Donor Retention Metrics That Matter: Calculate, Benchmark, Improve 

Donor retention rate is a metric used to track donor loyalty to your nonprofit organization. It indicates how many of your donors continue giving to your organization versus how many have stopped giving to your organization. 

Raising funds is great, and revenue growth can happen because of increased gift amounts alone; however, donors may be lost over time due to a variety of reasons. Donor retention rates indicate the long-term viability of the relationship between you and your donors and give you valuable insight into whether your fundraising efforts are sustainable. 

Nonprofit organizations and their fundraising leaders need to use donor retention as a performance measure. A donor retention rate is an indication of how healthy a donor base is. 

If you know how to measure donor retention rates accurately, compare them appropriately, and improve your donor retention rates over time, your organization will continue to be more successful. 

This guide will explain how to correctly calculate your nonprofit’s donor retention rate, avoid errors in reporting, and use your numbers to take action. 

Retention, Attrition, and Reactivation: Definitions That Will Help You Avoid Mistakes When Reporting 

Many errors in reporting start with unclear definitions. Before any metrics are calculated, they will need to be defined clearly in the CRM. 

Donor Retention Rate 

Donor retention rate measures the percentage of donors who gave in one year and then gave again the following year, measuring donor loyalty. Essentially, it tells us one thing: Did the donors from last year return again this year? 

To calculate donor retention rate, use the following formula: 

(Donors who gave last year and also gave this year ÷ Donors who gave last year) × 100 = Donor Retention Rate 

For example, if last year you had 1,000 donors and this year you had 450 returns, your donor retention rate is 45%. 

Donor Attrition Rate 

Donor attrition rate is the opposite of donor retention; it measures the number of donors who did not return to donate. 

To calculate the donor attrition rate, use the following formula: 

(Number of donors who did not return ÷ Total donors last year) × 100 = Donor Attrition Rate 

For example, if 550 out of 1,000 donors from last year did not return to donate, that means your donor attrition rate is 55%. 

Note that total donor retention plus total donor attrition equals 100%. 

Donor Reactivation Rate 

The reactivation rate of donors will be the percentage of lapsed donors (i.e., those who have stopped donating for a defined period of time) who subsequently make donations again. 

Reactivation Rate = (Number of Lapsed Donors Who Reactivated ÷ Total Number of Lapsed Donors) x 100 

Example: If there are 300 lapsed donors and 60 of those lapsed donors make donations again, then the reactivation rate of those lapsed donors would be 20%. 

To ensure reporting accuracy: 

  • Utilize standard 12-month time frames. 
  • Do not include new donors when computing retention rates. 
  • Combine and merge duplicate donor records. 
  • Have a clear definition of what “lapsed” means for your organization. 

Having clear definitions will help safeguard your agency’s credibility. 

The Fundamental Formulas Explained with Real-Life Examples and Edge Cases 

Calculating the donor retention rate isn’t complex, but it can be complicated by misconfigured data. 

For example, if you calculate your donations based on the fiscal year but you are comparing those results against donations counted by a calendar year, you may end up with incorrect results. If you are using duplicate records in your dataset, you will end up with one donor in both records when calculating their retention rate, and margins of error for retention will show incorrectly low margins. 

There are additional edge cases to consider: 

  • Donors who give via different channels with different names. 
  • Recurring donors who miss a contribution but start again at some point. 
  • Major donors who give every other year. 

Consistency in how you calculate retention is critical. Avoid changing your method year to year. 

Comparing Donor Retention: Understanding Benchmark Categories 

A variety of organizations have conducted benchmarks and released them to the public as useful tools for measuring donor retention. They are typically compiled by large nonprofit organizations, which then share this information through their websites or social media outlets. 

The overall donor retention stats for the United States can be anywhere between 40% and 50%. This can cover a wide range of donors, making up the total that is being reported. 

Things you should look for include: 

  1. Your organization’s history.
  2. Like-sized organizations.
  3. Similar donorcompositionorganizations, such as colleges or churches. 

Things you should not look for include: 

  1. Comparing monthly giving to one-time event donors.
  2. Comparing a local organization to an organization that is national in scope.
  3. Comparing online fundraising with a majorgiftsorganization. 

The most important benchmark to use is your own trend. Measuring your retention rate from 42% to 46% is very helpful. 

Over the course of time, your progress toward improving your retention rate has been much more positive than trying to catch up with what the other organizations are doing based on industry standards. 

Segment-Level Retention: One-Time Vs. Repeat Vs. Recurring 

At an aggregate level, looking at only one number will not uncover the important group-level detail. Therefore, it is necessary to separate donors into groups. 

Retention of First-Time Donors 

Measurement of retention of new or first-time donors is a measurement of how many new donors give at least one additional gift; typically, only 20%-30% of first-time donors make a second gift, according to many nonprofits. Increasing the retention of this group impacts the long-term health of the nonprofit more than increasing any of the other groups. 

