by Steven Shattuck

Donor relationship development is vital for your nonprofit’s retention rate and revenue consistency. Overcome the challenges of relationship building.

Building donor relationships is one of the most important things your nonprofit can do in order to maintain a consistent revenue stream and fund your mission. This is because effective donor relationships lead to higher retention rates. 

However, there are some challenges that many nonprofits run into when it comes to building these relationships, and many organizations can’t seem to overcome the common roadblocks!

That’s why we’ve created this guide. We want to make sure nonprofits have no excuse to let donor relationships go to the wayside. Each of the challenges we’ve stated here is directly related to statistics compiled by Ann Green originating from Bloomerang Chief Scientist Adrian Sargeant and Fundraising Effectiveness Project research. These challenges and related statistics are as follows: 

• Donor Dissatisfaction – 36% of lapsed donors leave because they thought other organizations were more deserving of their contribution. 

• Limited Time for Personal Interactions – 9% of lapsed donors left because the organization didn’t leave a lasting impression on them.

• Donors are Treated like ATMs – 54% of lapsed donors did so because they could no longer afford to contribute. 

• Lack of Prioritization of Retention – The average donor retention rate after the first gift is 19%, while it’s 63% after the second donation. 

• Limited Technology – 18% of lapsed donors did so due to poor communication strategies. 

Ready to dive a little deeper into the implication of these statistics and how your nonprofit can overcome these common challenges? Let’s get started. 

1. Donor Dissatisfaction

36% of lapsed donors leave because they thought other organizations were more deserving of their contribution. 

These donors leave because they’re dissatisfied with your organization. This doesn’t mean that other organizations are truly more deserving, but that they give the impression of being so with their communication strategy. Therefore, to overcome this challenge, your nonprofit needs to show all of your supporters that your organization makes the biggest splash using their donation. 

This concept can be boiled down to a single word: impact. 

In order to show your donors the impact that they make toward your mission, consider the following strategies: 

• Tell impact stories at every opportunity. You don’t have to wait for the annual report or gala to tell stories about who has benefited from your programs and services. Weave them into acknowledgments, appeals, and stewardship pieces. There’s no limit to the amount of good news you can send. 
• Communicate project progress updates to your supporters. Supporters want to know that your organization is moving forward with your mission. Expressing progress on larger projects is a great way to show campaign donors (and those who may have contributed to another campaign) that your nonprofit is always moving forward. 
• Acknowledge achievements made through past gifts. Don’t make long-term donors feel like they haven’t made a dent in the issue your nonprofit is trying to alleviate. While your mission may never be truly completed, this is about being more than just donor-centric. Donors should be recognized for the impact they’ve made even when they’re being asked to fund new initiatives.

As your nonprofit creates its communication strategy, be sure you’re taking intentional steps to tell your supporters about the impact they’ve made on your nonprofit. This will help ensure they’re satisfied with the choice they make to give. 

2. Limited Time for Personal Interactions

9% of lapsed donors leave because they have no memory of supporting the nonprofit.

If a donor doesn’t remember giving to your nonprofit, this is much deeper than simply a memory problem. The issue is really that your nonprofit didn’t make an impression on that individual. 

Personalizing your communications with supporters shows that your organization wants to develop a relationship with them. 

Relationships are not one-sided. If your nonprofit is sending the same message to all of your supporters, you’re not making the effort to get to know them. Essentially, this implies the expectation that your supporters should do all of the work to get to know your nonprofit, but you won’t do the same for them. The challenge is that there’s not enough time to individually communicate with each and every donor. 

There are several ways you can overcome this challenge. Consider the following strategies: 

• Segment your supporters. Segmentation is the tried and true strategy that allows your organization to address the individual interests of your supporters without sending individual emails to each one. Create donor segments based on commonalities in their donor profiles. Then, when it comes time to communicate, you can craft messages that specifically target recipients with those traits and commonalities. 

• Include personal details in messages. With the best software, your nonprofit should be able to autofill personal details like your supporters’ preferred name, past donation amount, past campaigns supported, and more. Bloomerang’s guide to nonprofit CRM software explains how personalization leads to donor cultivation and larger donations over time. 

• Conduct research before interacting with major donors. Before your staff members go to meet with major donors or major prospects, make sure they have access to plenty of information from that person’s donor profile to help guide the conversation. You should always conduct research about individual donors before meeting with them in person to remind you about their interests, their past involvement, and future opportunities. 

Making the most of the limited time your nonprofit has is what matters most for personalizing conversations. Automate as much of this personalization as you can and don’t be afraid to take the time to research individuals when the opportunity presents itself. It will be worth it!

