Painting: Donor Retention
“BURBULATORIUS PURGATORIUS” BY FERNANDO JARAMILLO / WWW.FERNANDOJARAMILLO.COM

Editors’ note: This article is featured in the Nonprofit Quarterly‘s summer 2013 edition: “New Gatekeepers of Philanthropy.”

In the twelve years since the first academic article on the topic of donor retention was published, the state of our knowledge has changed very little. Academic researchers continue to emphasize motives for giving rather than the determinants of switching or lapse, and even practitioner interest in the topic has been scant. The emphasis remains firmly on donor acquisition, with donor retention coming in a very poor second.

As a consequence, the sector continues to waste a substantial proportion of its annual fundraising spend. In 2001, a large-scale analysis of database records showed that even small improvements in the level of attrition can generate significantly larger improvements in the lifetime value of the fundraising database.1 A 10 percent improvement in attrition can yield up to a 200 percent increase in projected value, as with lower attrition significantly more donors upgrade their giving, give in multiple ways, recommend others, and, ultimately, perhaps, pledge a planned gift to the organization. In this sense the behavior of “customers” and the value they generate appear to mirror that reported in the for-profit consumer sector, where similar patterns of value and behavior emerge. Indeed, the marketing literature is replete with references to the benefits that a focus on customer retention can bring, including:

  • The reduction of marketing expenditure. It typically costs around five times as much to solicit a new customer as it does to do business with an existing one. Acquisition costs through direct forms of marketing are high. This is particularly the case in the context of fundraising, where it typically costs nonprofits two to three times more to recruit a donor than a donor will give by way of a first donation. It can take twelve to eighteen months before a donor relationship becomes profitable.
  • The opportunities that existing customers present for cross- and up-selling. Existing customers can be cross-sold other product/service lines or upgraded to increase the value of their future purchases. In the fundraising context, existing donors can be persuaded to upgrade their giving, make additional donations, purchase from the trading catalogue, volunteer, leave a bequest, etc.
  • The additional feedback that customers are willing to supply as relationships grow stronger. Continuing contact can enable organizations to improve the quality of the service they deliver.
  • The good word-of-mouth (or “word-of-mouse”) advertising that successful relationships can generate.

Despite the potential advantages that enhancing donor retention can bring, the opportunity remains largely untapped. In 1997, a report identified that a typical U.K. charity experiences an annual attrition rate of between 10 and 20 percent of all supporters who make more than one contribution.2 More recently, my own work broke the aggregate retention figure down to examine both cash and sustaining donors, concluding that a typical charity will lose 50 percent of its cash (i.e., annual) donors between the first and second donation and up to 30 percent annually thereafter. With respect to regular or sustained giving, annual attrition rates of 20–30 percent are common. Recent data collected by the Association of Fundraising Professionals (AFP) suggests that the pattern of donor retention in the United States may be even lower than that in the United Kingdom, with attrition rates in initial cash giving being reported at a mean of 74 percent.3

Given the scale of the opportunity, it seems timely to consider what we now know about the factors that drive donor retention as well as what other lessons from the wider marketing literature nonprofits might take into account in the pursuit of a loyalty strategy. While there may have been little academic interest in donor retention per se, research into the determinants of customer retention has continued apace. Therefore, below I review both the marketing and the fundraising literature in order to determine the factors most likely to drive switching (to another nonprofit) and/or lapsing behaviors.

Key Drivers of Loyalty

In order to understand what drives customer loyalty, it is necessary first to understand the evaluations, attitudes, and intentions that affect behavior. Marketing literature regards satisfaction, identification, trust, and commitment to be the primary drivers. Also important are “triggers”—situational, influential, and reactional factors with the capacity to cause a review of giving behavior and, as a consequence, drive switching or lapsing. Finally, it is important to comprehend what I call “value determinants,” and to focus on the key forms of utility that may be derived from the fundraising relationship. I believe this to be relevant, as some donors will consciously evaluate the service provided by a nonprofit and compare it to what could be achieved “in return” for their donation elsewhere. As will be explained further on, the benefit returned to the individual and the benefits delivered to beneficiaries are both at issue.

