Retention Rates Are Sick … Is It Terminal?
Yesterday Roger delivered the latest gloomy news about donor retention rates. Gloomiest of all is the fact that overall retention rates have fallen from 50% to 39% over the past seven years, as reported by the AFP/Urban Institute’s 2013 Fundraising Effectiveness Project Survey.
What that suggests is a broad systemic failure, not some momentary glitch or distraction.
Roger suggested two possible reasons:
- Few nonprofits even know their retention rates … and what you don’t know/measure you cannot act upon.
- Organizations might tilt their fundraising budgets to acquisition versus retention, believing this (erroneously) to be an either/or situation.
He asked for other thoughts on why retention is steadily declining.
Here are the possibilities as I see them.
- Profound lack of fundraising expertise — as suggested above, too many practitioners simply don’t understand the underlying theory and financial calculus.
- And/or knowing the theory, too many are clueless as to how to proceed tactically — poor implementation of proven messaging and contact tactics.
- Even more significant than tactical ineptitude, too many do not understand the more fundamental organization-wide requirement to nurture positive donor attitudes by engaging donors in a variety of ways that drive commitment.
Dare I say it? These first three reasons imply a talent gap!
However, there’s good news to be had … the reasons just given are all addressable by any nonprofit. The knowledge is out there and readily accessible.
But there might be more at issue here, involving factors less — or not at all — under the control of any given nonprofit. For example …
- There are simply too many nonprofits doing the same thing … and the declining numbers reflect donors’ weeding their gardens. And as it happens, the ‘losers’ outnumber the ‘winners’.
- Donors are aware of greater giving choice, are more demanding (of everything, from service to results), and can easily and independently access comparative information.
- More and more, donors perceive failure (in terms of making impact) as opposed to success or progress.
- The highly visible fraudulent fundraising practices of the few have eroded fiduciary trust in the nonprofit sector as a whole.
- The marketing communications blizzard has simply become too impenetrable — even the most compelling nonprofit, meeting the most urgent need, and communicating most effectively with its donors, is increasing overwhelmed by the sheer ‘noise’ in the marketplace.
These last five possibilities are more frightening than the first three, because individual nonprofits and fundraisers on their own can do little about them.
Will the nonprofit sector ever see a 50% overall retention again? I think not. Re-attaining that level would require heaps of organizations to become retention superstars, hitting the 70% retention level to offset the multitude of laggards.
In the commercial marketplace, organizations that cannot retain customers are routinely terminated, without fanfare.
In the nonprofit space, the laggards have appeared to be able to hang on indefinitely. But maybe the sorry retention curve is telling us that’s about to change!
P.S. If your nonprofit is a retention superstar, Roger and I would like to hear about you.