Calculating Donor Retention
Your organization should annually calculate your overall donor retention rate to assess who is choosing to stay within your donor circle each year. By evaluating these metrics, your organization can strengthen donor stewardship and keep donors giving to your cause.
Donor retention is typically calculated by dividing the number of donors in a current time period, like your current fiscal year, by the number of those same donors that also gave a gift in a previous period, like the last fiscal year.
Retention Rate = Donors that gave this year / Donors that gave last year * 100
According to the Charitable Giving Report in 2020 29% of all first-year, offline only donors were retained and 25% of first-year, online-only donors were retained. Retention was even higher for multi-year donors, with 59% of offline-only donors retained and 66% of multi-year, online-only donors retained.
While organizations with a high retention rate keep or renew many donors from year to year, those with a low rate must acquire new donors in order to keep their bottom lines above water. This reinforces the significance of calculating retention to benchmark your internal progress from year to year and across time. Many organizations conduct a retention assessment at the close of their fiscal years and pursue a variety of custom assessments, including their year-to-date retention, first-year donor retention, year-over-year retention, or even year-over-year revenue retention. Each of these metrics can support your organization as you measure the effectiveness of your fundraising strategy and optimize for success
Calculating Donor Attrition
Donor attrition is calculated by subtracting all donors that gave in a current time period from those that gave in a past time period, then dividing that number by the total of all that gave last year. As a shorthand, attrition is also the remaining percentage after you’ve accounted for retained supporters in a given time period.
Attrition Rate = 100% – Retention Rate
As with retention, your organization should take an evolutionary approach to attrition, calculating it at least annually in order to benchmark performance over time. In an ideal world, your attrition rate is low compared to retention, and you continually calculate both rates to assess your strategy.