Reducing Donor Churn doesn't have to be a big task but does need to be a fundamental part of a Nonprofit's day to day processes
Donor Churn is the likelihood of an individual stopping their donations to a charitable cause for a variety of different reasons resulting in the non-profit organisation needing to spend extra resources to attract new donors.
It’s also known as donor churn risk, donor attrition risk or donor turnover probability.
The formula to calculate donor churn is:
· Donor Churn = No. of lost donors in 12 months / No. of total donors in 12 months
Nonprofit’s rely on charitable donations for both the advancement of their chosen cause and the viability and sustainability of their own organisation.
Surprisingly however many nonprofit’s either don’t understand or appreciate the impact donor churn can have to those goals.
It’s always tempting to ascribe the last interaction a donor may have had with a charity when deciding on why they stopped donating to a cause but that last touchpoint is rarely, if ever, the real reason someone will stop their donations.
In solving the problem of donor churn then, it’s important to understand the various root causes of why an individual may have stopped donating but to understand that, we first need to look at why someone started to donate to a charity in the first place.
The reason someone picks a particular charity to donate to can be hard to pin down, as charitable giving is such a deeply personal choice that’s intrinsically tied to an individual’s personality and personal history, especially when it comes to understanding why some people make repeat, regular donations. They may be influenced by their personal tastes and viewpoint, political leanings or economic background to name a few… all data that’s very hard to quantify in a post GDPR world.
Other, less specific reasons for donating to charity include:
· Wanting to feel like their specific donation has a positive impact on a chosen cause
· It generates feelings of happiness and contentment
· Their perception of a nonprofit’s competence (reputation) and the perceived likelihood of their money reaching it’s intended destination.
· Poorly set expectations from the first donation
· They were never thanked for their donation(s)
· A feeling of unappreciation due to a lack of personalisation in your communications with them
· Continued requests for aid with no indication of what their donations are accomplishing
· Thinking your charity doesn’t need them (their individual donation doesn’t make a difference)
· They’ve found another charity or non-profit operating in the same sector they deemed as ‘more worthy’
· They don’t remember giving to your charity
· They can no longer afford to donate
Now you’ve a basic understanding of why someone picked your charity in the first place and then later stopped donating the question becomes ‘how to reduce donor churn’.
First off, it’s important to recognise you’ll never stop it completely.
A certain percentage of people will only ever make a one-off donation so your efforts will be best spent in making regular, long term donors feel appreciated rather than investing a lot of resource into attracting new donors.
The 80/20 rule will apply here with 80% of your fundraising team’s revenue likely being generated by just 20% of your donors.
Next you need to understand that making donor churn a priority after someone has left with a win back campaign will be difficult and yield very little results. By that point the horse has bolted the stables.
Instead, your non-profit needs to institute an entire culture built around reducing donor churn, making it a crucial part of your strategy even before someone makes their first donation.
Whilst your focus will obviously be in collecting money to further your chosen cause it’s important to also recognise that an individual’s reasons for donating will differ slightly from that if you want to keep them as a long-term donor their needs must also be met.
Poorly set expectations – Before someone donates it’s vital you make sure they know exactly what their individual donation will be spent on to best engender a sense of satisfaction in their charity.
Oxfam do this very well with their Clean Water campaign, stating a monthly donation of just £2 a month can provide water for an entire village.
Managing their expectations in this way will make it much more likely they continue to donate without feeling dissatisfied that their money doesn’t make a difference.
Send a personalised thank you – After you’ve received their donation make sure they receive a personalised thank you explaining how much of a difference their specific donation will make. Singling them out in this way is an important step in the relationship building process and can result in a much higher percentage of repeat donations.
Regular updates – To maintain their interest and make sure they continue to feel appreciated you need to send regular, updates of the difference their donations are making.
These communications should be separate (and take priority over) to any requests you may make for extra donations.
This will continue the relationship building process and make sure they continue to feel that they’re appreciated and that their money is needed. It also serves the dual function of reminding them of your organisation and cause so they don’t forgot donating to you in the first place.
Minimum donation amounts – People’s personal circumstances change and in leaner times they may be less likely to support charitable causes. If you do have a minimum donation amount, consider giving people the option to give less as well as more to keep them as a donor.
Donor churn doesn’t have to be a huge problem to address but in smaller nonprofit organisations or larger ones with masses of data, segmenting your donors and building repeat, personalised campaigns can look like an insurmountable task.
cloudThing have worked with many nonprofits over the years (including Achievement For All, Trauma Response Network, The British Red Cross and Comic Relief) in implementing cutting edge technology for business transformation.
Feel free to reach out today to discuss how we can help automate reducing donor churn within your organisation.
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