The Secret For Great Donor Retention Lives In A 1927 Publication

For those who have produced strong retention numbers you understand that it is not at all about renewing the second gift. The current retention rates discussed in the fundraising effectiveness report are really not the numbers to review in order to begin designing retention strategies. However they certainly do outline some challenges. 

Retention is understood by knowing the length of time your donors, by category, remain on the books. Example: the donors giving 90% of fundraising dollars today remain with us an average of 2.95 years. A decade ago that number was 3.75 years. The root of understanding momentum boils down to an appreciation for the Heisenberg theory. And the foundation of building a strong sustainable retention initiative is all about momentum.  Loosely translated from quantum mechanics  “ The more you try to understand the location of an object, the less you understand its momentum. “ The location of an object is the equivalent of measuring a single number to understand retention. This means looking at renewing the first year donor in year two is simply a nonstarter in understanding how to design strategy and demonstrates a lack of understanding of the impact physics plays in improving donor retention.

To begin figuring out how to improve donor retention you have to understand that what you are actually

Werner Heisenberg

looking to accomplish is creating a particular kind momentum.  As a result of this fact in 2003 I hired a PhD in Physics to spend the summer with the advancement team. In order for us to impact retention in the manner we desired we had to understand how to  impact and create the momentum we desired.  This required us to appreciate and understand  Werner Heisenberg’s uncertainly principle which he published in 1927.

At the time leaders in fundraising thought we were crazy to be generating customized html pages for our donors connecting them to the impact their investment was having. However, we realized that we were not fundraisers anymore; we were in the business of designing donor experiences. All aspects of our strategy were measured to the physics of creating momentum.

Please pardon the sales pitch, but we were very proud of bucking traditional fundraising thinking. Because of our attention to the physics of momentum we increased retention by 288%, tripled the number of donors and double the average gift size. If you are interested in learning how to build a remarkable retention effort grounded in the science of momentum and in how to effectively measure the impact of your strategies with proprietary tools then maybe check us out.

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What If Our Measures Undermined Our Mission

This past week I witnessed a thread on Linkedin focused on the roi measurement of money raised by Major gift officers. Measuring for money raised leads directly to mediocrity and our industry statistics seem to prove that point. Now please know I fully understand what the outcomes of an advancement effort need to be, however what I have experienced first hand is that you can push results much much further then imagined by focusing on another set of metrics that will drive the results you seek.

Do a google search for Harvard Business school professor Clay Christensen. After a little research one of the many things you will find is that he very simply describes why successful companies fail. The reason is simple....they are looking to be profitable in the short term. By focusing on the short term profit they loose sight of the really key long term stuff.

Now marry that to our world of philanthropy. We are all about short term metrics. Cost per dollar raised, average size gift, participation and many others. The majority of our measures are focused on the transaction, the money part.

I thought we were about relationships? What relationships are build via measuring transactions? Looking at the AFP Fundraising Effectiveness it is quite clear that our short term focused measures isn't working if we are looking to build and relationship momentum. Another indicator for us to pay attention to is the fact that the nonprofit sector has not gained any market share in 4 decades.  In forty years we have not been able to gain any ground on the for profit sector with giving remaining at 2% of GDP. How many indicators will it take for us to just stop and pivot to something else. But where?

So what should we measure for optimal success? Over the past year the New Science Of Philanthropy team has beta tested a tool to measure the momentum and financial impact of donor connections. If we can agree that a retained donor is better than a lapsed one than please read on :-).  The raising of money requires having a donor, not one that leaves in 2 years.  In addition most people do not lead with their very best gift. Keeping donors significantly longer than our national averages will be required in order to successfully fund our missions. But, as Clay Christensen suggests, if we continue to measure for short term profitability we will keep up our 40 year trend of zero market gain, lose donors at a 58% annual rate, un-fund our important work but most importantly not design the opportunity for so many to lead a life of value and service. Measuring for our ability to sustain and grow relationships is the most important metric to understand and it requires long term questions.

Do Your Internal Systems Create A Culture Of Happiness?

Those of us in the nonprofit world have to admit, we just missed it. There are lots of reasons for this, along with future blog posts, but it is freeing to say we just didn't get it. Hop on to amazon and search for books on how to be happy, or just do a google search. As it turns out happiness is kind of a big deal, we all wish to do something of value and that at some level our life matters. These are pretty basic things. I mean who does not wish to have their time on this earth matter? And the other cool thing is when we do something that makes us happy, we tend to do it again and again.

Mihaly Czikszentmihalyi has long been a leader in studying why people are happy. In his book Flow, he helps the reader decipher how we acquire meaning, purpose and happiness in our life. The list of items almost directly align with the reason so many nonprofits exist. Being of value to others, sense of purpose being part of a greater good.

At the end of the day nonprofits exist to change lives. Not only can nonprofits change the lives of the people they serve but if the scientific studies are accurate they also have the power to change the lives of the people who invest in the mission. However, our national statistics suggest we never really accomplish the latter. Our industry stats point out that we never really keep donors long enough to impact their level of purpose or happiness. Without those triggers,  Czikszentmihalyi suggets people do not reach a place called flow. Designing a "flow' like experience for donors is a key aspect in creating a stewardship strategy that actually retains donors.  Designing a culture to deliver a flow like experience can not be attained by looking to our past or current "best"practices. This will require a rethink of how things have always been done.

This is a big topic and one that will be explored in great depth and with concrete take aways at the Donor Retention Bootcamp. It is interesting to note that part of our long term answers may be found in the design of games. Author Jane McGonigal begins to unlock a key ingredient to long term retention in her book "Reality Is Broken".

Are Our Donors Trapped By Puritan Thinking?

Compelling, and incredibly logical. How can we continue to make the case that the way we have done our work for 40 years remains the way to move forward. We have failed to capture any more market share in almost a half of century. If we read the AFP fundraising effectiveness report it seems that we are failing our benefactors as well.

 Is this Dan Pallotta quote from the Ted talk the way you donors are feeling? Do you measure the donor momentum your strategy is creating?

 "people are weary of being asked to do the least they can possible do, people are yearning to measure the full distance of their potential on behalf of the causes that they care about deeply"