Why do first-time gifts matter?
Our board recently asked that I periodically report on fundraising progress. The following information will be used at an upcoming board meeting to discuss first-time gifts and subsequent renewal rates. Boards usually struggle with how to evaluate fundraising performance- often simply relying on short-term measures such as money raised versus money spent. This approach does not consider the long-term strategies that are being implemented to sustain long-term relationships. This approach also neglects to consider the processes that are being implemented, revised, and improved to sustain funding. I encourage Executive Directors and board members to elevate fundraising performance from both short-term and long-term perspectives.
First-Time Analysis
In 2008, our organization received 61 first-time gifts.
In 2009, 31 of those 61 did not renew their support.
Therefore we had approximately a 50% renewal rate for first-time donors.
In 2009, our organization had 154 first-time gifts. Incredible increase compared to last year!
How many will renew their support in 2010?
Why this is important?
The costs (both in time and money) to acquire a new donor are much greater than the cost to renew an existing donor.
The first-time donor is typically the most difficult to renew. The repeat donor is much easier to renew for subsequent gift – this reflects a relationship that is being established.
A 50% renewal rate means we lose half of the people we work so hard to win each year. If organizations could simply maintain their existing support, regardless of the anticipated increase, they would be much healthier organizations.
What are we doing to improve our renewal rate?
We have adopted a 90-day cycle that identifies and solicits renewals from those individuals who have yet to renew. The 90-day cycle keeps everything manageable and consistent with the donor’s own giving preferences. It also prevents us from working with renewal groups four-times as large. Our newsletter, communications, special events, parties, etc. are all incorporated into the 90-cycle so that we can encourage renewal long before a donor lapses.
What are some of the challenges of renewal?
In our example, the 154 first-time gifts reflect a large number of capital campaign gifts; some of which you would not expect to renew within a single-year. For this reason, first-time gifts and renewals rates are most applicable to analyzing annual donor relationships.
Renewal rates sometimes overlook engagement of a non-monetary value. For example, donors who also volunteer their time and talent may not make annual contributions. Others may appear to have lapsed when in fact their financial support may come through United Way contributions or corporate gifts.
Some types of gifts are uniquely one-time only gifts. Examples would be memorial and honorary gifts. While there are certainly exceptions and steps to improve the likelihood, these types of gifts are especially difficult to sustain long-term.
