The Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy sponsor the Fundraising Effectiveness Project (FEP), which provides nonprofits with tools for tracking and evaluating their annual growth or decline in giving. The FEP focuses on “effectiveness” (maximizing growth in giving) rather than “efficiency” (minimizing costs). It conducts an annual survey and publishes gain (loss) statistics in a yearly report.
The 2010 Report (pdf) is enlightening. The Project looks at “donor lifetime value: the total net contribution that a donor generates during his/her lifetime on a [nonprofit’s].” It also looks at donor defection rates, or the rate of declining donations following a first gift. For cash gifts, it’s 50% in the first year and 30% each year after that! In addition, 30% of ‘regular or sustainer givers’ are lost from year to year.
With these ongoing trends, and the time and money needed to attract new donors--over and over again--learning how to attract and keep donors with the greatest potential lifetime value is critical for nonprofit sustainability.
During a recent AFP webinar, several ‘drivers of lifetime value’ were discussed, starting with reasons donors defect. Simply: lack of customer satisfaction with their donating experience, led by the lack of responsiveness by the nonprofit staff. Donors who were surveyed said they were ignored, lied to, meetings were delayed, staff were ‘uncivil,’ and the nonprofit/staff ‘failed to deliver on promises.’
On the other hand, a high level of donor satisfaction with the customer service they receive from a charity’s staff drives donation levels and repeat gifts. The higher the satisfaction, the more likely the donor is to give again and again.
- To know what makes the nonprofit qualified and competent to utilize their money to best advantage
- To know what is done with their money; who is served and to what outcomes
- To build a relationship with the organization beyond giving money
- To express their own identify through their gifts
Regular, sustained giving is based on trust, commitment, satisfaction, and identification. Basing your donor-relations activities on excellent customer service, getting to know what is important to your donors, and learning how they want to engage with your organization will reduce defections and build greater lifetime value for your organization.
A win-win for all!!
Effective Fundraising for Nonprofits