Sep 21, 2015
All might look well for nonprofits with charitable giving in the U.S. reaching a post-recession high of 7.1 percent last year, but consultants advise organizations to keep their existing donor base close.
According to The Giving Institute, Americans donated more than $358 million to charities in 2014, putting donations at an all-time high in the 60 years that it's tracked giving by individuals, corporations and foundations.
"The 60-year high for total giving is a great story about resilience and perseverance," W. Keith Curtis, chairman of the Giving USA Foundation and president of The Curtis Group, a nonprofit consulting firm, said in a press release. "It's also interesting to consider that growth was across the board, even though criteria used to make decisions about giving differ for each source."
High turnover donors
While a healthier economic environment might encourage more Americans and businesses to donate to nonprofits, organizations shouldn't start the celebrations just yet. Nonprofits might wonder how they can best tap new donors as they see markets improve and the recession abating. However, pursuing new donors at the expense of retaining old ones could be reckless.
According to The Urban Institute, many nonprofits see a high turnover rate among their donors, but cultivating new ones can be particularly costly for organizations that depend on charitable giving.
While the rate of keeping donors rose from 39 percent in 2012 to 43 percent in 2013, the percentage hasn't cracked 50 percent in nine years, a survey from the Association of Fundraising Professionals and The Urban Institute states.
Therefore, institutions are losing almost 60 percent of their donors, Barbara O'Reilly, founder of Windmill Hill Consulting, a marketing communications firm, wrote in a Network for Good blog post.
In 2013, nonprofits lost 107 donors for every 100 new ones they received, the AFP reported.
"The widespread turnover in donors needs to be understood and addressed," Elizabeth Boris, director of the Urban Institute's Center on Nonprofits and Philanthropy said in a press release. "Nonprofits have to be more strategic in how they use their fundraising resources by focusing, for instance, on retaining new and existing donors."
Sometimes the reason why donors stop giving is outside a nonprofit's control i.e. loss of income in a poor economy, O'Reilly wrote. However, engaging existing givers pays dividends, especially since many nonprofits actually spend more money to gain new donors. Organizations spend approximately 25 cents to $1.50 on the dollar to raise funds from new donors. Those negative costs mean older donors provide the greatest return on investment for nonprofits.
O'Reilly added that veteran donors need to hear regularly from organizations that they give to. What they need to know is how their dollars are making a difference. Nonprofits should inform their veteran base of support about how valuable their gifts are keeping both the organization afloat and furthering the cause.
Using individual anecdotes about how the nonprofit made a difference or personalizing correspondence to lapsed contributors about how their money helped can bring former donors back into the fold.