Donor churn rate is one of the most important metrics for nonprofits to measure. However, it can feel like a daunting task to determine yours – or maybe you just don’t want to! Donor churn, when someone stops giving to your organization, is one of those things no one in nonprofit leadership likes to hear.
Knowing your donor churn rate – and the reasons for churn – gives your organization valuable insight into donor behavior. In turn, that insight can help your organization take steps to reduce your donor churn rate year-over-year.
Here, we’ll look at churn rates, how to calculate them, and how to increase donor retention.
What is Donor Churn and How Do You Calculate Donor Churn Rate?
Donor churn is often calculated as a percentage of donors who choose not to donate again during a certain period of time (often year over year, but sometimes by campaign). It’s important to understand within nonprofit organizations because lower donor churn rates can lead to healthier giving outcomes.
The Blackbaud Institute reported that in 2021 (the latest year data is available), the first-year offline only donor retention rate was 29%, and the multi-year retention rate was 60%. Churn is the inverse of retention rate and the two are directly correlated.
Additionally, organizations with a high churn rate must acquire new donors in order to maintain consistent giving levels. Often, the cost of acquiring a new donor is also higher than retaining a current one.
Calculating the churn rate is easy. You may want to calculate the donor retention rate as well, depending on the conversations you are having about churn.
Donor churn rate
For example, Organization A had 200 total donors in 2021. In 2022, they had 186 total donors. That equation would look like:
200 – 186 = 14
14/200 = 0.07
0.07 x 100 = 7% donor churn rate
Donor retention rate
Using the same numbers as an example, this equation would look like:
186/200 = .93
.93 x 100 = 93% donor retention rate
This simple data makes it easy to see why churn is such an important element of fundraising because the longer and more habitually someone gives, the more likely they are to continue giving.
Understanding the Reasons for Donor Churn
The biggest tool you have against churn is understanding what motivates donors to continue giving and what can force them to stop. For the most part, relationships are a key element of this equation.
What motivates donors to give to a charity? These are in no particular order but tend to have fairly equal importance, depending on who you walk to.
- Passions and motivational drive
- Lifestyle and culture
- Preferences and tastes
- Experiences and worldly knowledge
- Personal or professional background
- Charitable knowledge
- Personal impact
What makes a donor stop giving to a nonprofit? This often comes down to four basic reasons.
- They thought the charity didn’t need them.
- No thank you follow-up.
- They were not alerted of the impact they made.
- Circumstances have changed.
Reducing Donor Churn Rates
If you want to reduce donor churn rates, you have to motivate people to give again. (Easy, right?)
Your biggest tool in the fight against churn is understanding donor data and information. That’s where having a great donor database, such as the one you get with GiveWP can help!
By looking at the numbers, you can see who stopped donating and then take a deeper dive into your relationships with them. Did you give them one of the reasons above to stop giving? The top donor retention tool is follow-up. We can’t overstate the importance of acknowledging donations and their impact with donor follow-up.
You can reduce churn by adopting a multi-channel communications strategy that ensures strong communication with donors wherever they may be so that they continue to feel the impact of their gifts.
Your multichannel messaging may be distributed in a variety of ways and places:
When you are communicating with donors, especially those that have stopped giving or you are at risk of losing, it is important to make your sure messaging includes these elements:
- Make sure donors know your charity needs them and their support is vital to your mission.
- Thank donors privately and publicly (Need an idea? Here are nine ways to do it.)
- Show how donations were used with donor impact reports.
- Highlight the importance of any donation amount for donors who may have a change in circumstance.
When planning a communications plan, think about all the ways you can connect with a donor base to help them stay engaged. While email, social media, and reports are a must, nontraditional ideas such as nonprofit events can also be extremely helpful.
And here’s our pro tip: Almost nothing beats the power of a handwritten thank-you note.
You are probably beginning to make lists in your head and ask “How can I do all of this?” GiveWP has all the tools you need to automate some communication efforts – from automatic receipts and thank you’s to the data you need to create donor impact reports to email integration.
Donor retention isn’t always about working harder. You can work smarter with the right tools to help automate in the right places to ensure consistent communication with your organization’s donors.
Donor Retention Starts with the Right Tools
A good donor experience is one of the best ways to help prevent churn. From the minute they first interact with your nonprofit, through the giving process, and through the follow-up, it is important to make it easy to donate and provide answers to all of a donor’s questions.
GiveWP can help with tools designed to simplify the giving process with easy-to-use donation forms and tools, plus reports for you to track gifts and interact with donors!
Join the 100,000+ WordPress users already using GiveWP. Start for free today.
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