Nonprofits need to think growth

Buzz words come and go for various reasons.  I guess that is why they call them “buzz” words.  Popular one minute and gone the next.  One buzz word I wish would fly off into the great unknown is the word sustainability as it relates to nonprofits.  The rough definition of sustainability is the capacity to endure (thank you Wikipedia).  Why are nonprofits content to just build capacity to endure?  Don’t get me wrong, your organization can’t do much when the doors are closed, but why wouldn’t you want your organization to grow and thrive?  As Benjamin Franklin once said, “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”

Nonprofit growth can be directly traced to how well organizations can build relationships within their community.  This is not a revolutionary thought.  Donors will give to organizations they know and trust.  However, I believe organizations underachieve when it comes to the growth of their donors.

The 2010 Fundraising Effectiveness Survey reports that first-year donor retention is 39.8%.  This means only 4 out of every 10 donors give a second time.  If nonprofits were run like businesses, bankruptcies would be in the near future.  Nonprofits focus so much energy on the acquisition of new donors they typically miss taking care of those they already have.  Let’s see what would happen if an organization could increase their donor retention from 40% to 70%

First Scenario:
First Year Retention Rate 40%
Second Year Retention Rate 30%
Third and Fourth Year Retention Rate 20%

Second Scenario:
First Year Retention Rate 70%
Second Year Retention Rate 50%
Third and Fourth Year Retention Rate 40%

What could your organization do with a 32% increase in donations?