Fundraising

How To: Calculate and Track Donor Retention & Benchmarks

Donor retention is a critical metric for nonprofits, so it's important to know how to calculate and set benchmarks for your donor retention rate.


Do terms like “fundraising metrics” and “data analysis” make your head spin a little? You might know that setting benchmarks for your nonprofit’s growth is a good practice, but getting started can feel intimidating. There are many metrics nonprofits can track to evaluate progress toward their goals. If you’re wondering where to begin, we recommend looking at your donor retention rate.

Donor retention is a simple metric to track, and knowing where your rate stands and what activities improve it over time can make a big impact on your mission-driven work.

Below, we’ll help make this process easier by answering some of the most frequently asked questions about donor retention rates, including:

  • What is a donor retention rate?
  • Why is it important to track donor retention rates?
  • How do I calculate my donor retention rate?
  • What donor retention benchmarks should I aim for?

What Is a Donor Retention Rate?

Donor retention refers to how many past donors give another donation to your nonprofit within a set period of time. You can measure it by the number or percentage of donors who return.

Typically, nonprofits will look at their donor retention rate year over year. So, for example, how many donors who gave a gift in 2021 gave another gift in 2022?

This helps you see if, in general, donors are continuing to engage with your nonprofit—whether that’s with a second one-time gift, recurring gift, peer-to-peer fundraiser, or any other number of ways they may donate to your cause.

However, you can also look at your donor retention rate for other periods of time too. For instance, looking at donor retention rates monthly or quarterly can provide insight into whether you’re increasing the number of donors using an autopay feature to give a set amount each month.

Why Is It Important to Track Donor Retention Rates?

First and foremost, it costs less to retain an existing donor than to recruit a new one. The marketing and outreach costs needed to build new relationships add up, and studies show that, on average, it costs nonprofits two to three times more to recruit a donor than the amount of their first donation. This means it can take between 12 to 18 months before a relationship with a new donor is profitable.

Additionally, as mentioned above, tracking your donor retention rate can offer insight into how many recurring donors you’re recruiting to your nonprofit over time. Recurring donors help provide reliable revenue for your organization’s work even when unexpected challenges may tighten your budget.

Tracking your donor retention rate lets your nonprofit set growth goals to be able to better fulfill your mission over time. You can use them to see how your marketing, community building, and other strategies are impacting donor retention and learn where you might need to pivot or invest in order to increase engagement.

How Do I Calculate My Donor Retention Rate?

To calculate your year over year donor retention rate, you divide the number of donors from your current year by the number of donors from your prior year and multiply that by 100 to get a percentage.

You can also break that calculation down a bit further to look at retention rates for first-time versus recurring donors. To look at the retention rate for first-time donors, you’d first need to identify which donors gave in the previous year for the first time. Next, review your data to see how many of them gave again in the current year. Divide the latter by the former and multiply by 100 for a percentage.

To do this for recurring donors, you’d follow this same logic, but identify all recurring donors from the previous year and then the number of those who continued as recurring donors in the current year.

While looking at your donor retention rate, it can also be helpful to calculate your donor growth rate year over year. A donor growth rate shows the overall percentage of how many donors you gained or lost from the prior year, whether new or retained.

To calculate your donor growth rate, you subtract the number of donors you have in your current year from the number of donors you had in the previous year and then divide by the number of donors you had in the previous year.

Making a simple table like the example below can help you track your rates over time compared to your benchmarks.

Metric

Benchmark

2020

2021

2022

2023

Donor Retention Rate

45.0%

43.7%

44.8%

   

Donor Growth Rate

1.0%

0.75%

-0.01%

   

What Donor Retention Benchmarks Should I Aim For?

Benchmarks are reference points you can use to understand where a metric stands for your nonprofit in relation to where you’d like it to be.

If you’re unsure where to start with setting benchmarks for your donor retention rate and donor growth rate, you can start with national averages.

According to the Fundraising Effectiveness Report, the average donor retention rate in 2018 was 43.4%. Since 2005, average yearly rates have fluctuated between 40.5% and 49.7%. Growth in donors can also vary by year. In 2017, the average was 0.75% and in 2018 it was -2.8%. So, a good benchmark for that metric is to aim to keep it within a positive range.

However, these national averages should be considered a guide, not the hard and fast rule.

You know best where your nonprofit is in its fundraising and development journey, so tailor the benchmarks you aim for to best suit your situation. For example, if your nonprofit is in its first two years of work, your rates might run a little lower than the national averages as you develop your strategy. Similarly, if you’re just implementing a new comprehensive fundraising strategy, the first year might show slower growth than the first.

Think challenging, but attainable for your benchmarks. You can also use where you are now with your rates as a benchmark for where you want to be in the future. For example, if your 2021 donor retention rate was 40%, you can use that as a benchmark for the minimum rate you want to have for 2022.

Track Your Donor Retention Rate to Meet Your Benchmarks for Growth and Sustainability

There are many metrics your nonprofit can track to gauge progress toward your goals. One of the most important is your donor retention rate. Calculating this figure and tracking its growth over time can help your nonprofit maintain a sustainable revenue stream while reducing donor recruitment costs.

With a few simple calculations, you’ll be able to see the impacts of your different marketing campaigns, understand the strength of your donor relationships, and, most importantly, continue to fund your mission-driven work.

 

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