From Year 1 to Year 2: The Importance of Retaining First Gifts

As many nonprofits know, securing donations from new donors requires large upfront costs and an extraordinary amount of effort, literally requiring a “reinvention of the wheel” for a constituent your institution may know little about. One would think that after making such an investment of time and precious funds in these new donors, retention would be a top priority – wrong.

But why?

Fundraising professionals continually speak about the importance of retaining new donors, but few have developed methods that are cost effective and efficient. How can we develop stronger relationships with these new donors when resources are so limited?

According to Chuck Longfield’s research, the average retention rate of a new donor 10 years ago was around 33%. Today, it is 27%. There are several reasons why a donor may choose not to give again, but one complaint that consistently rings true for many first time donors – “I did not feel that my gift made a difference.”

The Trial Gift

The first gift a donor makes is called a trial gift, kind of like a trial purchase. He or she clearly has some level of affinity for the institution and has certain expectations of the institution after the gift is made. These expectations can vary based on the capacity of the donor, but one can assume that the donor is somewhat skeptical of the value of his or her small gift in light of the many other much larger gifts an organization may receive. If these new donors do not feel their donation was impactful and fail to receive proper “touches” from the organization, the donor will develop negative disconfirmation, a negative perception towards giving to the institution because his or her expectations were not met, and will therefore not give again in the future. In consumer behavior, it has been argued that for first time purchasers, negative disconfirmation is more powerful than positive disconfirmation, when a service or product exceeds expectations. It is imperative then that first time donors have a positive experience and meaningful engagement with the organization – their future gift giving depends on it!

Let’s be honest, organizations will not be able to retain every first time donor. But there are certain tactics that should be kept in mind. Although the first gift is a trial gift, it is a gift that could lead to a much larger gift in the future, or a gift that could become consecutive over the lifetime of the donor. According to Marc Pittman, the key to successful retention is “seeing a gift as a step in a relationship, not a one-off business transaction.”

Why Nurturing First Time Donors is More Important than Ever

Historically, our organizations have received less and less government funding, and many corporations are scaling down their philanthropic giving. This means that cultivating individual donors will be more important than ever, and if we can secure small gifts consistently from a large number of our constituents, we can dramatically increase our fundraising revenues. We have to connect with first time donors and communicate the impact of their gifts, however small. Email blasts, handwritten thank you notes and communications on social media are all methods that can easily be put in place, at little cost to the institution. Volunteers can also be extraordinarily helpful in stewarding small gifts. Finally, practice makes perfect. If your organization develops a strategy to retain first time donors and evaluates it on an annual basis, your staff will work smarter, not harder and this in turn will minimize acquisition costs.