Donor churn is the percentage of your donors who choose not to donate again. Donor churn is an important nonprofit metric to measure and take steps to reduce the number of donors who will not make a donation the following year.
According to the 2018 Fundraising Effectiveness Survey Report, the donor retention rate was 45.5 percent in 2017. That is, only 45.5 percent of 2016 donors made repeat gifts to participating nonprofits in 2017.
How would that affect your mission if only 45.5% of donors made a repeat donation? How much time and effort would it take raise that difference from new donors?
Your organization’s churn rate is directly correlated with your organization’s Donor Retention Rate – the percentage of your donors who return to make another donation. There are several ways to measure churn; however, the most commonly used way to group donors who have “churned” or lapsed in their giving is LYBUNT and SYBUNT.
LYBUNT means donors who have given Last Year But Unfortunately Not This year. This refers specifically to donors who gave in the immediately preceding (last) calendar or fiscal year, but not in the current calendar or fiscal year.
SYBUNT means donors who have given Some Year But Unfortunately Not This year. This refers specifically to donors who gave in any preceding (some) calendar or fiscal year, but not in the currently calendar or fiscal year.
Also key to reducing churn and growing your fundraising efforts is identifying your new donors.
How to Calculate Your Donor Retention Rate
A nonprofit’s donor retention rate is a calculation that determines the number of donors that give to the organization year after year or other predetermined time period. To calculate your donor retention rate, first identify the time period you’d like to track – this could be yearly, quarterly, or even one campaign period to another. Next, identify those unique donors from the initial time period. Then, identify those donors who made another contribution in the next time period.
Use the following formula to calculate donor retention rate:
(number of returning donors/number of donors in the initial time period) x 100.
For example, let’s say you wanted to compare your 2024 Giving Tuesday campaign with your Giving Tuesday campaign in 2023. The number of returning donors was 2,000, and the initial donor set was 5,000.
(2,000/5,000) * 100 = 40%
You retained 40% of the donors that you acquired through your initial Giving Tuesday campaign.
How Effective Are Nonprofits at Retaining Donors?
According to the latest Fundraising Effectiveness Project’s Quarterly Fundraising Report (Q4 2024), donor retention was down 2.6% over previous years. This indicates that the nonprofit industry struggles to develop effective engagement strategies that maintains donor participation year after year.
The report also shares the donor retention rate for new versus repeat donors. The donor retention rate for new donors was down 5.9% with 19.4% retained YTD. For repeat donors, the rate was down by 3% with 69.2% of repeat donors retained YTD.
What does this tell us? There is a tremendous opportunity for nonprofit organizations to develop engagement and stewardship plans specifically for first-time donors. With all the effort expelled to acquire a new donor, it is critical to maintain them as a donor so as to recoup the cost to acquire that donor.
Lastly, they reported upon the differences between donor segments. Micro ($1-$100), small ($101-$500), and midsized ($501-5k) donors suffered the greatest decline in retention rates with a 4.4%, 5%, and 3.8% decreases. Although these donor groups do not contribute at a major contribution level, it’s important to nurture these donors. With proper stewardship, micro donors may become small donors who become recurring donors. Midsize donors may make planned gifts that could amount to a significant contribution to your organization.
Benefits of Churn Analysis
- Donor Acquisition Costs Are High: Nonprofit professionals focus on donor retention because of the high initial cost of recruiting first-time donors. It can take 18-24 months for nonprofits to recoup the amount of money they spend to attract a first-time donor, as most gifts are generally 2 to 3 times less than the marketing or recruiting cost.
- Gain Access To Bigger Networks With People Fundraising: If you’ve impressed your donor enough to warrant repeat donations, then there’s a chance that the donor may be recommending your cause to friends and family—which is the basis of People Fundraising. Thus, that relationship is leveraging additional donations.
- Potential For Larger Gift Amounts: There is a direct correlation between retention and gift size. Returning donors of gifts less than $100 are retained at 53% while retention was 76% for those gifting $250 or more. This could mean that as your nonprofit grows along with your donor, their gifts are likely to increase over time.
What Contributes to a Decreasing Donor Retention Rate?
There are many factors that may contribute to a declining donor retention rate which make this metric challenging to influence. Nonetheless, it is still important to address any potential factors that may influence whether a donor will lapse.
Sending too few appeals
Stay top of mind with your donors by regularly sending appeals. With timely, meaningful communication, your donors won’t neglect to continue supporting your worthwhile cause.
Donor fatigue
Conversely, if you inundate your supporters with solicitations, you may overwhelm them. This may result in a complete dismissal of your donation request. To help avoid this, monitor the number of appeals made before a donation. By tracking this number, you may determine the ‘right’ number of asks.
Generic communication
Today’s donors expect personalized communication from the nonprofits they support. If your messaging speaks too broadly about your mission or fails to resonate with their personal interests, they may fail to make another gift.
Lack of follow-up
Post donation, donors want a sense of immediate gratification. Send an automated email not only with a tax receipt but also with a meaningful acknowledgment of their contribution.
Unclear understanding of impact
If your donor cannot visualize the impact of their donation, they may feel disconnected from your mission. Many donors may stop contributing to an organization altogether if their gift feels meaningless. Share impact reports and stories that showcase how their donation maps to mission outcomes.
Financial status changes
Unfortunately, some of your donors may have a change in their financial status that may prohibit their ability to give. Offer these supporters the opportunity to support you in non-financial means such as volunteering. By continuing to engage with your cause, they will be more likely to donate again once they have the means.
Four Ways to Reduce Churn
- Personalize the giving experience: Show your donors how much they matter to you by speaking directly to them. Acknowledge the donor’s interests and communication preferences to tailor your messages about donor impact and upcoming engagement opportunities.
- Keep donors informed about why their gift matters: Share nonprofit stories about those impacted by your organization’s work. Include information in your communications that is relevant and useful for your supporters.
- Engage donors with activities: If the constituent is donating, there is something about your cause that resonates with them. Cater personalized engagement opportunities, such as Volunteering, Advocating, or peer-to-peer fundraising to develop a stronger relationship with the donor.
- Thank your donors immediately and often: Send the donor an immediate donation receipt or a handwritten thank you letter, or call the donor to thank them personally. Also, don’t forget to reach out to your donors at other key times of the year – for example, the holidays.
How Can StratusLIVE 365 Help?
The six (6) native churn reports in StratusLIVE nonprofit CRM empower your organization to perform your very own churn analysis throughout the year or campaign cycle as well as for end-of-year giving appeals. Additionally, all these reports are Extract reports so that you can take the results directly from the report and immediately take action to retain those donors via a letter, email, or phone call appeal. You can also further personalize the donor communications by querying the system to determine the donors’ interests and communication preferences.