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What Is Donor Retention Rate and How To Calculate It?

By Colin Hunter

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Every nonprofit works hard to make a difference, but their success largely depends on the support of their donors over the long term. However, keeping donors involved year after year can be a challenge. 

This is where the donor retention rate comes to the rescue. Today, we will introduce you to the concept of donor retention rate, discuss its importance, and explain how nonprofits can calculate it to create long-lasting relationships with their donors.

What Is Donor Retention?

Donor retention refers to how well a nonprofit organization keeps its donors giving year after year. In simpler terms, it's about whether people who donated money last year decide to do it again this year.

Definition Of Donor Retention Rate

The donor retention rate is a percentage that shows how many donors continue to donate to an organization over a set period, usually one year. 

If you want to figure out your donor retention rate, you look at the number of people who gave money last year and see how many of them gave again this year. 

For example, if 100 people donated last year and 60 of them donate again this year, the donor retention rate is 60%. This rate helps nonprofits understand how good they are at keeping their donors interested and willing to support their cause.

The average donor retention rate for nonprofits is around 40-45%.

Why is Donor Retention Important?

  • It’s cheaper to keep existing donors than to attract new ones.
  • Regular donors provide a reliable source of income.
  • High retention rates indicate strong bonds with donors.
  • Predictable funding helps with better organizational planning.
  • Satisfied donors often give more over time.
  • Returning donors are more likely to engage in other ways, like volunteering.
  • Happy donors are more likely to recommend the charity to others.
  • Less need to allocate resources to recruit new donors.
  • High retention rates can increase a nonprofit's credibility.
  • Continued donor support helps ensure long-term project sustainability.

How to Calculate Donor Retention Rate?

Calculating the donor retention rate is simple if you follow these steps. 

Step-by-Step Formula

  1. Count Last Year’s Donors: Start by finding out how many donors you had last year.
  2. Count Repeat Donors: Next, count how many of those donors gave again this year.
  3. Divide and Convert to Percentage:
  • Divide the number of repeat donors this year by the number of last year's donors.
  • Multiply the result by 100 to get the percentage.

Example Calculation

Let’s say your nonprofit had 200 donors last year. This year, 80 of those donors donated again. Here’s how you would calculate the retention rate:

  1. Last Year’s Donors: 200
  2. This Year’s Repeat Donors: 80
  3. Calculation:

  • 80 (repeat donors) ÷ 200 (last year's donors) = 0.4
  • 0.4 × 100 = 40%

So, your donor retention rate would be 40%. This means 40% of last year’s donors donated again this year.

What Reduces Donor Retention Rate?

One of the biggest factors that reduce donor retention is lack of communication. When donors don't hear from a nonprofit, they might feel like their contributions are not important. It ultimately leads them to stop donating. 

Another issue is failing to show appreciation. Donors need to feel valued, and a simple thank you can go a long way. Without acknowledgement, donors might feel unappreciated and look elsewhere to support causes where they feel their contributions are recognized.

The unclear impact of donations also drives donors away. If donors can't see the results of their donations, they may doubt the effectiveness of their contributions and stop giving. 

Poor engagement, such as infrequent interaction or irrelevant content, can also affect a donor’s connection to the cause. 

A complicated donation process is a big turn-off for donors. If it's too difficult to make a donation, people are less likely to go through the hassle a second time.

Lastly, general neglect, such as not responding to donor inquiries or failing to resolve issues, can make donors feel undervalued and ignored. 

Strategies to Improve Donor Retention

Improving donor retention is important for maintaining a sustainable funding source for nonprofits. Here are some effective strategies to improve donor retention.

Improve Donor Management

Treat donors like integral members of your team. Be transparent about your needs, successes, and struggles, and maintain open communication to build trust and a strong relationship.

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Use Technology

Invest in donor management software to simplify your processes and maintain detailed records. 

It helps in personalizing communication and tracking donor engagement effectively.

Personalize Communications

Address donors by their preferred names and customize communications to show the specific impacts of their contributions. 

Make donors feel directly connected and valued to your nonprofit mission.

Diverse Giving Options

Provide various methods for donations based on different preferences. Include text-to-donate, mobile-responsive donation forms, and peer-to-peer fundraising platforms. 

Make it easier and more appealing for donors to contribute in ways that suit them best.

Regular Engagement and Feedback

Keep donors regularly informed and involved in your activities. 

Use data from your CRM to personalize outreach and make adjustments based on donor feedback and engagement metrics.

Show Appreciation

Regularly thank your donors through various methods like personalized emails, thank-you videos, and special recognition on donor walls. 

Acknowledging their support promptly and genuinely helps in creating a long-lasting relationship.

These strategies focus on making donors feel appreciated and integral to the nonprofit's mission, thereby encouraging their continued support and engagement.

Increase Donor Retention With Free Donor Management Software By BetterWorld

BetterWorld offers free donor management software that helps nonprofits engage donors and increase retention through a seamless and effective suite of tools. 

With our software, organizations can improve their fundraising efforts and keep donors coming back. Join over 85,000 amazing nonprofits and organizations already benefiting from the platform.

Loaded with Essential Features

  • Video Integration and Text Message Notifications: Keep donors excited and informed with video content and text updates, making them feel directly involved in your auctions and events.
  • Efficient Tools: Features like an online item donation form, automated fulfillment center, and one-click checkout make the donation process fast and smooth. It reduces the hassle for donors and encourages repeat contributions.
  • Impact Visualization: Embeddable impact items allow donors to see the direct results of their contributions within the auction itself. 

BetterWorld's platform is entirely free, which means there are no hidden fees or percentages taken from your fundraising efforts.

The Power of Donor Retention in Fulfilling Your Nonprofit's Mission

Maintaining a strong donor retention rate is key for any nonprofit aiming to achieve its mission effectively. 

It's not just about raising funds but it's about building a community of supporters who believe in your cause and are committed to seeing it succeed over the long term. Focusing on keeping your donors involved and interested plays a central role in your organization's ability to meet its goals and make a lasting impact.

As you look forward to growing your nonprofit, remember that each donor is a vital part of your community. Keeping them engaged and appreciated is important to not only meeting your immediate financial targets but also building the long-term success of your organization.

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Colin Hunter
AUTHOR

About Colin Hunter

Colin Hunter is the cofounder of BetterWorld, where he leads initiatives to expand reach and impact. Previously, he cofounded and served as CEO of luxury custom menswear brand Alton Lane. Colin’s experience as a consultant with Bain & Company, working with Global 1000 companies, shaped his approach to leadership and growth. He holds a BA from the University of Virginia and studied in Oxford, England. Colin lives in Scottsville, Virginia with his wife and three daughters.

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