Donor Retention vs. Donor Acquisition: What Research Shows About Overall Online Engagement

February 14, 2017 Scott Gilman

When asked by organizations whether their online fundraising programs should focus on donor acquisition or donor retention, I say, “Yes.”

As fundraisers, we don’t have the option of choosing; we must solicit from existing donors while simultaneously growing prospect lists and converting new leads into first-time donors.

Yet time and resources are limited, so from a strategic, data-driven perspective, we have to prioritize where our efforts should lie. We can see from the 2016 Luminate Online Benchmark Report that nonprofits are having success in both areas, but that between the two, efforts are skewed toward donor retention.

  • As a whole, the value of an e-mail address is $12.30, down 7% from last year’s $13.36. While a disconcerting drop, this number alone doesn’t speak to retention vs. acquisition efforts. For greater clarity, we must examine the differences and change in giving between first-time donors and repeat donors.
  • Total online revenue from first-time donors in the 2016 report was just about even, down 1%, at $206,619. This made up just over a third (35.92%) of total online giving, which was a decline of 6% from last year. As one might expect, revenue from repeat donors went the opposite direction: up 8% as a total, and up 3% as a share of total online giving.

So we know that repeat donors are giving more dollars, as a subset of donors, than first-time donors, and donate about 2/3 of an organization’s overall total. But it gets even more interesting when looking at average gift amounts.

  • The average transaction amount for a first-time gift was $105.81. The average transaction amount from a repeat giver is lower, at $95.30. So how can repeat donors have a lower average gift than first-timers, but still have a higher total revenue amount? Sustainers. The total transaction amount from sustainers was up 14% compared to the 2015 report, and their share of total online fundraising (11.26%) was up 10%.
  • Overall, total online revenue in the 2016 report was up just under 5% from the previous year. So we see that sustaining revenue was up a larger percentage than overall online revenue, and revenue from repeat donors up was likewise up more, percentage-wise, than overall revenue.

So what does that tell us about donor retention vs. donor acquisition?

It might possibly leave us with a chicken and egg. What is behind the growth in repeat donor revenue, and the drop in first-time donor gifts as a share of total revenue? Are nonprofits being more aggressive with renewing lapsed donors, or engaging in more sustaining giving campaigns? Probably both.

But let’s look at two more numbers that are indicative of the overall online engagement picture.

  • Housefile growth was 10%, which is a lower growth rate than years’ past; at the same time, the percentage of constituents on a house-file who are donors was slightly up, to about 14.1%. So a lower rate of housefile growth, a smaller percentage of first-time donor revenue of the composite total…yet an increase in the percent of e-mail addresses who give.

It seems clear that it is getting more challenging to bring in new names, and getting these new names to donate. The trends speak to nonprofits doing a better job at renewing donors, taking advantage of the longer-term relationships with existing donors (increases in fundraising appeal open and click-through rates suggest this as well).

Moving forward, it behooves organizations, as they continue to grapple with the donor retention vs. donor acquisition challenge, to better understand the make-up of their own file base. After reviewing the Luminate Benchmark Report data, these are the questions I’d ask of your own organization:

  • What percent of your file are donors?
  • Last year, how many made their first online gift, and how many renewed a gift from the previous year?
  • Last year, who gave more both in total and average gift, existing donors or first-time donors?
  • Of those who joined your file last year, what percent gave?

Once you answer these questions, you can compare your performance to the benchmarks (both overall and to your specific vertical). More importantly, you’ll then be better equipped to properly allocate time, resources and effort in terms of renewing donors and seeking out new ones. If the rate of growing your list continues to slow, it will become more imperative to properly steward and nurture the constituents you’ve already got.

Online Fundraising Data

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