2016 Donor Retention Report

December 31, 2016

A Supplement to the 2016 Fundraising Effectiveness Survey Report

Available at www.afpfep.org

The Fundraising Effectiveness Project (FEP)

A project of the Growth in Giving Initiative
A special thank you to the following data providers, donor software/services firms, and
nonprofit sector groups for their contributions.

2014-2015 Data Providers

Abila* DonorPerfect Fundraising Software* [**]
Bloomerang*[**] Neon*
eTapestry [**]

* GiG Database Providers [ **] FEP 2016 Annual Report Data Provider

2006-2016 Participating Donor Software/Services Firms

Abila* MatchMaker FundRaising Software*
Bloomerang Metafile*
Donor2/Campus Management Corporation* PhilanthrAppeal (FundTrack Software)*
DonorPerfect Fundraising Software* The Raiser’s Edge ® (Blackbaud)*
DonorTrends ROI Solutions
eTapestry (Blackbaud)* Telosa Software (Exceed!)
GiftWorks (Mission Research)* Neon

* Charter member of the AFP Donor Software Workgroup (2006 to 2014)

Nonprofit Sector Groups Endorsing the Project

Association Foundation Group (AFG)
Association of Fundraising Professionals (AFP)*
Association of Donor Relations Professionals (ADRP)
Center on Nonprofits and Philanthropy at the Urban
Institute*
Council for Advancement and Support of Education
(CASE)
Philanthropic Service for Institutions
Lilly School of Philanthropy at Indiana University-
Purdue University Indianapolis
National Association of Charitable Gift Planners

* Founding partners, providing resources for the project.

2
 2016 FEP Donor Retention Supplement
December 31, 2016

Written by: Ben Miller

Contributions by: Bill Levis, Heather McGinness, Nathan Dietz, Cathy Williams, Michael Nilsen

Summary
In 2006 the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and
Philanthropy at the Urban Institute established the Fundraising Effectiveness Project to conduct
research on fundraising effectiveness and help nonprofit organizations increase their fundraising results
at a faster pace. Organizations listed on the cover page have joined them as sponsors of the project. The
project goal is to help nonprofit organizations measure, compare, and maximize their annual growth in
giving. The Growth in Giving Database housed at the Urban Institute will soon be publicly to nonprofit
sector researchers on request.
The groundbreaking annual Fundraising Effectiveness Survey, piloted in November 2006, collects
fundraising data from nonprofit organizations beginning with data for 2004–05. The Fundraising
Effectiveness Survey enables participating nonprofits to measure and compare their fundraising gain and
loss ratios to those of similar organizations. Participants can use this industry data, which AFP offers free
at www.afpfep.org, to make better-informed, growth-oriented budget decisions to boost donor
revenue.
The 2016 Fundraising Effectiveness Survey Report is based on 9,922 responses for 2014–15 from
nonprofit organizations in the United States. The 2014–15 responses reflect a total amount raised of
$8.628 billion from 8.27 million donors with an average gross revenue of $869,607 among the 9,922
participating organizations.
The revenue for the organizations reviewed increased 5.3 percent and the number of donors increased
2 percent. The increase in revenue was driven largely by a 3 percent increase in average gift size. On
average, 46 percent of donors who gave in 2014 gave again to the same organization in 2014. This
means that on average, 54 percent of the donor file needed to be replenished by reactivating lapsed
donors or acquiring new ones.
Figure 1
In order to provide a more detailed analysis of the organizations , a subset of 7,840 organizations was
further examined. The remainder of this report uses the subset of 7,840 organizations where we had
additional data points like NTEE code and age of organization as examples. Using the subset of data
allowed us to dig deeper into the data and provided additional views of the data.

Overall Retention Rate

Definition: the number of donors who gave last year and gave again this year, divided by total
number of donors last year.
On average, for the 7,840 organizations in the subset, 46 percent of donors that gave in 2014
gave again in 2015. The retention rates for the organizations are distributed much like a
traditional bell curve. One can think of the average retention rate much like the average height
of a man/woman. The average height of a male/female in the United States is 5’10”/5’5”, much
like the average retention rate for the organizations we reviewed was 46 percent.
It is useful to compare an organization’s retention rate to the average as one might compare
their height to the average. The standard deviation of height for a male is 4”, and the standard
deviation for retention in the FEP data is 16.8 percent. Therefore, if you think of a male
between 5’6” and 6’2”, this is roughly equivalent to an organization with a retention rate
between 30 and 60 percent. In both cases roughly 68 percent of the population is contained
inside that margin.
Just 5 percent of the organizations in the survey had retention rates above 68.5 percent, and
only 5 percent had retention rates less than 14.1 percent. For the donors that were retained, 41
percent increased their giving compared to 28 percent who gave the same and 31 percent who
gave less.
The figure below illustrates the average overall retention for the organizations reviewed.
Figure 2

