Donor Acquisition and Retention - How to Deliver More for Less
According to The Charities Aid Foundation (CAF) annual giving in the UK was £10.7 billion in 2022, down from £11.3 billion in 2020 (source CAF). The cost of living crisis is driving higher demand for charitable services (57% of charities say demand has increased), and due to inflation, the spending power of each pound donated does less with £20 in 2021 predicted to only be worth £17.60 in 2024 (source ProBono Economics). At Torchbox we’re acutely aware of the crisis this presents to charities - we’re seeing it everyday.
We’ve been partnering with charities in the digital space for over 20 years, and have felt the shift in donor acquisition and retention through our work first hand. We can't take the same approaches we did a few years ago and expect the same outcomes, so we’re actively working with our clients to find ways to deliver more with less. We’d love to share how we’re trying to tackle this in our work.
Growing and maintaining a donor base is more important than ever. Donor needs are changing and disrupting the traditional donor lifecycle which has been the backbone of charity income and growth. We need to adapt our approaches: reduce reliance on traditional donors and diversify, to attract new audiences.
The challenges of retention
Donor retention is an obvious top priority, as retaining donors should be more cost effective than recruiting new ones. We’re actively exploring a number of ways to improve donor experiences and encourage long-term supporter relationships. This can be financially, such as offering donation pauses (if we can take a payment holiday from a mortgage, surely we can from a donation?), giving clearer information about the specific impact a donor has, and personally, making donors feel part of the organisation and encouraging greater engagement and involvement with other activities like volunteering and fundraising.
Increasing costs of acquisition
Donor acquisition is increasingly expensive. There has been a decline in donations from societies wealthiest, followed by the cost of living crisis that has forced people to cut back wherever they can. For many people, the continuing rising mortgage and rent costs are likely to force further cutbacks on all non-essential spending (13% of people already planned to cut back on donations earlier this year).
We’ve also seen how platforms like Facebook have shifted their approach and made it more challenging to reach the right people at the right time. As social media platforms change their approach to how people can access their members, we’ve all to change with them - otherwise they will fail to deliver new giving audiences.
Disruption: younger audiences behave differently
The stewardship model of onboarding donors in the hope of a lifetime relationship and a legacy gift is one charities can no longer rely on. Younger generations have lower awareness rates of charities and different expectations as supporters and donors.
According to YouGov, Cancer Research UK, the largest charity operating in the UK, has an awareness rating of 100% amongst baby boomers, which falls to 94% in millennials. Of course, you can argue that baby boomers have been around longer to gain that awareness, but still, people can only support a cause once they know about it. Tailoring campaigns to different audience groups is important to maximise how engaged each can be.
Younger audiences also behave differently, and have different expectations from charities when they do donate. According to research conducted by Blackbaud, younger donors aged 18-34 expected to receive thanks for their donation (36%) compared to those over 55 (15%).
The shift in generations is also evident in the way new campaigning groups are rebelling against the top-down, hierarchical structures most western charities have adopted. Some charitable organisations are distanced from the people they are set up to support, which modern grassroots organisations are not. Black Lives Matter (“a collective of liberators”), Just Stop Oil (“civil resistance”), and Extinction Rebellion (“a do-it-together movement”) all centre their activity around their collective stance and are very much of the people.
We’re following this shift in behaviour with our clients, and exploring ways we can make their supporters active agents of change. Simple ideas such as giving people choice where their donations are spent can create stronger attachments to the act of giving, and create greater meaning for the donor. Alongside this, we’ve seen client Search Console data that shows how some audience segments are very active seeking detailed information about how their donations are spent, and what impact they have. This has prompted us to explore more ways we can surface the shape of impact people giving have, so they understand their personal contribution more tangibly, while avoiding restricting funds from supporting core service delivery.
Why do people give?
The reasons people support charities are complex and personal. These are not typical transactions that we see elsewhere, despite sharing some surface level similarities. There are complex value exchanges taking place, and understanding the specific triggers and motivations people have for engaging specifically with your organisation is absolutely critical to ensure you maximise donations.
Typical core reasons for making donations are connected to the following themes:
- Identity: Giving can feel part of a person’s identity and self worth.
- Emotive: Specific causes can resonate emotionally with people, either through their personal lived experience or through their personal interests.
- Cultural: This can be tied to religious practices, like Zakat, or those within a community where there is an expectation on people to give.
- Duty: A sense of duty can make people feel the need to give, which can be linked to religious faiths, or it can come from a position within the community or an individual’s experience.
- Personal Connection: These are often formed after receiving help from an organisation directly or indirectly via a friend or family member.