Satisfaction

Academics define customer satisfaction as a customer’s overall evaluation of the performance of an offering to date.4 It is now well established that satisfaction has a strong positive effect on loyalty intentions in a wide variety of product and service contexts. Satisfaction is viewed as the consequence of a comparison between expectations and overall evaluations of delivered service quality. In other words, people compare what they expected to get with what is actually delivered. They only experience satisfaction when their expectations are either met or surpassed. Recent work shows that the nature of the satisfaction-retention relationship can vary by such customer characteristics as demographics.5 For some the issue of satisfaction with the quality of service received is a more important determinant of loyalty than for others.

These studies suggest that in the context of fundraising, donor satisfaction with the quality of the service with which they are provided (as donors) would drive subsequent loyalty, but the strength of this impact may vary by the profile of the donors in question. The position for nonprofits, however, is further complicated by the agency role that they play, and it is probable that both donor service quality and the perceived quality of service delivered to the beneficiary group may be at issue, since it may be argued that donors are in fact purchasing both. Empirical work has so far failed to address this issue and the nature of these interrelationships.

In the first study to address donor satisfaction, I identified a positive correlation with loyalty, with those donors who indicated that they were “very satisfied” with the quality of service provided being twice as likely to offer a second or subsequent gift than those who described themselves as merely “satisfied.” More recently, studies have confirmed this relationship, while in the latter simultaneously identifying a link between satisfaction and commitment to the organization.6 Work by Roger Bennett similarly shows that there is a significant and positive relationship between satisfaction with the quality of relationship marketing activity (in this case, relationship fundraising) and the donor’s future intentions and behavior, particularly the likely duration of the relationship and the levels of donation offered.7

Despite the weight of evidence that it is the single biggest driver of loyalty, few nonprofits actually measure and track levels of donor satisfaction over time. That said, a number of major charities are now measuring and tracking donor satisfaction, with a handful constructing supporter satisfaction indices that can be fed into their organizational reporting systems (e.g., a balanced scorecard). Managers are thus now being rewarded for changes in the level of aggregate satisfaction expressed. Given the foregoing analysis, this would seem a long-overdue practice in donor retention.

Identification

Originally developed in social psychology and organizational behavior, the concept of identification is regarded as satisfying the need for social identity and self-definition. When a person identifies with an organization, he or she perceives a sense of connectedness with it and defines him- or herself in terms of the organization. As an example, someone might see him- or herself as a Greenpeace supporter, an environmental campaigner, or a “responsible person” when it comes to taking care of the environment. Unsurprisingly, studies have consistently shown that higher levels of identification lead to higher levels of loyalty to the organization and more supportive behaviors on the part of consumers. Researchers working in the domain of marketing have now shown that identification is a critical concept in driving loyalty in both membership8 and non-membership contexts.9

Despite its utility, the concept of identification is little researched in the fundraising context. In particular, we understand very little about what drives identification between a donor and the charities he or she supports. Although he has not specifically employed the term, Paul Schervish has shed some light on the issue of donor identification, arguing that a basic connection to a cause (e.g., being a graduate of a school) is not enough in itself to prompt subsequent donations to that school, and that some degree of socialization is required. This, the author argues, is experienced through “communities of participation,” and thus donors will be predisposed to give to causes connected in some way with these communities.10 This reflects many of the themes developed in the psychology and sociology literatures, where the concept of “we-ness” is seen as a spur to caring.

In an interesting twist, there is some evidence that emphasizing the development of identification may not always be an optimal strategy to pursue. Self-perception theory tells us that external triggers for giving, such as membership, or perceived membership, can cause a donor to discount any intrinsic motives they might have had, making it difficult to sustain that giving in the longer term—particularly when contact with that community comes to an end. Again, the need for further work to investigate the role of identification in fostering loyalty is clear.