80.00%
Overall Donor Retention 80.00%
Overall Donor Retention Rate Average
70.00% 70.00%

60.00% 60.00%
50.00% 50.00% 49.00% 48.62% 48.85%
50.00% 48.00% 46.63% 50.00%
46.09%

40.00% 40.00%

30.00% 30.00%

20.00% 20.00%
2008 2009 2010 2011 2012 2013 2014 2015
The overall retention rates over the organizations appears to be normally distributed (bell
curve). The following figures show the distribution and percentile of the organizations’
retention, with the majority of the organizations between 30 and 60 percent retention.
Figure 3

879 863
795 815
Number of Organizations

681 696
637

487 494
428
315
246
139 161
61 88
5 3 29 18
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
5. 10. 15. 20. 25. 30. 35. 40. 45. 50. 55. 60. 65. 70. 75. 80. 85. 90. 95. 00.
1
Retention

In keeping with the height comparison, it is useful to think of the growth chart a child receives
during the first five years of doctors’ visits. The chart is meant to track the growth of a child as
compared to the average for the age.
The chart on the next page, figure 5, shows the percentile for each retention rate. So if an
organization has a 68.5 percent overall retention rate or higher, it is in the top 5 percentile of all
organizations. Similarly, if an organization has a 14.1 percent overall retention rate, it is in the
bottom 5 percentile. An organization can measure its overall retention rate and compare below
to see what percentile it is in.
 Figure 4
100.0%

68.5%
Overall Retention Rate

63.1%
59.6%
56.7%
54.0%
51.7%
49.6%
47.5%
45.2%
42.8%
40.3%
38.0%
35.6%
32.6%
29.8%
27.0%
23.4%
19.2%
14.1%

0.0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
Percentile

Relationship of Growth to Retention, New and Lapsed Donors

The retention of the organizations reviewed was 46 percent. This means that on average 54%
of the donors giving in one year need to be replenished through acquisition of new donors or
the recapture of lapsed donors, just to break even. For the organizations we reviewed, on
average for every recaptured donor nearly four new donors were acquired.

Figure 5

% of Current Year Donors by Gain/Loss Category

14.1%

12.5% 46 percent of Current Year

Donors Retained from Last
18.4%
Year
11.2%

54 percent of Current Year

43.8% Donors Recaptured or New

Donors

New Recapture Upgrade Same Downgrade

The donor growth rate is equal to (New donors + Reactivated donors – lapsed donors[attrition])
/ Total Donors Last Year), and measures the rate with which the number of donors contributing
within a year increases or decreases. The Fundraising Effectiveness Project’s goal is to increase
giving at a faster pace. Therefore, we analyzed the relationship of the factors that increase
giving—retained, new, and lapsed donors—to better understand the elements of growth.
There was a large amount of variability in the donor growth rate for small and young
organizations within the data set. To control for this variability, the dataset was filtered down to
organizations with more than 1,000 donors and older than five years of age. The correlation
was then run to determine the strength of the relationship between retention, new donors, and
lapsed donors on the donor growth rate.
A surprising outcome was that the new donors had the highest correlation (.795) compared to
the correlation of retained donors (.313) and lapsed donors (.140). This indicates that the
relationship of existing donors either retained from the prior year or recaptured from previous
years is not nearly as strong as the relationship between new donors and donor growth rate.
While obviously both are important and should not be neglected, it is important to understand
how closely the donor growth rate is related to the acquisition of new donors. This is especially
true when considering the costs associated with acquiring donors as opposed to retaining and
stewarding them. Because acquisition is so much more expensive, it is often the first expense
that is cut for organizations of all sizes.
Value of Retention
Perhaps the most important question is not how many donors are we retaining, but instead
what is the value of that retention. For it is only once that value is understood that an
organization can set expenses toward maintaining and improving retention. We calculated the
revenue generated by an increase of 1 percent of retention. This will give organizations a good
rule of thumb for the expense they are willing to allocate toward increasing that retention.
It is important to note that the following calculations are an average. This value can and should
be calculated individually for each organization.
This calculation was done in the following manner: the value of 1 percentage point is the total
value of the donors retained for an organization, and then divided that by the percentage
retained.
Repeat Donor Revenue
Value of 1 % of Retention=
(Overall Retention Rate/100)

Repeat Donor Revenue = Revenue from donors that gave both this year and last year.