Retention of Repeat Donors 

Measurement of repeat donors is a measurement of how many donors have made more than one gift. These donors generally are more loyal than first-time donors, with retention rates typically exceeding 60%. 

Strong recognition and communication are critical to maintaining the loyalty of repeat donors. 

Retention of Recurring Donors 

Recurring donors generally have the highest retention rate because their giving is on autopilot, which increases their loyalty to the nonprofit. 

Keep this group separate from one-time donors when measuring retention rate (you need to measure them separately). 

Analyzing retention of donors through segmentation helps identify donor lifetime value. This enables you to forecast increased contributions over time from donors who remain donors for a longer period of time, and, through the practice of costing fundraising by using cumulative donor cohorts to create cohorts based upon the year the donor made their first gift, you can track how each cohort of donors behaves over time. 

This tracking provides a long-term perspective of the behavior of your current and potential donors. 

Identifying Churn: The Reasons for Loss of Retention 

When you notice a decrease in your donor retention, don’t react from emotion. An investigation should be undertaken for all causes. 

Possible reasons include: 

  1. Weak or delayed thankyous,
  2. Missing second-gift follow-ups,
  3. Less frequent communication,
  4. Staff turnover,
  5. Variations in the economy,
  6. Data entry errors.

Each month, you should review your retention dashboard to analyze trends in retention. If there was a spike in retention across the board, was it due to a single overall campaign, or are there segments that experienced substantial reductions in retention within a campaign? 

While data will inform you that something was different, donor feedback will provide insight into the “why. 

Retention Playbook: Actions for Retention Failures 

Targeted strategic action should take place once you have identified a specific problem. 

In situations of poor first-time donor retention: 

  1. Send a thank-you message as quickly as possible (ideally within 48 hours).
  2. Share impact stories with the donor as soon as possible.
  3. Invite the donor to make a second gift within 60-90 days.

In situations of decreased repeat donor retention: 

  1. Personalize communication with the donor.
  2. Recognize the donor’s loyalty.
  3. Provide an opportunity for the donorto upgrade their giving amount. 

In situations where recurring donors have canceled: 

  1. Monitor when creditcards willexpire. 
  2. Send reminders prior to when a collection will be processed for a recurring donation thatwon’tbe successful due to insufficient funds or an expired credit card. 

If there are low rates of reactivation: 

  1. Run targeted win-back campaigns.
  2. Send donors “We Miss You” messages.
  3. Sharenew programsand progress made since they last donated. 

Each retention failure requires a separate solution. Avoid one-size-fits-all solutions. 

Tips for Implementing Retention Reviews 

Make retention an integral part of your ongoing management processes. 

Implement a monthly internal review process that tracks: 

  • Donor retention rates on the whole. 
  • Retention rates of new donors. 
  • Retention rates for repeat donors. 
  • Retention rates for recurring donors. 
  • Attrition rates for donors. 
  • Reactivation rates for donors. 

In addition, do a quarterly evaluation of trends and long-range direction with your leadership team. 

Assign clear ownership by designating: 

  • Your CRM manager is responsible for maintaining clean data. 
  • Your development director will lead the strategy. 
  • Your marketing team will create messaging support. 

By embedding retention as part of your monthly business processes, you will be able to expect improvements over time. 

Conclusion 

Donor retention rates are one of the strongest indicators of fundraising health. Increasing revenue may mask declining donor numbers, but the retention number provides an accurate indication of what is actually occurring in your fundraising program. 

If you define your metrics clearly, calculate accurately, benchmark properly, segment well, and take action quickly, you will achieve consistent growth. Strong retention will increase donor lifetime value and lessen long-term pressure on fundraising. 

Begin with your first-time donor experience, establish a clear retention dashboard, review consistently, and make progress each day to secure long-term sustainability. 

FAQ 

What is a good donor retention rate?
Donor retention rates vary considerably, based on the type of donor that you have, so depending on your mix of donors, you should use the donor retention benchmarks to help you measure yourself; however, the most important thing to focus on is the trend of improving your own retention rate over a period of time. 

How do recurring donors impact retention?
Recurring donors typically have a higher retention rate than one-time donors. Therefore, always monitor recurring and one-time donors as separate groups. 

How often should we measure retention rates?
Leadership should conduct reviews of donor retention every quarter, while internal groups should measure their performance and compare it monthly. 

Is reactivation measurable?
Yes. Tracking the number of donors who have stopped donating for a specific period of time and then resumed giving is a good way to measure your reactivation rate. 

Why can retention rate reports be wrong?
Two of the most common sources of reporting errors are mistakes in how cohorts are defined and the presence of duplicate donor records.