A related strand of research to donor retention has explored the issue of identification with a brand. As long ago as 1959, Sidney Levy noted that people buy things not only for what they do but also for what they mean. In electing to purchase brands with particular personalities, consumers can seek to convey representations of themselves and/or reinforce their self-image.11 This may be particularly important in the context of giving, since research has indicated that giving carries important psychosocial meaning and that “fundraisers should recognize that the philanthropy opportunities they provide represent identity props or tools for their donors.” 12 Donors are drawn to (and perhaps remain loyal to) brands that are perceived as having a personality encompassing values congruent with their own, be they actual or aspired. Similarly, Schervish has argued that philanthropy provides donors with the opportunity “to excavate their biographical history, or moral biography . . . and their anxieties and aspirations for the future.” 13 The act of giving is therefore influenced by the individual’s perceiving not only the brand’s personality but also his or her own personality or self-conception, through the brand.

In 2006, I argued that in the voluntary sector context, brand personality is complex, and I identified three facets of charity personality shared by the sector as a whole.14 In a study of nine thousand individual donors, I found that only perceptions of personality characteristics grouped under the dimensions of “emotional stimulation,” “voice,” “service,” and “tradition” were capable of distinguishing between organizations. Interestingly, it is only these distinctive facets of personality that are linked to donor behavior, explaining a proportion of the variation in an individual’s charitable pot that would be received by a given organization as opposed to being split among the other organizations they support. The facets of an organization’s personality that have been linked to behavior are as follows:

  • Emotional stimulation. Personality traits that have the ability to evoke an emotional response can be a source of differentiation. These might include such traits as “exciting,” “heroic,” “innovative,” and “inspiring.”
  • Voice. Brands can also be differentiated on the basis of tone, as projected in the media. Is the organization perceived as “serious,” “bold,” “confrontational,” “challenging,” “impartial,” “balanced,” etc.?
  • Service. The style or philosophy behind how an organization delivers its services can be an effective route to differentiation. Human service charities in particular might carve out a unique personality on the basis of such characteristics as “inclusive,” “approachable,” “dedicated,” “compassionate,” etc., in the way they deal with their service users.
  • Tradition. Donors view some nonprofits as traditional, and may even regard giving as a duty, particularly during certain events or seasons. Who can deny the power of the Salvation Army kettles positioned outside shops across the United States around Christmastime?

In seeking to differentiate brand personality, it is important to remember that it is not appropriate to simply find different words to describe the organization. What is required is that the balance of the personality stand out from relevant local and national competitors for funds. In donor retention, these characteristics must also be perceived as desirable by donors and ideally have resonance with aspects of donors’ own identity.

On balance, the literature on identification does suggest that nonprofits seeking to foster retention should think through the various identities that supporters might have, which the organization could seek to reinforce through fundraising and other communications. Aiding donors in fostering a favorable image of themselves, not merely because they are donors but also because of the values they aspire to or already possess, would be an effective strategy to adopt.

Trust

Successive studies have demonstrated trust’s utility in driving customer retention—either directly or indirectly through satisfaction or commitment. Trust is built by the trusted party being seen to exercise good judgment, demonstrate role competence, adhere to a desired set of principles (e.g., a code of practice), and deliver high-quality service, possibly through high-quality interaction with front-line employees.

In the nonprofit context, Stephen Lee and I demonstrated that levels of trust drive giving behavior.15 More recent work in the nonprofit context confirms the relationship between trust and commitment, although it also suggests that this relationship is in turn mediated by “non-material benefits.” This is defined as “the belief that the nonprofit is making efficient use of its funds and having a positive impact on people for whom the funds were intended.” 16 The model also stresses the significance of “shared values” and “communication,” both of which have the capacity to build trust. In their classic article, Robert Morgan and Shelby Hunt conceptualized communication as having three dimensions—namely, frequency, relevance, and timeliness.17 This was later extended by considering, in addition, informing, listening, and the quality of staff interactions.18