Figure 6
 Value of 1% of Retention
5 million & up $186,873

2.5 million-5 million $54,552

1.5 million-2.5 million $30,989

Organization Size

1 million-1.5 million $20,085

500,000-1 million $11,759

250,000-500,000 $6,037

100,000-250,000 $2,810

Up to 100,000 $842

$0 $40,000 $80,000 $120,000 $160,000 $200,000

Value of One Percentage of Donors Retained

The Chart above illustrates the value associated with one percentage of the donors that could
be retained in the ensuing year. For example, if an organization retained 50 percent of its
donors, and the revenue retained was $500,000, then the relative value of a percentage point is
$10,000, or 50 * (1%) * $10,000 = $500,000. The average value of a percentage point of
retention was calculated by the size of the organization in the chart above.

New Donor Retention Rate

Definition: the number of new donors last year who gave again this year, divided by all new
donors last year.
It is important to separate out the retention rate of new donors compared to the retention
rates of existing donors—they are starkly different, relative to time and level of connection with
the organization. In addition, the strategies used to improve retention vary widely between
these two populations. The chart on the following page, figure 6, illustrates that the average
new donor retention over the time period below was 25.76 percent. An alarming finding in this
research is that the New Donor Retention rate has been steadily declining since 2008, averaging
a reduction of -3.4% year over year.

Figure 7
 New Donor R etenti on R ate
35.00%
29.35%
30.00% 27.71% 26.84%
25.22% 25.42% 24.44%
25.00% 24.13% 22.93%

20.00%

15.00%

10.00%

5.00%

0.00%
2008 2009 2010 2011 2012 2013 2014 2015

New Donor Retention Rate Average

When looking at new donor retention there is a large distinction between donors who gave under $100
and those giving greater than $250. You can see in the chart below that the average new donor
retention rate for donors giving under $100 is only 17.5%, percent compared to 48.5 percent for those
giving above $250. The $100 to $249 segment is right in-between at 30.4 percent during the same time
period.

Figure 8

N e w D o n o r R e t e n ti o n R at e b y G i v i n g L e v e l
60.00%

50.00%

40.00% Under $100

$100-$249
$250-$999
30.00% $1,000- $4,999
$5,000 & Up

20.00%

10.00%

0.00%
2008 2009 2010 2011 2012 2013 2014 2015
Repeat Donor Retention Rate
Definition: number of donors last year who gave again this year (excluding new donors last
year), divided by all donors who gave last year (excluding new donors last year).
In the chart below you see that the average repeat donor retention rate over the time period
below was 64.8 percent. There has been a steady decline over the last six years averaging -1.68
percent per year.
Figure 9

80.00%
R epeat Donor R etenti on
70.00% 67.88% 66.81% 65.68% 64.77% 64.80% 64.48% 63.89%
60.23%
60.00%

50.00%

40.00%

30.00%

20.00%
2008 2009 2010 2011 2012 2013 2014 2015
Repeat Donor Retention Rate Average

As you would expect, the repeat retention increases as the giving level increases. There is a
direct relationship between gift value and loyalty. Donors giving less than $100 had an average
retention of 52.25 percent over the last seven years, as compared to those giving $250 and
above who demonstrated an average of 76 percent. Again, donors giving between $100 to $249
were right in the middle with an average of 64 percent.
Figure 10

Re pe at Donor Re te nti on by Giving Le ve l

90.00%
80.00%
70.00%
Under $100
60.00% $100-$249
$250-$999
50.00%
$1,000- $4,999
40.00% $5,000 & Up
30.00%
20.00%
10.00%
0.00%
2008 2009 2010 2011 2012 2013 2014 2015
Overall Donor Retention by Organization Type
The following section will analyze the retention of organizations by their National Taxonomy of
Exempt Entities (NTEE) code, size in gross revenue, age, and the average gift size of the
organization.
Retention by NTEE Code
Religion, Environment, and Arts, Culture, and Humanities had the highest retention numbers in
2015. Human Services, Societal Benefit, Health, and Other had the lowest retention for 2015.
The relationship between the growth in donors and retention can be seen in the charts below
as variable. For example, Religion had one of the highest average retention rates, but also had
one of the lowest growth in donors.
The following chart shows the average retention rates and corresponding growth in donors of
the organizations by the NTEE code. (Please note that retention is the percentage of the total
number of donors last year who gave again this year, divided by total number of donors last year and
growth in donors is the number of donors contributing in 2015 divided by the number of donors
contributing in 2014.)

