Advice You Can Use to Manage Lapsed Donors
It is a fact that most nonprofit organizations do not have a plan to keep their donors. Organizations do not plan on losing them; they just don’t do anything to keep them.
60% to 80% of all charitable donors to your organization should be individual donors. As a result, an organization’s fundraising plan for 2022 needs to address raising money from and stewarding first time donors, mid-level donors, and major gift donors. These are the individuals who support your annual appeal, respond to various requests, and attend special events.
There are, however, two other groups in your database that need attention. You need to create and implement specific strategies to engage them. These two groups impact your donor retention numbers and your bottom line. They are your lapsed donors and non-donors.
Not planning to keep donors must be a fact because between 2006 and 2020 donor retention numbers have fallen from 60% to 45%. That is almost 1% a year in lost donors and their charitable gifts. It is interesting that over the past two decades, the more we have wrung our hands, beaten our chests, and contemplated strategies, the donor retention numbers have continued to spiral downward.
Yet, thanks to a whole plethora of billionaires, the total dollars raised across the United States keeps going up. The problem is that many of the multi-million dollar gifts are going to large colleges and universities, medical centers, and museums. Neither the small animal shelter in rural South Carolina nor the domestic violence shelter in eastern Colorado is receiving those mega-gifts.
To raise more money year over year, when the organization is only retaining on average 45% of its donors each year, means staff and volunteers are running faster and going nowhere. The cost to the organization is not just the cost of securing replacement donors and growing the total fundraising dollars, but also the high burnout and turnover of fundraising staff.
The initial task is to put into place sustainable strategies to manage first-time donors so that they do not become lapsed donors. The Fundraising Effectiveness Project has noted that only 25% of first-time donors will make a second gift.
Build stewardship strategies for thanking these first-time donors and engaging them in the mission of the organization. There are numerous things an organization can do such as calling and thanking them for their gift, send them a short survey, invite them to tour the facility, or include them in a special program to learn more about the organization’s mission. Do something besides just sending a receipt email.
If you have heeded the importance of managing first time donors, this group should be relatively small. However, if you are just beginning to put strategies in place to manage first time donors, your lapsed donor list might be approaching epic proportions. Where do you begin?
Begin by segmenting the lapsed donor list into two groups: those who have only lapsed one year and all the rest. For those who have only lapsed one year, segment them by first removing those who only gave event, in-kind, or tribute gifts. If you have a membership program, separate membership and manage that list with a strategy specific to members. What you should have left are donors who made simple charitable gifts. These are most often the people who responded to an appeal.
Segment the group that remains into gift size, such as $999 to $2,499 and $2,500 to $4,999. There is not any magic to the groups. By analyzing your donor database you will see natural groups occur. You do not want more than six or seven groups.
Develop a strategy for each group. You might decide to send one last appeal to the smaller donors, the $1 to $249. A strategy for mid-size gifts might be a letter followed by a board member phone call.
Larger donors could be invited to a VIP event or a tour of the organization. Your goal is for them to meet the leadership and learn more about the organization. The greater their previous giving, the more touch points you should apply prior to asking for a gift.
Donors who have been lapsed for more than one year are much harder to bring back to a giving status. Take the same approach with this group as with those who had only lapsed one year. Remove all donors who only attended events or gave in-kind or tribute gifts.
Take the remaining list and segment by gift size. Based upon the number of people in the segmented groups, you might want to vary the approach. A suggestion would be to mail to all the individuals in the small and mid-level segments and call the larger gift donors. Depending upon how long the donor has been lapsed and the size of the gift determine if a personal call from the Executive Director or a board member might encourage the person to give again.
Managing lapsed donors is a process that requires planning and on-going analysis. What strategies worked and what did not? What strategies should be in place to lessen the number of lapsed donors in the future and to manage those who do lapse going forward?
You might want to consider mailing to those donors who were pulled out as event, in-kind, and tribute donors. These donors are very likely one time donors and will probably not give again. Time and cost may determine how much effort you can put into these groups. Going through the lists with a select committee might glean a few donors who should receive personal follow-up.
Once you have strategies in place to retain donors, the organization will spend less time and money with lapsed donors and more time cultivating new and continuing donors.