For Nonprofit Organizations there is no profit in broken relationships

NonprofitDonor attrition has always been a problem in mass fundraising, where personal touches are difficult and the ability to communicate impact is limited.  Now, widespread personal losses in recent years and the failure of institutions of all kinds to prove trust-worthy have produced a dangerous culture of mistrust.  One consequence: the relationships that nonprofits rely on to sustain programming and to keep fundraising costs down are in short supply.

Since the devastating impact of the recession in 2008 and 2009, charities have found ways to raise funds from new sources, and have–as a whole–managed a few percentage points of growth in 2010 and 2011. Fundraisers have done their job.

The problem: although ability to find new donors has kept most organizations afloat since 2009, the number of existing donors who have stopped giving has increased even more.  Put another way, organizations have been able to get first dates, but the number of ongoing relationships is in a tail spin. In 2011, for every 100 new donors to organizations, 107 people ended the relationship.

Over the last five years, the addition of new donors gained has remained strong, annually in the mid to high 50% level.  But the number of people abandoning the relationship has been higher, or at best about the same number.  Organizations are stagnating, not because they don’t know how to present their mission and attract donors, but because they can’t maintain the relationships.

As never before, it is vital that organizations focus more attention on aligning all related groups—board, leadership, staff, volunteers, program partners, members, recipients, and yes, donors—around robustly communicated vision, mission, and core values.  In addition, organizations must drill deep into the principles of developing and maintaining community, a fellowship, ‘small platoons’ around common causes.

For there is nothing more costly to an organization than a broken relationship.

Donors Gained and Lost (%) over previous year*
2007 2008 2009 2010 2011
Gained 63.9% 59.2% 54.2% 58.6% 54.9%
Lost -54.0% -57.6% -60.2% -56.9% -58.5%
Net 9.9% 1.6% -8.0% 1.7% -3.6%
Funds Gained from New Donors and Lost by Donor Attrition (%)*
2007 2008 2009 2010 2011
Gained 63.6% 13.3% 45.0% 53.5% 55.19%
Lost -56.0% -16.2% -61.1% -55.4% -55.0%
Net 7.6% -3.2% -8.1% -1.9% 0.01%

*Source:  Association of Fundraising Professionals Annual Fundraising Effectiveness Survey Report

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