Figure 11

14%
X - Other - Z
38%

10%
VIII - Religion related - X
52%

17%
VII - Public-society benefit - R-W
42%

10%
V - Human services - I to P
42%

13%
IV - Health - E to H
40%

9%
III - Environment/animals - C, D
46%

12%
II - Education - B
45%

13%
I - Arts, Culture & Humanities - A
46%
0% 10% 20% 30% 40% 50% 60%

Retention Growth in Donors

Retention by Size
The organizations analyzed were divided into eight classifications of size. The size refers to the
annual gross revenue of the organization.
The size of an organization does seem to affect retention up to a point. This may be attributed
to availability of resources to invest in tailored, segmented donor cultivation and stewardship.

Figure 12

20%
5 million & up
45%

13%
2.5 million-5 million
47%

14%
1.5 million-2.5 million
Size of Organziation Revenue

47%

13%
1 million-1.5 million
44%

12%
500,000-1 million
45%

12%
250,000-500,000
43%

12%
100,000-250,000
41%

10%
Up to 100,000
36%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Average Retention

Average Retention Average Growth in Donors

Organizations with less than $100,000 in revenue retain 36 percent of their donors on average.
Once a nonprofit makes more than $1,500,000 the average retention plateaus at 47 percent. As
revenue reaches $5,000,000 or more, retention rates average 45 percent.
It is important to note that a 50 percent growth in donors for an organization raising less than
$100,000 could mean an increase of only hundreds of donors. However, for organizations
raising $5 million or more, that rate could mean an increase in the tens of thousands of donors.
It is easy to see how the rate of growth in donors necessarily diminishes as an organization
grows.
Retention by Age
In addition to the size of an organization, the age of an organization plays a part in the ability to
grow and retain donors. Organizations that were less than five years old had the lowest average
retention at 40 percent, whereas the organizations that had been in operation for more than 30
years had an average retention of 46 percent. This may be attributed to the length of time the
older organizations have had to build trust and develop more meaningful relationships with
their donors.

Figure 13

5.6%
Over 30 years
46%

5.8%
16 to 30 years
44%
Age of Organziation

5.1%
6 to 15 years
42%

32.9%
Up to 5 years
40%

19.4%
Unknown - '9999'
42%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Average Retention Average Growth in Donors

Older organizations grew their donor files between 5 and 6 percent and had retention rates
between 42 and 46 percent for 2015. By comparison, younger, less established, organizations
grew by 33 percent, but retained only 40 percent of their donors. Organizations less than five
years old may have not fully realized conversion and the lifetime value of newly acquired
donors due to the shorter time frame.
Retention by Average Gift Size
Earlier in this report, retention by donors’ average gift size was discussed. The graphs below,
figure 13, show the average gift of the organization. One particularly interesting finding was
that the average gift size for an organization had an inverse relationship to growth in donors.
Organizations with low average gifts demonstrated the largest average growth of donors in
their donor file.
The chart below maps retention, growth in donors and gift size. Another divergence from the
gift size of an individual as compared to the average gift size to the organization is that when
looking at the higher gift amounts, we see a drop off in retention. For example, organizations
whose average donation is $5,000 or higher have a retention rate of 40%, or 6% points below
the average. Alternatively, when you look at repeat donors whose average donation is $5,000
or greater those donors have a retention rate of 76%, or 8% points above the average. This
means that when you group retention by individual the retention rate increases as the donation
size increases, but when you group retention by organization the retention rate does not
necessarily increase as the average donation increases. This finding is counterintuitive and
requires further study.

Figure 14

10%
$5,000 and up
40%

8%
$2,500 to $5,000
42%
Average Gift of Organziation

8%
$1,000 to $2,500
43%

11%
$500 to $1,000
43%

16%
$250 to $500
41%

22%
$100 to $250
40%

24%
Up to $100
40%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Average Retention Average Growth in Donors

Conclusions
In 2015 the overall retention rate was at 46.1 percent compared to the average of 48.4 percent
over the past eight years. There has been a decline in new donor retention of -3.4 percent and
in repeat donor retention of -1.68 percent over the past seven years. Even with these declines
in retention rates, there was an increase in 2015 of 2.6 percent in revenue generated from the
organizations studied.
Sectors experiencing the highest retention rates in 2015 were Religion, Environment, and Arts,
Culture, and Humanities, as compared to those experiencing the least: Human Services, Societal
Benefit, and Health. The size, age, and average gift of an organization also play a role in the
retention. The larger and more established organizations exhibited higher retention rates.
The question then becomes what can be done about retention and what resources should an
organization employ toward improving their retention. This question is not easily answered,
and likely varies widely depending on a variety of factors. To help organizations develop
strategies toward improving retention, please visit www.afpfep.org where the Growth In
Giving/Fundraising Effectiveness Project publishes useful performance measurement tools and
statistics to help the non-profit sector increase their giving.