Donor stewardship practices have become much more intentional, strategic and focused. That’s the good news. But according to the most recent report from the Fundraising Effectiveness Project (FEP), overall donor retention rates – which have hovered between 40% and 45% for the last 10 years – are dropping.
FEP results also show that donors at higher giving levels are being retained at more than twice the rate of donors giving at lower levels. This isn’t surprising as national statistics have shown a trend for several years that reflects fewer donors giving more. But this begs the question: Are we lavishing too many of our resources on high-end donors while ignoring those at the other end of the giving spectrum? What will the long-term impact on our nonprofits be?
We know that broad-based community support from a variety of donors and funders helps ensure financial stability and sustainability for nonprofit organizations, particularly during difficult economic times.
It is only recently that fundraisers have come to understand the importance of donor retention as part of their overall fundraising results. While initially focused on major donors, fundraisers must now transfer stewardship practices to all segments of the donor population. Improvements in technology allow even small nonprofits to customize and personalize their stewardship strategies for their entire donor base.
Key Metrics to Measure Donor Stewardship Success
The simple measure of donor retention is the percentage of donors an organization retains year over year. This is a metric fundraisers should be aware of and track, but there are other ways to measure how successful donor stewardship efforts are, including the following:
- Growth in recurring giving is a metric that all nonprofits can focus on as a measure of stewardship success. The more recurring donors you have, the better your retention rates are and the lower your costs are, consequently improving your ROI in fundraising and the lifetime value of your donors.
- Planned giving donors typically are your most consistent donors. The number of planned gifts and documented expectancies received each year is an important and frequently overlooked indicator of strong stewardship.
- Touchpoint tracking is essential. When you invite a donor to a function, the invitation, the event and the follow-up are touchpoints. Whether or not the donor attends, the invitation sends a message that they are valued by the organization. Regular touchpoints like invitations, shared communications, emails and phone messages make an impact even when there is not an immediate response from the donor.
Strategies to Maximize Donor Loyalty
Donor relationships are built on trust, and consistency helps foster trust. Rather than trying a variety of different strategies, develop an approach that is sustainable for the resources and culture of your organization. Don’t bite off more than you can chew; you will end up either doing it sloppily or inconsistently. Develop a plan that works for your organization, then do it really, really well…even if it is small. Consistency is the key.
- If you aren’t doing it already, start making thank you calls to an identified segment of your donor population. They can be new donors, major donors, loyal donors - you identify the segment. I have seen some recent push back against phone calls, and I understand that everyone might not welcome a phone call. But it is still a remarkably effective tool. And while most calls may end up on voicemail, that message is a touchpoint that can make the recipient feel very appreciated.
- Consider sending handwritten thank you notes. Handwritten letters in the mail are so rare that your message will stand out.
- Send impact reports. They don’t need to be expensive or high tech – a cell phone video, a bulleted list of achievements over the past year or a story from a recipient of service. Make sure it emphasizes how donor support makes a difference.
- It is important that you communicate with your donors beyond solicitations in ways that offer opportunities for engagement and feedback.
Smaller organizations with fewer resources can leverage their board, staff and volunteers to help with stewardship efforts. Whether it is asking board members to make thank you calls, hand write notes, host a donor stewardship event or serve as an ambassador at events to engage donors, the activity not only improves your donor stewardship, but it also helps create an organization-wide culture of philanthropy which is critical to fundraising success.
The Future of Donor Stewardship
The future of donor stewardship is technology – improved data management and AI. Technology will allow fundraisers to be more efficient and effective with engagement and stewardship approaches. But the true effectiveness of stewardship will continue to rely on building personal relationships with donors.
It’s time to take the donor stewardship efforts we use to build personal relationships with major donors and translate them to our mid-level and entry-level donors. It is critical for the future.
Smart, consistent and cost-effective strategies for donor stewardship build sustainability by ensuring a donor base that includes engaged donors at all giving levels.
