When it comes to nonprofit fundraising, donor retention is a powerful metric that deserves every fundraiserโs attention. It is a key indicator of nonprofit health. This metric represents the number of donors who gave last year and continued their support this year.
The 2024 Virtuous Nonprofit Benchmark Report tracks donor retention on both an annual basis and a rolling 13-month basis rather than just the annual calendar. This is a tactic nonprofits can adopt to identify trends and issues more effectively.
Letโs explore donor retention, why it matters, how to calculate it, and ways to increase retention rates in your organization.
What is Donor Retention?
Put simply, donor retention measures the loyalty of your donor base. It calculates the percentage of donors who remain engaged with your cause year-over-year. While tracking retention annually is standard, also using a 13-month period instead of 12 allows nonprofits to capture โonce-a-yearโ donors. This approach prevents the premature classification of a donor as โlapsedโโsuch as a donor who gave in mid-December last year and again around the same time this year.
How to Calculate Donor Retention
Donor retention can be broken down into three main components:
- Number of Donors Who Gave Last Year: Total unique donors from 13โ25 months ago.
- Number of Donors Retained: Of the donors who gave last year, those who donated within the past 13 months.
- Retention Rate: The percentage of last yearโs donors who were retained, calculated as:
Retention Rate = Number of Donors Retained/Number of Donors Who Gave Last Year
Why Does It Matter?
Retaining donors is far more cost-effective than acquiring new ones, and every dollar matters when working with slim margins that nonprofits often see. While new donors are essential to growth, maintaining relationships with current donors offers stability and predictable revenue.
For example, if your nonprofitโs retention rate is 50%, increasing it by just 5% for the next two years could lead to a 20% revenue growth over five years.
In practical terms, if your organization brings in $4.2 million annually, that would grow to over $5 million through a modest boost in retention alone.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Revenue | $4,200,000 | $4,410,000 | $4,746,000 | $4,947,600 | $5,068,560 |
| Active Donors | 30,000 | 31,500 | 33,900 | 35,340 | 36,204 |
| New Donors | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 |
| Retention Rate | 50% | 55% | 60% | 60% | 60% |
| Retained Donors | 15,000 | 16,500 | 18,900 | 20,340 | 21,204 |
| Average Gift | $140 | $140 | $140 | $140 | $140 |
In addition to financial security, higher retention enables better long-term planning, reducing the risk of not hitting revenue goals when donor acquisition strategies fall short.
Industry Benchmarks for Donor Retention
Industry benchmarks reveal just how critical this metric is. For many nonprofits, annual donor retention rates hover around 50%, meaning half of the donor base may need to be replaced every year.
Larger nonprofits tend to fare better in retention rates, as they often have more resources to build and sustain donor engagement programs. However, some small nonprofits struggle to retain donors consistently, often due to reliance on major donors or a lack of a recurring giving program.
Based on Virtuous benchmark data, there is a rise in donor retention across organizations, particularly among top-performing nonprofits with a donor retention rate of 68.5%. These organizations actively invest in relationship building activities and see consistent support.
Strategies to Improve Donor Retention
Improving donor retention doesnโt happen overnight, but with strategic focus, nonprofits can boost loyalty and engagement.
Here are some tactics that successful nonprofits use:
- Analyze Retention by Acquisition Channel: Different acquisition channels yield varying retention rates. Invest more in channels with the highest lifetime value and retention, such as recurring giving programs.
- Focus on Pre-Lapsed Donors: Donors who havenโt given in six to nine months are on the verge of lapsing. By identifying these donors early, nonprofits can re-engage them through personalized outreach, updates, or a โthank youโ message to renew their interest.
- Promote Recurring Giving Programs: Recurring giving programs help create a steady revenue stream and keep donors engaged. Offering benefits or exclusive content to recurring donors can strengthen these relationships.
How Virtuous Helped Ronald McDonald House Charities in Omaha
Implementing these strategies requires the right tools. A modern CRM, like Virtuous, allows nonprofits to easily review donor data, automate tasks, and more. So, when Ronald McDonald House Charities (RMHC) in Omaha was ready to change CRMs, they turned to Virtuous.
After implementing Virtuous, RMHC in Omaha had more accurate data, enabling it to create more personalized, responsive donor experiences, avoiding mistakes like treating long-time supporters as first-time donors. With these strategies in place, RMHC in Omaha saw a 44.3% overall donor retention and a 68% repeat donor retention rate.
Donor retention is one of the most impactful metrics for nonprofits aiming for long-term sustainability. While acquisition is essential, retaining donors builds a loyal support base, laying a foundation of predictable revenue and minimizing financial uncertainty.
For organizations dedicated to their cause, retaining donors is not only a financial strategyโitโs an investment in trust, loyalty, and shared purpose.
To learn more about donor retention, including first-to-second gift donor retention, download the 2024 Virtuous Nonprofit Benchmark Report.
