Measuring Donor Loyalty Walter Wymer 1 Wymer, W. (2010). Measuring donor loyalty. Gift Planning in Canada, 15(2), 1-3. Introduction Nonprofit organizations want to retain their donors. As difficult as it can be to attract donors’ initial gifts to your organization, it can be almost as difficult to attract their second contributions. Donor attrition rates are an increasing cause of concern. Many organizations lose up to 60 percent of their donors after their first donation. 2 Research suggests that the key to retaining a higher proportion of donors is building commitment through communication and trust. 3 Communication between the organization and its donors appears to be very important. 4 Lapsed donors (donors who stop giving) report dissatisfaction with the quality of their communications with the organization. 5 Initially, having an existing relationship between a new donor and a regular donor is useful. 6 Most communications from the organization to the donor is useful. Public relations events, conversations with staff, email, 7 and so forth can be helpful in connecting with donors. 8 Focusing more attention on donor retention makes sense. Even taking into account the costs of superior donor retention programs, it is generally less costly to retain a current donor than to acquire a new donor. Because donor contributions over time can add up to considerable sums, because donors tend to increase their level of giving over time, and because a long-time donor is more likely to leave a bequest, the lifetime value of a retained donor can make retention costs wise investments. Since donor retention is important, development professionals need a means of assessing the health of donor retention efforts in their organizations. Fortunately, this is not too difficult. If a donor stops giving, she is not counted as a retained donor. This calculation can be scaled up and summed to produce the percentage of donors that are retained. While development professionals must decide when someone is no longer a donor (not giving after one or two years, for example), calculating donor retention is relatively simple. How does the development professional determine if the organization’s level of donor retention is healthy or not? The organization could compare its level of donor retention with an industry norm, if available. The organization could track its annual donor retention over time and observe the trend. Is the organization’s donor retention improving or getting worse? My criticism of this methodology is that it really only provides a weak assessment of the health of the organization’s relationship with its donors. To use marriage as an analogy, can you determine the health of a couple’s marriage by knowing that they are not divorced? I believe a much better variable to use in gauging the health of the relationship between the organization and its donors is donor loyalty. I will define donor loyalty as an emotional state of bonding, a belief in the importance and goodness of your organization’s purpose, a duty to support your organization and its cause. Donor retention is a lagging indicator of behavior; it lets you know a donor is not retained after they have stopped donating. Donor loyalty is a leading indicator of behavior; it lets you know how a person feels about your organization in advance of their discontinuation of donating. Donor retention is a crude measure. You either are a donor or you are not. Measuring donor loyalty provides the development professional with an