So, in the fundraising context, trust may be viewed as a driver of donor loyalty, and it, in turn, may be enhanced by:

  1. Communicating the achieved impacts on the beneficiary group;
  2. Honoring the promises—or rather, being seen to honor the promises—made to donors about how their money will be used;
  3. Being seen to exhibit good judgment, and hence communicating the rationale for decisions made by the organization with respect to its overall direction and/or the services offered to beneficiaries;
  4. Making clear the values the organization espouses—so, communicating not only the content of service provision to beneficiaries but also the style, manner, or ethos underpinning that delivery;
  5. Ensuring that communications match donor expectations with respect to content, frequency, and quality;
  6. Ensuring that the organization engages in two-way conversation, engaging donors in a dialogue about the service that they can expect as supporters of the organization and the service that will be delivered to beneficiaries; and
  7. Ensuring that donor-facing members of staff are trained in customer service procedures and have the requisite knowledge and skills to deal with inquiries effectively, promptly, and courteously.
Commitment

Relationship-marketing literature suggests a further driver of customer loyalty—namely, relationship commitment, or a desire to maintain a relationship. What these definitions have in common is a sense of “stickiness” that keeps customers loyal to a brand or company even when satisfaction may be low.19 It differs from satisfaction in that satisfaction is an amalgam of past experience, whereas commitment is a forward-looking construct.

It is now generally accepted that relationship commitment comprises two dimensions: an affective component (a strong and emotional attachment, i.e., “I really care about the future of this organization”) and a component specific to relationship marketing called “calculative commitment” (simply, the intention to maintain a relationship that develops because of a conscious evaluation of the costs and benefits of doing so). In the for-profit context, this would normally include an evaluation of the costs of switching supplier. There are risks inherent in doing this because, for example, their performance might not live up to expectations, and individuals have to spend time learning how to use a new variant of the product or service.

The reader will appreciate that this latter construct is probably of less relevance to the fundraising context, where the costs of switching one’s philanthropy are typically negligible. The notable exception here is the realm of planned giving, but the role of commitment in this context remains to be researched.

Indeed, only one study has specifically addressed the issue of donor commitment, and while the authors support a two-dimensional model, they replace the calculative component with what they term “passive commitment.” In the study, a significant number of individuals “felt it was the right thing to do” to continue their support, “but had no real passion for either the nature of the cause or the work of the organization.” 20 Indeed, some supporters, particularly regular givers (sustainers), were found to be continuing their giving only because they had not gotten around to canceling or had actually forgotten they were still giving.

These authors label the affective component of commitment as “active” commitment, which they define as a genuine passion for the future of the organization and the work it is trying to achieve. The literature suggests that this “active” commitment may be developed by enhancing trust, enhancing the number and quality of two-way interactions, and by the development of shared values. Other drivers include the concept of risk, which the authors define as the extent to which a donor believes that harm will accrue to the beneficiary group were they to withdraw or cancel their gift, and trust, in the sense of trusting the organization to have the impacts that it promised it would have on the beneficiary group or cause. Finally, the authors conclude that the extent to which individuals believe that they have deepened their knowledge of the organization through the communications they receive will also impact positively on commitment. The authors term this latter concept “learning,” and argue that it serves to reinforce the importance of planning “donor journeys” rather than simply a series of “one-off” campaigns.

Triggers

There are also triggers that can cause customers to reevaluate their relationship with an organization. These can be defined as situational, influential, and reactive.

Situational triggers are events that occur in the customers’ own lives and over which the service provider has no control. Factors such as the birth of a child, the death of a loved one, or an increase or decrease in income all have the potential to impact an individual’s charitable giving. A change in financial circumstances was the most frequently cited reason in donor “exit polls” in the United States and the second-most cited factor in the United Kingdom (the leading factor being a desire to switch giving to another cause or organization).21 More recently, a study of direct dialogue donors found that donors may lapse because of a change in financial circumstances, and that younger donors were particularly likely to lapse for this reason.22 As a consequence, the authors advise charities engaged in recruiting donors to sustaining or regular gift programs to focus on individuals thirty years of age or older. Individuals under thirty exhibit lower levels of loyalty than their older counterparts.

