434 per organization. Not bad, but that total is pretty skewed by a few large “winners” and many small “not-so-winners”.

Over 50% of the groups participating in 2019 had under $1,000 of donations. 504 of the 887 received $999 or less. That’s almost not worth it, if you consider the time taken by a staff member to create a campaign, design some artwork, solicit a match, design and produce artwork (or take photographs), plan, write, and publish social media posts and e-mails, set up autoresponder thank-yous, and so on. What’s the return there? I can imagine it might be pretty difficult to justify the same activity for such a low return next year.

However, if you did absolutely nothing, and still got $1,000, it might make sense to participate again. Because, hey, free money.

The point is, it’s hard to look just at aggregates and figure out what’s going on. You need to break results down by organization size and sector to have a good feel for what you could get out of GiveSTL Day. Those will tell you more about how your peers fared, and with some analysis could show you how you did relative to them.

But it probably won’t give you much certainty on what you would get if you participate again next year. Which, to be frank, is what we’re all looking for, right? We all want that secret sauce that turns our GiveSTL Day campaigns into the money trees we dream of.

It’s not that easy.

2. Size Is No Guarantee of Success or Lack Thereof

Organizations are grouped according to size of their budget: Micro (<$250,000), Small (up to $1,000,000), Medium (up to $2,000,000), and Large (everything above $2,000,000).

The fact is, there are small groups that have plenty of success and large groups that struggle. The Small segment this year included 379 organizations. 52 of those received over $3,000 on GiveSTL Day. And 12 of those were over $10,000. Evidently, small-budget organizations can still find the money to create major results in one-day campaigns like this. And remember, $10,000 on a $250,000 budget is a much bigger bump than the same amount on a $1,000,000 budget.

One factor that certainly helps: 10 of those 12 had a match available. Having a match is like free money, in multiple ways. It provides an incentive to give (because that money will be doubled), and it’s a large amount that comes with little effort.

I highly encourage all groups next year to start with a match, as a good way to create additional motivation for giving. (More on that later.)

In the same vein as small is not bad, let me say that being bigger is no guarantee of success, either. Yes, the biggest numbers did come from the largest groups. ThriVe ($181k), Stray Rescue of St. Louis ($136k), Foster and Adoptive Care Coalition ($110k), and St. Louis Priory School ($106k) had big days. But for the rest of the 205 Large groups, just being big was no better indicator of how their day would turn out. Only 58 of them had donations over $3,000 on the day, just past the 52 of the Small groups.

And of all of the 205 Large organizations, only 109 (53%) received $1,000 or more. That means that if you were a Large organization, and participated in GiveSTL Day in 2019, the chances of you walking away with over $1,000 were pretty much a coin flip.

This is an encouragement and a challenge. An encouragement to those small organizations that your results can be better, with appropriate strategy and an effective campaign. And it is a challenge, to those organizations who think that just relying on their name and their current size will be enough to make GiveSTL Day a success. You’re going to have to work for it.

3. A Match Is Not Just Helpful, It Is ESSENTIAL

I said above that having a Match is like free money. It can inspire higher donations, because of the desire to make that donation work even harder. Take a look at the aggregates:

  • 735 groups WITHOUT a match received $1.27 million ($1,725 each)
    • Average gift of $94
  • 107 groups WITH a match received $1.62 million ($15,175 each)
    • Average gift of $202

Fewer organizations, received significantly more money, with almost twice as much given per donation. Now, that’s not to say that having a match guarantees you more money. But having a match is more than just inspiring higher-dollar contributions.

Yes, a match is good for your donors, because it gives them something to shoot for, an initial goal that they can accomplish with the right initial effort.

Beyond that, though, a match is a signal that your organization is doing the right things. It shows that you’re planning GiveSTL Day as a campaign, not as an event. It shows that you’re being thoughtful about how you solicit matches throughout the year.

And planning early enough to get a match in place means that you’re more likely to complete the rest of the essential campaign steps in time for success as well: a marketing concept identified, a timeline planned, resources aligned to take advantage of specials like prizes, etc.

