Nonprofit organizations in the U.S. were better at retaining donors and shored up their net losses in donations in 2010, according to the latest report of the Fundraising Effectiveness Project (FEP).

The FEP, a report of the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute, compares gains and losses of donors and donation amounts. More than just a look at total revenue and the total number of donors to a given organization, the FEP indicates year over year growth by comparing how many new donors are acquired with how many stopped giving, and the donation levels of each.

In a promising trend, nonprofits gained more new or reactivated donors than they lost in lapsed donors in 2010. Organizations saw an average net increase of 1.7 percent in the number of donors. This compares favorably to a -3.2 percent average net loss of donors in 2009.

Sign of Turnaround?

Net giving levels have not yet recovered to pre-recession levels, but they were far better than in 2009. For every $5.35 that organizations gained in gift dollars in 2010, $5.54 was lost through donor attrition, for an average net loss of -1.9 percent.

In 2009 there was a much steeper average net loss of -17.7 percent (a median net loss of -8.1 percent).

While better than the losses reported in 2009, giving totals in 2010 are still not back to what they were in previous years before the recession. In report periods 2005 to 2008 average giving showed net gains.

Other Findings

Growth-in-giving performance varies significantly according to organization size (based on total amount raised), with larger organizations performing much better than smaller ones.

  • Organizations raising $500,000 or more had an 8 percent net gain.
  • Organizations raising $100,000 to $500,000 had a 2.3 percent net gain.
  • Organizations in the under $100,000 groups had a net loss of -12.2 percent.

The largest growth in gift dollars/donors came from new gifts/donors, and the pattern was most pronounced in the organizations with the highest growth-in-giving ratios.

The greatest losses in gift dollars/donors came from lapsed new gifts/donors, particularly in the organizations with the lowest growth-in-giving ratios.

The results are based on 2,377 nonprofit responses comparing 2009 and 2010 data received as of February 2011.

Priority One: Your Existing Donors

Research shows that it usually costs less to retain and motivate an existing donor than attract a new one. Your organization may have raised more money this year, but have you sacrificed larger, exponential growth by constantly churning through donors, losing just as many as you have gained? “Real” fundraising growth comes about by not just raising more money this year than the year before, but rather building and upgrading your donor base in the long term and minimizing your losses from lapsed or downgraded donors.

By focusing on retaining existing donors, there is less money that you have to spend recruiting new donors to replace your losses. As the FEP report notes, taking positive steps to reduce gift and donor losses is the least expensive strategy for increasing net fundraising gains.

Plus, the longer you keep your donors and cultivate them effectively, the more they will give over time. If people stay for longer they can upgrade their giving, give to a capital campaign, become a regular (sustainer) giver, volunteer, recommend a friend and perhaps even offer a bequest.

The 2011 Fundraising Effectiveness Project (FEP) Survey Report is available here.