Influential triggers are those derived from the competitive situation. In the giving context, it may be that a donor is won over by another organization, perhaps because it is perceived to be doing worthier work or because the package of benefits available to its donors/members is more attractive. As was noted above, many donors will switch their giving between organizations; a typical direct-mail donor now supports an average of six charities, with those who have been subject to a reciprocal or list swap program giving to an average of twelve.23

In the fundraising context, organizations seeking to maximize donor retention will wish to evaluate the merits of participation in list swap programs. Extant research indicates that lower-value donors (who are almost always the focus of such programs) can be just as likely to consider a bequest as other value segments in the database, and that once a list has been swapped, donors on that list will lose around 15 percent of their subsequent (annual giving) lifetime value. In deciding whether or not to participate in list swaps, it is therefore not as simple as comparing the immediate return on investment that accrues from the use of this technique as opposed to the use of traditional “cold” lists.

Reactive triggers are responses to the ways in which the organization interacts with the customer. In this sense, reactive triggers are more directly manageable than either of the other two categories, and as a consequence they have been the subject of a good deal more research.

To group our discussion, we will first consider those aspects of research that have considered the nature of solicitation itself, before moving on to consider issues pertaining to the acknowledgment of any gift.

Ken Burnett stresses the need to recognize individual donor motivation and to reflect such motives in fundraising communications.24 While this may be difficult at the point of acquisition, it should thereafter be possible to focus on a particular donor’s interests and concerns. It appears, however, as though many fundraising solicitations are product focused, in the sense that they focus on the organization’s needs and are formulaic in approach. A recent study of fundraising solicitations identifies common arguments that revolve around the quality of the institution, the fact that an individual’s gift matters, and the beneficiary needs that will be addressed. That is not a donor-centric approach (stressing what donors can achieve through their giving and, subsequent to the gift being made, praising them for having had that impact); talking only about how great the organization is, is a serious mistake.

Much of the creative approach will adjust to respond to changing motives over the duration of the relationship. In acquisition marketing creative, the portrayal of the beneficiary needs to be strong and emotive in order to make an immediate impact on a prospect donor and cut through the perceptual clutter of other charity appeals. In a bid to secure the all-important second and subsequent gifts, many organizations have developed welcome cycles, in which individuals receive a differentiated pattern of communication until the second or third gift is secured. Only then does the organization regard them as donors and enter them into the “standard” communications program. Organizations that have experimented with welcome cycles in the context of direct mail have found that they work best when they comprise a series of the best-performing “cold” recruitment packs that the organization has been able to produce.

Interesting work from the field of psychology has also identified that it may be appropriate to ask for different sums at different points in the relationship.25 It appears that asking for too much initially can lead people to conclude that they have done their bit and ignore subsequent solicitations. It may be better to begin with requests for smaller sums and then build these up over time.26 This is echoed in modern fundraising practice, where many U.K. charities, for example, solicit gifts of as little as six dollars per month and then work on developing the amounts over time. Such an approach works well, since a low-value ask eliminates many potential barriers to giving. When donors cannot post-rationalize their giving as a response to social or other pressures, they are significantly more likely to attribute their first donation to caring about the cause, and hence to continue their support.

Turning to the topic of post-gift communications, the issue of labeling has received the most research attention. The idea behind labeling is simple. If people can be induced to believe something new about themselves, then they may start behaving on the basis of that belief. In thanking donors for their gifts, organizations often append labels to the donor such as “kind,” “generous,” “helpful.” Such labels elicit a greater motivation to help, and foster favorable attitudes on the part of the donor. The impact of labels will be particularly potent when there are concrete prior behaviors to be labeled and when the label stresses the uniqueness of the donor’s behavior.27 Repetitive labeling has been found to enhance efficacy,28 and labels have been found to work best where the donor accepts the label,29 emphasizing the need for the label to be credible and supplied by a credible source.

