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The Leak in Your Donor Bucket

16044395_d55ca7d99b_zThere has been a surge of discussion in social media and fundraising blogs about donor retention recently.

And while this is a great topic, it is not a new one for fundraisers. If Twitter had existed in 1987 when I first started working for a nonprofit, we fundraisers would have been tweeting about it, too! We’ve known for a long time that keeping a donor was a better investment than getting a new one.

 

But the fact is that very few organizations even know what their retention rate is.

Are you bringing on new donors and keeping your loyal givers?

Are you bringing on new donors and are they renewing beyond that first gift?

Do you have the right level of acquisition to replace those donors that leave?

If you don’t know the answers to these questions, the retention and stewardship efforts you’ve planned are like throwing money in the wind.  They could end up in the right place, but they could make no difference at all.

So, to help organizations determine their unique challenge, Ann and I created an interactive workbook, The Leaky Bucket.

Here’s how the Leaky Bucket works:

Think of your donor file (the people who give to your organization) as a bucket. New donors come into your bucket through acquisition efforts, like direct mail, events, or board contacts.  Some stay in the bucket and even upgrade their gifts over time.  But, all donor files have attrition or donors that lapse or do not repeat their gifts.  This attrition forms the leaks from the bottom of the donor bucket.

There are four different kinds of leaky buckets:

The Classic Leaky Bucket: There are proactive efforts to bring new donors into the organization, but existing donors are not renewing.

What to do: Work to engage the donors in a closer and closer relationship (think: friendship) with your organization so that they are inspired to give again.  Most donors want to know, “What have you done with my money?” and “How have I made a difference?”

The Second Gift Leak:  New donors are being recruited, but those same donors are not making a second gift and are immediately leaking out the bottom of the bucket.

What to do: Ensure that your acquisition efforts are “true” to your organization. While some acquisition methods may yield impressive results by offering tote bags, using celebrity endorsements, or having a flashy event, the acquisition piece has to ultimately reflect your organization and the work it does.  If it doesn’t, donors will simply not give again.  So be sure that you are inspiring people by your mission and work, and test acquisition methods and messages to try to find strategies that encourage a longer term relationship.

The Slow Leak Bucket: If your organization isn’t investing in getting new donors, your donor file will shrink over time, even if strong retention efforts are in place.  Donors “naturally” leak out of the bucket when they die, move, or lose interest.  No organization can retain 100% of its donors!

What to do: If your organization is recruiting less than 2% – 5% of its overall donor file per year, you need to invest in a proactive acquisition strategy to attract new donors.

The most important thing is to KNOW what your bucket looks like. Even those with good  acquisition and retention strategies in place could be missing opportunities by not knowing about their donor movements.

So take a moment to download The Leaky Bucket workbook and plug in your numbers to determine what kind of Leaky Bucket you have.  The workbook will also give you more specific strategies for what to do to seal up those leaks!

And then write us back and let us know how it went.  Did you learn something?  What’s your next move?

 

Photo from Flickr Creative Commons by A is for Angie

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