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Monday, September 25, 2017

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Running backwards: A two-part post: Part 1 -- The Bad News
Tom Ahern

October, 2015

In America, by far the world's largest fundraising marketplace and "the most generous country on earth" (in 2014, according to the Charities Aid Foundation, tied with Burma/Myanmar), year after depressing year, at least 60% of any charity's first-time donors do not make a second gift.
         Let me put that in a commercial context:
 
  • "Sixty percent of first-time diners say they'll never eat in our restaurant again."
  • "Sixty percent of first-time shoppers will never set foot in our shoe store again."
  • "Sixty percent of first-time customers will never get their hair styled here again."
         
         Think businesses with such numbers will succeed wildly? I don't. Yet those are the numbers nonprofit executives accept and hope to grow on.
         Chuck Longfield, senior VP and Chief Scientist at Blackbaud, reported the following all too typical numbers for Australian fundraising in 2013 (since the general trend in retention is down, the 2014 numbers were likely worse, 2015 worse yet, etc.):
 
  • 59% of mail-acquired donors did NOT make a second gift
  • 75% of web/digitally-acquired donors didn't make a second gift
  • 93% of event-acquired donors didn't make a second gift
 
         Or consider this: the 2015 Fundraising Effectiveness Project, co-sponsored by AFP and The Urban Institute, found that for every 100 new donors charities gained, they lost 103 existing donors. If you were running a race with those numbers, you'd be running backwards.
         Look: a donor who gives to your charity just once costs you money. You're spending two bucks to raise a buck.
         "Our nonprofit sector is bleeding to death," Ken Burnett rued, in his foreword to Roger Craver's 2014 book, Retention Fundraising. "We're hemorrhaging donors, losing support as fast as we find it, seemingly condemned forever to pay a fortune just to stand still." It's a severe financial headwind. Poor donor retention, with its debilitating impact on the bottom line, is one big reason charities can't invest in growth, talent, or new ideas. They just don't have the money.
         How deep is the problem?
         In 2015, in a sample of 1,200 US charities, only one in five-the vast minority-retained half their first-time donors, according to Bloomerang, a software firm serving small- and medium-sized nonprofits.
         That's the bad news.

IN PART 2, next issue: The Good News AND a special report on why your boss and board are (in most cases) NOT worth listening to.

[The article above is from my new, continent-dividing book-in-progress, for publication in 2016 by Emerson & Church.]
 
Check out Tom Ahern at aherncomm.com


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