The one donation that’s no good for fundraising

Nearly every charity spends a huge amount of time, money and energy trying to find new donors. Donor acquisition is usually the highest cost centre in any fundraising budget.

Yet, research shows us that many of the new donors you work so hard to get will not even reach their 90-day anniversary before they leave you.

As many as three out of five who come through your front door will run out the back door as soon as they get there, without ever having made more than one donation.

When donors leave so fast, it destroys their potential lifetime value – the additional funds, advocacy and volunteering opportunities and referrals to friends and family.

You’ve worked so hard to bring in that first gift from a new supporter. But none of your hard work will matter at all if you don’t work just as hard to retain those donors.

Retention is critical.

Why you need to get that second gift The following graph highlights ‘The Exponential Importance of Second Gift Timing’. It shows the five-year value of a donor based on how quickly an organisation converts a new donor into a second gift donor. This is consistent with Pareto’s Benchmarking reports.

Source: Analytical Ones, USA.

The single gift is not great for fundraising and increases your overall cost of acquisition.

But, new donors that give a second gift within 90 days have a lifetime value nearly twice as high as those who give at the 12-month mark.

Which means that not only is it critical to give your donor a great first-time engagement experience, when they have that experience is critical.

Consider this:

– If a new donor gives you $50 and then makes the same, once-yearly gift for five years, their lifetime value (LTV) will be around $250 (break-even will be between the first and third gift).

– If that same donor converts to a regular giver within the first 12 months and gives you $36 (ave. benchmarking regular gift) every month for five years, their LTV is about $2,160 (without upgrades or additional one-off gifts).

– If that same donor then decides to remember your organisation in her Will, her LTV could blow out to become around $52,000 (ave. bequest according to Pareto Benchmarking) or even more, if you consider the gifts made prior to the bequest being realised.

That’s why taking positive steps to reduce donor losses is the least expensive strategy for increasing fundraising income.

And ultimately, the success of your fundraising program depends upon how successful you are at moving donors up the rungs of the ladder of engagement. 

The good news is that it’s not difficult to generate long-term loyalty.

How do you do it? It’s simply about making your donors feel good. Give them great experiences, add value to their lives and provide extraordinary customer service.

Our top 6 tips for a 2nd gift retention plan

1. For acquisition to work effectively you must have a quality retention program in place to support it.

Take an equal amount of time to plan for the retention process as you do for your acquisition strategy itself.

2. The first step in the plan should be to make sure that you get ‘everything right’ for your first-time donor – ease of donation, thanking and welcoming them, reporting back so they know their donation has been used wisely.

3. The retention program has to be relevant to the donor (why they decided to engage with your charity) and not based on what’s easiest for your organisation.

 4. It’s about how we make donors feel, not about what we want them to have. Choose the materials and touchpoints that make a donor feel valued and delighted to be supporting your cause.

 5. Try to make your retention program multi-channel because donors that are connected to a charity through multiple points give more and have better conversion and retention rates.

6. Although 90-days is critical to acquire that second gift, retention strategies require a long-term view. Investment of time and money needs to be made not only in the first months, but throughout a donor’s time as a supporter.

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