Study: Should Nonprofits Focus More on Donor Loyalty?

In their fundraising work, many nonprofits focus on continuously bringing in new donors to support their cause. But could they be missing a more important element for their long-term financial health? The authors of a new report think so.

The 2018 Nonprofit Leadership Impact Study  (opens in a new tab) [registration], released by the publication NonProfit PRO  (opens in a new tab) and MobileCause this week, offers insights about daily nonprofit management challenges obtained in a recent survey of nearly 500 nonprofit professionals.

The biggest issue? A lack of resources, cited by 62 percent of respondents—followed by donor acquisition (45 percent), staff turnover (37 percent), and donor retention (31 percent).

Interestingly, however, donor retention ranked low on the list of factors that respondents saw as highly important to a nonprofit’s success: Only 8 percent named it as the most important factor. Ranking considerably higher were the amount of annual fundraising (46 percent) and the number of recipients helped (38 percent).

This, argued the report, hints at a potential weak point.

“While all these options are important factors to consider, the top two answers were more focused on attracting more donors and not on obtaining quality, lifetime donors,” the report stated. “Ensuring long-term nonprofit success should be heavily weighted on the quality of donors and donations, which is why nonprofits may be missing an opportunity for growth.”

Other notable points from the report:

Events are popular for fundraising, but costly. Of the fundraising strategies used by nonprofit professionals, the most common is events, at 86 percent—outpacing even online fundraising (83 percent) and direct mail (75 percent). And events represent a third of the nonprofit revenue pie. While online and mobile technologies have the potential to reduce fundraising costs, nonprofits are not using them effectively, according to the report.

Many nonprofits have board challenges and underdeveloped strategies. The report notes that 72 percent of nonprofits have a hard time finding board members who will actively fundraise, while 53 percent are challenged to find board members interested in the cause. Compounding the problem is a lack of strategy: Nearly three quarters of nonprofits don’t have a strategic plan for fundraising.

“There are so many challenges and opportunities facing nonprofit leadership today,” study author Nhu Te said in a news release  (opens in a new tab).

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