The importance of donor retention: How to calculate and track
Wednesday, April 20, 2022
What is a donor retention rate?
Simply put, your donor retention rate speaks to the percentage of donors who give to your organization on a consecutive basis—year over year. The higher the retention rate, the more donors you have that continue to support your nonprofit each year. The lower the retention rate, the harder you may have to work to get those donations in the door (or attract new donors).
The state of donor retention
While we saw an uptick in donations even during the height of the Covid-19 pandemic in 2020, what we saw in 2021 was that those same donors did not always come back to make subsequent donations. Philanthropy News Digest reported that while the retention rate for new donors in Q1 and Q2 2021 was up 3.5%, the repeat donor rate dropped 7.2% on the year as a whole.
Now, there are all kinds of ways you can look at the numbers—and it’s important to do so. State of the economy, social issues, these all play a role in some of the giving numbers and statistics. But overall, it’s important to calculate these numbers for your organization on an ongoing basis. Because while the state of nonprofit giving is a good benchmark to be mindful of overall, the numbers that count are the ones that directly impact your organization.
How to calculate donor retention rates
An easy way to calculate your donor retention rate is to tally the number of donors that gave this year and last year—your repeat donors—and divide the number by your total donors, then multiply by 100 to get your percentage.
For example: If you have 500 donors who gave this year and 330 of those donors also gave the year prior, your donor retention rate is 66% (330 repeat donors divided by 500 total donors multiplied by 100).
Keeping track of donor retention
For 4aGoodCause clients, we recently launched a donor retention stat on our user dashboard. Once our clients have two years of 4aGoodCause platform usage, we’re able to calculate a donor retention rate that is visible via the “Contacts” area on the dashboard. This feature helps users see the health of their donor database overall—total contacts, total donors, new donors (registration or donation in the last 30 days), active recurring donors and donor retention rates. If you’d like a preview of these new features or our software overall, we’d be happy to offer a free demo.
Once you have a minimum of two years of donation data, you’re able to calculate and track your donor retention rate. If you don’t have a CRM or software system that can do this for you, start small by pulling reports each year on your total donors and cross-referencing to find repeat donors. Keep this information handy and set goals for where you want your retention rate to be. Our recommendation is to strive for a donor retention rate somewhere between 45 and 65%.
Additional donor retention resources
Tracking donor retention is important for the longevity of your fundraising program and organization. And because these numbers can change year over year, it’s important to have a solid donor retention strategy in place. We have several resources available to help you in your donor retention efforts:
- Watch our free donor retention webinar and Q&A with fundraising expert Mary Cahalane, principal at Hands-On Fundraising
- Learn how to create solid donor retention plans after your next fundraising event
- Use your CRM to solidify effective donor retention systems
- Think about how social media plays a role in donor retention and ways to engage across multiple channels