3. Treating Donors like an ATM

54% of lapsed donors left because they could no longer afford to give.

Your donors are not ATMs. Too many nonprofits reach out to their supporters only when they need donations to help with projects and campaigns. Donors who receive too many asks for donations too frequently start feeling used. This is especially true if your supporter wants to contribute, but can’t afford to (as happens with such a large percentage of lapsed donors). 

In order to make sure your donors don’t feel like you’re simply using them for their cash, you should approach them with a variety of opportunities for engagement. 

Providing new and unique opportunities helps donors stay engaged with your nonprofit even as the economy or their personal finances fluctuate. Create a communications calendar so you can be sure to space out fundraising asks and ensure a variety of opportunities throughout the year. You may choose to include opportunities such as: 

• Recurring donation opportunities. Instead of giving all at once, recurring donations allow supporters to give a smaller amount every month. It impacts their finances less while still resulting in the same final donation at the end of the year.

• Encouraging volunteers. Ask your supporters to donate time rather than money. This helps your nonprofit get more done around the office or at an event and ensures the supporter still feels connected to your cause. 

• Asking for in-kind donations. If you know your supporters have access to materials or a resource that your nonprofit could make use of, you may consider asking for an in-kind donation rather than a monetary one. 

• Take unique fundraising approaches. Instead of just asking for straight donations, you may offer programs that make donating more approachable. For instance, Funds2Orgs’ fundraising ideas guide includes unique options like shoe drive fundraisers, raffles, penny wars, used book sales, and restaurant giving nights.

Building a relationship with your donors means making sure they know that you appreciate their support, not just their cash. Give them plenty of opportunities to show you how they can help in addition to your traditional giving pages. 

4. Lack of Prioritization of Retention

First-time donor retention is 19%, while it is 63% for repeat donors

As we said in the beginning, building donor relationships is especially important to improve your nonprofit’s donor retention rate. One common challenge that nonprofits run into is that they simply don’t see the importance of retention. 

Organizations tend to think that they have to continuously expand and acquire new supporters in order to grow. However, if you’re not retaining these donors that you acquire over a long period of time, how can you expect to continue growing? 

The key to nonprofit growth is striking a balance between your donor retention and donor acquisition strategies. And to do this, your nonprofit should focus on the “golden donation.” This is the second donation an individual makes to your organization. After the golden donation, your supporters are 63% more likely to continue giving to your nonprofit. 

In order to prioritize donor retention, your nonprofit should be sure to: 

• Make sure new donors feel welcome. Thank them immediately for giving to your organization and stress how grateful you are for their support. 
• Create a complete stewardship plan. Be sure you know what strategies you’re going to use to steward donors throughout the calendar year. 
• Be better than average. With first-time donor retention so low across the board, don’t settle for being average. Keep working to help your nonprofit advance and grow quickly. 

Make sure donor retention is one of the metrics your nonprofit keeps at the forefront of your CRM dashboard so your staff members are always thinking about it.

Your nonprofit’s priorities show through as you design your growth strategy. Make sure you’re emphasizing building relationships and improving retention as one of your top priorities. 

5. Limited Technology

18% of lapsed donors leave due to poor service or communication

Did you notice a commonality between the above strategies? They all allow you to leverage technology in order to build your relationships. You can use technology to help communicate impact, save time, create a communications plan, and track your retention rate. 

This requires your nonprofit to have access to effective technology. Investing in a cheap solution runs the risk of it not being high enough quality to help the nonprofit grow. By cheap, we don’t mean that all inexpensive solutions are bad. Cheap quality is what your nonprofit should avoid. 

Before investing in a software solution where the price seems too good to be true, make sure you conduct your research to make sure you’ll have access to everything you need. 

If 18% of lapsed donors leave due to ineffective communication or service, the last thing you want is for your tech to limit you in these areas. Make sure your nonprofit has the capability to offer the best communication and service to your supporters. If you’re unsure of how to start looking for the best tech, check out this guide to purchasing top-notch software. 

Building donor relationships is the key to establishing effective donor retention. While there are challenges to building relationships, overcoming them will help your nonprofit continue growing and get closer to achieving your mission.

Author: Steven Shattuck

Chief Engagement Officer at Bloomerang

Steven Shattuck is Chief Engagement Officer at Bloomerang and Executive Director of Launch Cause. A prolific writer and speaker, Steven is a contributor to “Fundraising Principles and Practice: Second Edition” and volunteers his time on the Project Work Group of the Fundraising Effectiveness Project and is an AFP Center for Fundraising Innovation (CFI) committee member.