The fundraising literature is also replete with references to the need for adequate donor recognition. Failure to provide adequate and appropriate recognition, it has been argued, will lead either to a lowering of future support or its complete termination. There is considerable empirical support for this proposition, indicating a link between the perception of adequate recognition and the level of gifts/lifetime value.30 Where gifts are offered as part of the recognition process, they will be more effectual when the gift is clearly tied to the organization and its services. Generic gifts, obtainable from other nonprofits (or even for-profits), are significantly less effective in stimulating loyalty.

Value Determinants

Value determinants are components of the product or service that are considered to be critical from the customer’s perspective, and where a poor evaluation of performance would lead to switching. We have already examined the issue of the service quality delivered to donors; here we are concerned with the utility that derives from the gift and the dimensions of the product or service itself that delivers utility.

Utility in the context of giving can take many forms. Two forms of utility are relevant here: personal, which may be further subdivided into tangible and emotional; and delivered (i.e., an evaluation of the impact a gift will have on the beneficiary group). Beginning with the former, it has long been argued that utility could take “material” form, and under this view donors will select charities to support on the basis of whether they have benefited from those charities in the past or believe that they will in the future. Individuals could, for example, give to those organizations that will do them political good and/or serve to enhance their career—perhaps through the networking opportunities that will be accorded. Donors may also evaluate potential recipient organizations against the extent to which their support will be visible or noticeable by others within their social group, thereby enhancing the donor’s standing therein. Equally, in the membership context, members will evaluate the package of benefits received against the costs of renewal, stressing the need for ongoing research on the part of such organizations to ensure that the optimum “value for money” is maintained.

The prestige-based model suggests that utility arises from having the amount of a donation made publicly known.31 Being seen to give may enhance a donor’s social status or serve as a sign of wealth or reliability. A donor may wish to access a particular group, and thus desire to be defined by his or her philanthropic activity. Prestige is clearly about recognition and is therefore also relevant to the notion of feedback referred to earlier. To respond to the motive of prestige, charities can create gift categories and then publicly disclose donors who contribute to various categories. This type of motivation is typically more relevant to certain categories of nonprofits, such as educational and cultural organizations rather than national charities. It may also be more relevant when addressing younger givers, since for older adults esteem-enhancement motivations are negatively related to gift giving.32

It is now widely accepted, however, that utility can also derive from the emotions evoked by giving. Indeed, there is a well-established positive relationship between the degree of emotional utility afforded and gift-giving behavior. Emotional utility can take the form of a feel-good factor, or “warm glow,” or it may derive from a family connection to the gift, such as the loss of a loved one to a particular condition or disease. Unsurprisingly, donors touched by a cause in this latter respect exhibit a high degree of loyalty.

Extant research also suggests that utility derives from the impact achieved with the beneficiary group. Individuals will also evaluate potential recipient organizations on the basis of the extent to which their performance is viewed as acceptable. Both efficiency and effectiveness are at issue. With respect to efficiency, donors appear to have a clear idea of what represents an acceptable percentage of income that may be applied to both administration and fundraising costs. They expect that the ratio between administration and fundraising costs and so-called charitable expenditure would be 20:80. It is interesting to note that, despite this expectation, most donors believe that the actual ratio is closer to 50:50. For example, recent research shows that respondents perceived that only 46 percent of the focal charities’ expenditures reached beneficiaries, when in reality the average figure was 82 percent.33 It has also been established that 60 percent was a significant threshold, with charities spending at least 60 percent of their donations on charitable programs achieving significantly higher levels of donation.34

