New Donors Trends by Chuck Longfield

02/07/2013 Customer & Market Insights 1

NEW DONOR TRENDS

Center of Philanthropy Symposium

November 2012


DECLINE IN NEW DONOR ACQUISITION 2001-2010

Sector (# of organizations)

Total # New Donors 2001-2010

% Change New Donors/Year

2001-2007

% Change New Donors/Year

2007-2010

Advocacy (16) 6.6 million -9.5% 14.4%

Hospitals (23) 1.2 million 17.2% -0.4%

Cultural (16) 2.2 million 5% -2%

Environmental (37) 16.4 million -23.1% -11.0%

Health Research (30) 117 million 12.5% -14.8%

Human Services (36) 6.7 million 4.7% 2.5%

Colleges (34) * 350,000 -18.9%

* The % Change for colleges is for the period 2006-2011

SOURCE: TARGET ANALYTICS


DECLINE IN FIRST YEAR RETENTION 2001-2010 Sector (# of organizations)

Retention Rate 2001

Retention Rate 2010

% Change 2001-2007

% Change 2007-2010

Advocacy (16) 34.0% 27.4% -19.5% 0.1%

Hospitals (23) 21.2% 18.1% -2.7% 0.6%

Cultural (16) 33.3% 26.8% -13.7% -6.5%

Environmental (37) 29.7% 24.0% -18.2% -1.4%

Health Research (30) 20.9% 19.3% -11.7% 0.4%

Human Services (36) 30.8% 26.3% -10.9% -4.2%

Colleges (34) * 30.8% 28.1% -8.8%

* The % Change for colleges is for the period 2006-2011

SOURCE: TARGET ANALYTICS


• Acquisition is increasingly more expensive

• First year retention rates are declining

• Trends started prior to downturn and will likely continue after recovery

• Younger donors are less loyal than older donors

• Low ROI on new donor acquisition (and getting lower). - too costly to acquire new donors to replace lapsing donors

• WHAT CAN WE DO? !!!

SUMMARY OF CHALLENGES



• View donors as valuable assets!

• When acquiring new donors, factor in whether you will retain the donor, and at what dollar level

• Fill the holes in your leaky bucket!

• Why did the donor give? Stop giving?

• According to Adrian Sargeant, Ph.D. from Indiana University’s Center on Philanthropy “A 10% increase in donor retention can increase the lifetime value of the donor database by up to 200% .”

EMPHASIZE DONOR RETENTION OVER ACQUISITION


















• Be willing to invest in your donors, e.g. thank you calls. See Donor-Centered Fundraising – Penelope Burk

• Determine a donor’s potential early in your relationship and allocate resources accordingly

• Be Donor-Centric, not Campaign-Centric

FOCUS ON LIFETIME VALUE, NOT RESPONSE RATES



• Set goals and measure your results

• Find peer groups and benchmark your results

• Checklist Manifesto, by Atul Gawande

• Identify best practices

• Find ways to collaborate to maximize results

FOCUS ON RESULTS, NOT EFFORT


• Organize yourself to recognize a donor’s passion for your mission

• See yourself through the eyes of your donors

• Be willing to invest in your donors

• Test investments and track results carefully

INVEST IN YOUR MOST PASSIONATE SUPPORTERS



1. Emphasize donor retention over donor acquisition

2. Focus on a donor’s lifetime value, not a campaign’s response rate

3. Focus on results, not effort

4. Identify & invest in your most passionate supporters

KEY TAKE-AWAYS


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QUESTIONS?

Chuck Longfield, Chief Scientist

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New Donors Trends by Chuck Longfield