A word of caution: be careful how big you set your match. You want the matching dollar amount for GiveSTL Day to be something that’s going to challenge donors, but you don’t want it to be so far out that you don’t get there. That’s actually wasting your match money. For example, Five Acres Animal Shelter received over $30,000 on GiveSTL Day. But they also had over $5,300 of match remaining unused. Essentially, they missed out on over $10,000 of donations ($5,300 that could have been given and $5,300 that would have been matched).

If the Shelter had an indication of how much of that match would be used, then maybe they could have dedicated those matching funds to another campaign later in the year. As it turned out, there seems to be a missed opportunity.

All that to say – be strategic in how you structure your match. You want to make your matching funder happy that you’ve been able to satisfy her desire to inspire donations, and asking for too big a match (or putting too much of it towards GiveSTL Day) may counteract that.

Conclusion

GiveSTL Day is a giving campaign designed to bring the St. Louis region together for a common purpose. Like similar one-day digital campaigns across the country, there are many opportunities. My suggestions: start early (like every campaign) and get a match (like every campaign, if you can). And make sure you don’t let your own internal view of your organization’s size (and how that may make success easier or harder) inhibit your disciplined approach to having a great GiveSTL Day.

business development, craft, Writing improvement

Stop Saying “Thank You”

There are times when saying “Thank you” is appropriate. When the person in front of you holds a door open, you should be appreciativeWhen you receive a gift, Thank you is totally fine. Expected, even. If you don’t say that, if you don’t express gratitude, you’re indicating a supreme lack of character or knowledge about the world. And unless you’re 3 years old, claiming that you didn’t know what to do isn’t going to cut it.

But there are other situations when Thank you isn’t right. Even worse, Thank you so much has become my pet peeve. I’ll leave that for another time, because right now I’d like to expand on why saying Thank you is sometimes inappropriate, and may even be confusing your audience. Paradoxically, this may be one of reasons you’re seeing lower engagement and ultimately poorer results than you may be able to achieve.

The thing is, that audience likely doesn’t even recognize what’s going on, because it’s not so obvious. It’s pretty subtle.

The biggest problem right now with Thank you is that people and businesses are using it at the wrong time. Where is it most wrong? [Wrongest? Incorrectest? Least right? Whatever.] Ironically, it’s most wrong in the place it shows up the most these days: In an autoresponder.

Now, if you’re like I think you are, you probably just said, “Wait, what?” Allow me to explain.

But first, let me back up. Just a little.

 

What Is An Autoresponder?

You’ve seen the list-building tool which is a [SIGN UP FOR OUR MAILING LIST] button on virtually all websites. I think it’s something like 99.9% of the websites in the world have this option. You put your name and e-mail address into a couple of boxes, click a button, and you’re good to go.

Now, the company presenting the website has your e-mail address, and they use this to send you an e-mail automatically. It’s responding to your action of giving up your address, and it happens automatically. Thus, autoresponder.

Very rarely is it an altruistic gesture on your part to give up your e-mail address. You’ve done it because you want something – perhaps some cryptocurrency trading tips, or a special report on the future of self-cleaning clothes. Whatever that thing is, it’s billed as a fair and open transaction: you signed up, the company (or the individual) send you a message, and you both are supposed to go on about your day.

 

You Don’t Like Autoresponders?

That’s not what I’m saying. I’m talking about the message that those autoresponders are sending to your clients. And in this case, the message is not the left-to-right words on the page. It’s not even the e-mail newsletter or publication list itself. I’m talking, specifically, those first Thank you for signing up messages that everyone uses. Because they present a different immediate image than was intended.

These e-mail newsletters are, on the surface, supposed to be ways for the audience to stay informed, or to get specific [insert business here] tips, or ideas to spark joy, or something like that.

In reality, the businesses are using these lists to create additional brand loyalty, or to drive a potential sale, or to add you to the funnel for future sales.  They don’t tell you that, but that is what’s happening. 

They often look like this: (I’m paraphrasing from one in my e-mail inbox right now. I’m going to change the details a little bit so I don’t sour the relationship with this guy :-/)

Welcome!

Thanks again for subscribing to our [business type] tip e-newsletter.