With respect to effectiveness, the degree to which the organization is seen to achieve its stated goals impacts gift-making decisions, the total amount donated, and the lifetime value of individual donors. This is a view supported by a later study that found that perceived mismanagement by charity administrators and trustees can impact negatively on donations, although it remains unclear how donors actually draw such conclusions.35 It has been shown that, to help individuals rate charity performance more accurately, charitable organizations simply need to provide relevant information in the public domain (for example, the number of people aided, the quality of outcomes achieved, etc.). Individuals appear to form holistic views about an organization’s performance based on small pieces of relevant information. Providing a more complete picture appears unnecessary with most classes of donors.36

Conclusion

Overall, a brief review of the literature suggests a number of actions that nonprofits might take to improve donor loyalty:

  1. They should begin by developing an understanding of the economics of loyalty, and thus identify for themselves the difference in the lifetime value of the fundraising database that would be garnered by achieving small improvements in the level of donor loyalty achieved (1 percent, 2 percent, 5 percent, etc.). This is essential if staff and board members are to understand the rationale for an enhanced focus on loyalty, and “buy in” to the process necessary for this to become a reality.
  2. Perceptions of the quality of service offered to donors are the single biggest driver of loyalty in the fundraising context. Organizations should therefore take steps to measure the quality of service provided by their organization and improve on those areas where weakness is detected.
  3. Organizations should think through and, ideally, conduct their own primary research program to understand why donors support their organization, or, more specifically, from which aspects of the organization’s operations (or fundraising) individuals derive the most value. Value can then be engineered that directly reflects and satisfies donor motives for supporting the organization.
  4. Allied to the above, nonprofits should consider how and under what circumstances they might contribute to a donor’s sense of self-identity. Are there circumstances where a donor would be likely to start defining him- or herself, at least in part, through his or her support of the organization? Donors may, for example, derive value because they identify with aspects of an organization’s brand or personality. These aspects may then be emphasized in communications.
  5. Allied to the above, organizations should give greater thought to the labels they append to donors in their thank-yous and other communications. Donors can be persuaded to adopt an identity if it is fostered consistently over time and reinforced with credible messages from a credible source.
  6. Nonprofits can seek to build donor commitment to their cause by considering each of the determinants we alluded to earlier. They can:
    • Clearly articulate their organization’s values.
    • Make clear to donors the difference their support is or has been making and therefore the consequences to the beneficiary if they were to withdraw.
    • Consider the “journeys” that they will take supporters on through ongoing communications. This might be as simple as considering what “a year in the life” of each category of supporter might look like, or it may be more sophisticated, looking at how each segment of donors will be educated about the cause (and bought closer to it) over time.
    • Allied to the above, consider ways in which donors can be actively encouraged to interact with the organization. In the electronic environment, for example, this is relatively easy. Supporters can be asked to sign up for specific forms of communication, to offer recommendations or suggestions, to take part in research, to “ask the expert,” to campaign on behalf of the organization, to “test” their knowledge in a quiz, etc. The more two-way interactions that are engendered, the higher the level of loyalty achieved will be.
  7. Similarly, organizations should seek to foster trust by considering all of the antecedents alluded to earlier in donor retention. An organization can:
    • Demonstrate to the donor that it has exhibited good judgment in its dealings with beneficiaries, its stewarding of organizational resources, and, where applicable, its approach to campaigning.
    • Stress that it adheres to appropriate standards of professional conduct. Ensure that all outward-facing members of staff receive appropriate training in customer service.
    • Design and instigate a complaints procedure so that individuals who wish to can take issue with the quality of an organization’s fundraising or approach.
    • Communicate the achievements of the organization and, where possible, relate these to the individual contributions made by individuals or segments of supporters.
    • Ensure that all promises made to donors are adhered to and, critically, seen to be adhered to.
  8. Consider the development of regular or “sustained” giving programs. Levels of attrition are much lower than those achieved in traditional annual giving. Younger donors are also significantly more comfortable with regular giving than their older counterparts, so offering regular giving, particularly as an online option, will greatly reduce the level of attrition experienced.
  9. Evaluate the continuation of activities that lower loyalty, such as list swap programs. In donor retention, managers need to assess the impact on donor lifetime value rather than looking at the short-term attractiveness (i.e., return on investment) of such programs.
  10. Consider the creation of donor welcome cycles. E-mail and mail versions of these cycles should be considered. Newly acquired donors should be exposed to a differentiated standard of care while their relationship with a nonprofit develops. The historically strongest recruitment messages would likely be the most effectual components of such cycles.
  11. Finally, those organizations seeking to facilitate higher levels of loyalty would be advised to maintain regular contact with their donors, researching ongoing needs and preferences. As a consequence of this research database, segmentation can then be regularly reviewed and updated as necessary. It would also be helpful to conduct regular exit polling of lapsed supporters to identify the reasons that predominate for this behavior. Corrective action can then be taken where possible.

