Recently released data from the 2007/08 financial year for seven Australian nonprofits has revealed insights about donors and valuable lessons for all nonprofits. Carol Rhine reports from data central.

Recently released data from the 2007/08 financial year for seven Australian nonprofits has revealed insights about donors and valuable lessons for all nonprofits. Carol Rhine reports from data central.

Moderate Donor Growth

In the 2007/08 financial year Australian charities continued to grow, increasing both donors and revenue. Key metrics from the Donor Centrics benchmarking project indicates median growth in donors of 3.9% overall.

When examined by gift type, differences in donor behaviour begin to emerge. More than 52% of all donors make regular gifts (i.e. ongoing monthly donations) while only a very small percentage, 3% on average, give both regular and one-off gifts. Chart 1 shows the changes by gift type in key fundraising performance metrics for the 12 months from July 2007 to June 2008.

Revenue growth for regular donors was 6%. Those donors contribute nearly two-thirds of all revenue for the charities examined so that 6% increase is more significant than the 25% growth for donors giving both regular and one-off gifts whose contributions were less than 5% of total revenue.

About the Benchmarked Charities

Seven Australian charities with donor bases ranging in size from 15,000 to 100,000 took part in the benchmarking project. The median income for the charities was $8.7 million (see panel for more about these charities).

All of the organisations have well-developed direct marketing programs though their use of mail, face-to-face, telephone and other channels varied. Direct mail represented 84% of all gifts at one organisation while face-to-face fundraising accounted for 71% of gifts at another.

Donor Value – Regular vs One-off Givers

The data revealed that donors giving both regular and one-off gifts have the highest revenue per donor at a median value of $434 per year, compared with $287 for regular donors and $153 for those giving only one-off gifts.

High revenue per donor from donors giving both gift types paired with higher retention yields the highest long-term value for those as well. Donors giving both types of gifts reach a five year value of $1,150 per donor while regular-only donors are worth a median value of $650, and one-off only donors yield $251.

Ryan Brown, fundraising manager at CARE Australia, said being involved in the benchmarking project had been worthwhile because it helped the organisation to see new opportunities.

“We currently have a high reliance on once-off gifts, and this study has reinforced to us the importance of building strong regular giving programs.

“The timing has also been good as we are currently carrying out strategic planning and budgeting for the next financial years. We’ll certainly be allocating budget towards developing a stronger regular giving product,” he said.

Retention Rates

The median 5-year retention rate of regular givers was 31%, while the equivalent rate for one-off donors was 25%. Overall, the benchmarked organisations managed to retain 63% of donors giving both one-off and regular gifts five years after acquiring them.

The data indicates an opportunity for nonprofits to solicit additional one-off gifts from regular donors as an important way of building value in the donor file. An examination of the timing of one-off gifts from regular donors found that most are given in December and June, leaving other times of the year open for special campaigns soliciting additional gifts.

One of the valuable aspects of being part of the benchmarking project for Brown has been the chance to compare techniques with the other organisations.

“It’s been really useful to see how our retention rates compare to other organisations, and as part of the reporting, we all got together to discuss the results. In this forum you can speak with other fundraisers and hear about some of the initiatives they are doing to improve their retention rates and perhaps adapt some of those ideas to your own program,” said Brown. “You can always learn from others!”

Greater Loyalty Equals Greater Giving

In the group of organisations examined 27% of the donors had given for 5+ consecutive years. This very loyal group had the highest revenue per donor at a median annual value of $215. They were also most apt to be among those giving both gift types – 52.5% of those giving both gifts were long time donors and averaging revenue per donor of $524 a year. The more loyal the donor the higher their revenue, making retention key to fundraising success.

Try for Regular Givers Initially

The high value of regular donors is evident in both their yearly revenue per donor (median value $281) and their retention (nearly 84% for multi-year donors.) Trying to convert one-off donors to regular giving was a standard practice among the charities in this study, but few donors convert once they begin as one-off donors. Most regular donors start that way.

Over 92% of regular donors joined the organisation as monthly givers. Fewer than 2.5% of one-off donors convert to regular giving when they renew. This finding could mean that organisations seeking to build their regular giving files should adapt their donor acquisition program to emphasize regular giving.

Regular donors start off with a higher value and are retained better than one-off donors. A higher initial investment in the acquisition of regular donors could yield much higher long-term value.

Brown said that the benchmarking findings validated some of the experiences CARE had seen in regards to converting one-off donors to regular givers.

“We have a contact strategy which includes telemarketing aimed at converting once-off donors to regular givers, but if you don’t get to donors within six weeks of their initial gift, our results show that the conversion rate drops away sharply.

“These findings will also help shape our donor acquisition strategy. Basically we’ll be putting a lot more resources into acquiring donors straight into our regular giving stream rather than trying to recruit once-off donors and then aiming to turn them into regular givers,” he said.

Value in Reactivating Lapsed

The report revealed that every organisation in the group has a significant opportunity to reactivate lapsed donors. The median reactivation rate for donors lapsed for one year was 8.9%. Reactivation rates dropped sharply after that first year with two-year lapsed donors rejoining at 2.1%, three-year lapsed at 1.6% and long-term lapsed of six or more years reactivating at less than 1%.

Reactivated lapsed donors have higher revenue per donor and higher retention rates than do donors who are new to the file. Reactivated donors tend to upgrade when they rejoin as active donors-by as much as $27 on average. Adding reactivation efforts or shifting acquisition resources to reactivation programs can help to build a more valuable file for the long term.

About the Donor Centrics Benchmarking Project

Donor Centrics is a benchmarking service that began in 1989 and is now used by over 400 organisations globally.

Donor Centrics examines donors by gift type to reveal behavioural trends

The Australian organisations taking part in the project were: Childfund, Greenpeace, MSF Australia, Mission Australia, Care, NRMA Careflight, and the Royal Institute for Deaf and Blind Children.

The analysis included the records of 387,000 active and 212,000 recently lapsed donors.

The total amount raised by the benchmarked charities was $97 million.