Keep watching for more helpful hints over the next couple of weeks. You’ll get a message every Thursday.

So, if you’re a rational person, you’re wondering how can I possibly have a problem with that? It’s polite, it’s not pushy and asking for a sale too quickly, it’s a fast response from the time of sign-up (virtually instantaneous!) so the audience doesn’t forget what they’ve done, and it doesn’t take up a lot of space in my mind. Quick, easy, simple, what could be wrong with that?

I’ll tell you what’s wrong with that.

He [generic he, insert “she” for any females who do similar actions] said Thanks.

Wait…

 

Is That A Problem?

Yeah. I think it is.

Remember, when you say Thank you, you recognize that someone else has done something for your benefit. Holding the door; picking up dropped books; giving you the best orgasm you ever had. You, the recipient of the action, feel better for the experience. And so you respond in the only appropriate way: you say Thank you.

In this situation, an e-mail list owner saying Thank you for signing up is giving the impression that the action was done for the e-mail list owner’s benefit.

Not for the benefit of the one who signed up!

This is cognitive dissonance at its best: the action and reaction aren’t part of the same sequence. Action: sign up for a list to receive tips about [whatever business]. Reaction: instead of getting tips, get sold products through that list (or corresponding actions, like phone calls, direct mail, etc.). At least, that’s the impression your audience is receiving, when you present the image that their sign-up benefited you.

Now, I’m not advocating that you shouldn’t use an e-mail list. Frankly, it can be a pretty powerful tool, given appropriate list selection, message, timing, offer, etc.

And I’m not advocating to eliminate your autoresponder. Both are valuable.

Provided, that is, your audience doesn’t feel like they’ve been deceived. If they get that dissonant experience, they’ll likely start building a subconscious picture of you as a deceiver. Not one that they could put into words, but just a feeling they have.

And, to be frank, most people won’t recognize it. Not on the surface, anyway. It’s going to go much deeper than that. Something just doesn’t sit right with them when they receive your e-mails. Perhaps they don’t open them, or if they do, only open every so often. Why?

Well, if you ask that audience, they might say, “I’m too busy.” Or, “It’s too long.” Maybe even “I get so much already, I don’t have time to read something else!” Well, then, I’d ask, Why did you sign up for the e-mail in the first place? And what changed?

The original sign-up was to get tips and tricks for [whatever] business. What changed was the perception of that business from one that wanted to educate me and give me tips, to one that wanted to sell to me. Thus my disengagement and disinterest with your e-newsletter.

 

What Does That Mean?

At the simplest, it means that people who actually do sign up for your e-mail list will immediately get the impression that what they’ve done is for your benefit, not theirs. That attitude will persist throughout their life on your list. And because that’s their perception, they’ll be less likely to stay on the list… less likely to buy… less likely to tell someone else about it.

In short, saying Thank you at this point is completely wrong, because it turns the focus back to the company, rather than keeping it squarely on the audience.

 

So, What Should We Do Differently?

Well, there’s nothing wrong with being polite. And there’s nothing wrong with selling someone through your list. But just be clear about the intentions up-front. Don’t act with a bait-and-switch mentality.

That means that instead of thanking them for signing up for the list, congratulate them. And perhaps it’s not so obvious as “Congratulations, you could be a winner!” That’s just as false. But there are plenty of other ways to think about the customer’s perspective in that action, and acknowledge it in a way that matches their intention.

It could be as simple as only a few words of revision that are needed. Maybe it’s as easy as rewriting the example from above as:

Welcome!

You’ve done a good thing today. The [business type] tips you’ll receive every Thursday will help you [do that business better].

Can you see how it’s a subtle shift? Thank you puts the emphasis on the business as the beneficiary. Turning it around with You’ve done a good thing is consistent with what the signer-upper thought they were doing, and keeps the action and reaction in the same line.

This consistency is likely to lead to greater reader open rates… greater engagement… higher reputation… and, ultimately, a better-performing list.

Give it a try. Change up your autoresponder, and see what happens with those who sign up and receive the Well done message instead of the Thank you message. I think you’ll be pleasantly surprised.