 

Notes

  1. Adrian Sargeant, “Relationship Fundraising: How to Keep Donors Loyal,” Nonprofit Management and Leadership 12, no. 2 (winter 2001): 177–92.
  2. Simon McGrath, “Giving Donors Good Reason to Give Again,” International Journal of Nonprofit and Voluntary Sector Marketing 2, no. 2 (May 1997): 125–35.
  3. Fundraising Effectiveness Survey Report (Washington, DC: Association of Fundraising Professionals/The Urban Institute).
  4. Michael D. Johnson and Claes Fornell, “A Framework for Comparing Customer Satisfaction across Individuals and Product Categories,” Journal of Economic Psychology 12, no. 2 (June 1991): 267–86.
  5. Vikas Mittal and Wagner A. Kamakura, “Satisfaction, Repurchase Intent, and Repurchase Behavior: Investigating the Moderating Effects of Customer Characteristics,” Journal of Marketing Research 38 (February 2001): 131–42.
  6. Sargeant, “Relationship Fundraising,” 177–92; Sargeant and Lucy Woodliffe, “Building Donor Loyalty: The Antecedents and Role of Commitment in the Context of Charity Giving,” Journal of Nonprofit and Public Sector Marketing 18, no. 2 (2007): 47–68.
  7. Roger Bennett and Anna Barkensjo, “Causes and Consequences of Donor Perceptions of the Quality of the Relationship Marketing Activities of Charitable Organisations,” Journal of Targeting, Measurement and Analysis for Marketing 13, no. 2 (January 2005): 122–39.
  8. C. B. Bhattacharya, Hayagreeva Rao, and Mary Ann Glynn, “Understanding the Bond of Identification: An Investigation of Its Correlates among Art Museum Members,” Journal of Marketing 59 (October 1995): 46–57.
  9. Susanne G. Scott and Vicki R. Lane, “A Stakeholder Approach to Organizational Identity,” Academy of Management Review 25, no. 1 (January 2000): 43–62; Bhattacharya and Sankar Sen, “Consumer–Company Identification: A Framework for Understanding Consumers’ Relationships with Companies,” Journal of Marketing 67 (April 2003): 76–88.
  10. Paul G. Schervish, “Philanthropy as Moral Identity of Caritas,” in Taking Giving Seriously, eds. Schervish et al (Indianapolis: The Center on Philanthropy at Indiana University, 1993); Schervish, “Inclination, Obligation, and Association: What We Know and What We Need to Learn about Donor Motivation,” in Critical Issues in Fund Raising, ed. Dwight F. Burlingame (Hoboken, NJ: John Wiley & Sons, 1997), 110–38.
  11. Sidney J. Levy, “Symbols for Sale,” Harvard Business Review 37, no. 4 (July-August 1959): 117–24.
  12. Ida E. Berger and Brenda Gainer, “Jewish Identity, Social Capital and Giving,” in Advances in Consumer Research 29, eds. Susan Broniarczyk and Kent Nakamoto (Valdosta, GA: Association for Consumer Research, 2002): 412.
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This article was based in part on a review of the donor retention literature commissioned by the Association of Fundraising Professionals. Their generosity in sponsoring this work is gratefully acknowledged.