Research conducted by Dr Cassandra Chapman suggests that aspects of identity and the sense of self a donor has plays a large role in the motivation behind giving:
Nearly half of donors said that giving was directly associated with their sense of ‘self’ – which groups they belonged to (social identity), as well as their beliefs and values (personal identity).Dr Cassandra Chapman, Research on Fundraising and Philanthropy 2020
In our work with organisations such as Samaritans, we know they find their most loyal and active supporters amongst people who have used their services in some way. By creating a meaningful relationship, value is created for both parties, like in this example:
Samaritans were there for me when I had nobody else to turn to. The volunteer I spoke to that night helped me find a reason to carry on. I want to take part in the Marathon to give back to the charity who were there for me in my darkest hour.Excerpt from a Samaritans audience segment profile
Supporters who advocate for the cause
Existing supporters are valuable both from their direct financial contributions, but also from their potential to engage and influence others. We’re actively working with our clients to help them understand how their audiences segment and what drives people to grow their interest in the causes that matter most to them.
We know potential donors are more likely to engage and take action when viewing posts from people in their direct circle of family and friends, in fact 50% of people say they are very likely, or likely to donate if asked to by a family member (slightly lower for friends). Therefore if we can shift existing supporters to be vocal about the causes that they care about, they will influence their network around them. To create that shift you have to create a bond with your audience, and give them the opportunity to feel like their efforts will make a difference.To achieve this though, you need to tie together your digital strategy across product and marketing so that there isn’t a messy handover experience for the audience.
Building a long term relationship with individuals is a way to not only improve the lifetime value of your donors (potentially with them leaving a gift in their will as a lasting act of support), but it also brings your work into contact with their sphere of influence, and becomes a key part of their life offering satisfaction and pride.
How do you build that relationship though, especially in the noisy online environment? When we’re working with organisations in this way, we’re always looking to tie together the mission and vision with the audience segment goals, as we can’t see how to influence and drive behaviour if we don’t have a clear picture of the motivations supporters (and potential supporters) have.
Having a marketing strategy that follows this approach is hugely important. Funnelling the right people, at the right time, with the right messaging reduces the cost of acquisition and gives better chances of higher lifetime values for new supporters. One marketing area that’s often neglected is email: we’ve seen many clients favouring marketing spend in other areas like social media which usually have a lower return on investment compared to email. We’ve been working hard on how we support clients to deliver successful email campaigns, so we can help them reduce their costs while improving their conversion rates.
We’ve recently delivered campaigns for Breast Cancer Now that have reduced the cost of onboarding new regular givers compared to previous years - something that we’re extremely proud to share.
Governance and measurement
Alongside email marketing, another area we have found can be a source of issues (or opportunities) is Customer Relationship Management (CRM) system integrations not having meaningful measurement frameworks. Some organisations have fraught relationships with their CRM systems and don’t get all the befits that are possible from them. Not being able to accurately track the effectiveness of activities severely limits how well your organisation can learn and adapt.
CRM issues are compounded if you have issues within organisation governance, especially siloed working practices. If your organisation has teams that are not set up to collaborate and work effectively together, you’re almost certainly going to have issues with donor acquisition and retention as you wont have a consistent set of experiences on your audience touch points (the moments and places where your supporters engage with you). Your audience segments are likely to see you as one entity, rather than a series of separate teams, so they expect to have a consistent experience however they engage with you.
Consider the real scenario where a person receives some help from an organisation’s helpline, then goes on to make a donation as a way of thanking them for their help. This is followed up by a call from an outsourced call centre looking to convert the single donation into a regular one, that opens with a question about the recent experience the person has had with the charity, which they assume means the helpline, only to be corrected its actually about the donation they made. How do you think that person feels about that scenario? Does it give the experience that is intended?
Scenarios like this are a result of organisations failing to have a complete evaluation framework that covers the complete audience lifecycle, and reflects how audience members can shift between segments.
Over the past few years getting your CRM integration and measurement right have become increasingly important if you use Google Analytics. We’ve seen clients losing visibility of their on site audience behaviour due to cookie opt outs removing chunks of data. It’s great for people’s privacy, but it means its even more crucial to ensure CRM measurement is working properly.
We have started using Data Orchard’s Data Maturity Framework with our clients to understand where they are with their data measurement and analysis. This is a specific framework developed for the not for profit space.
No one size fits all solution
Ultimately there isn’t a single easy fix to the economic situation the third sector finds itself in. Each organisation we work with faces specific challenges that are different to the next. The audiences you have, and the changing needs they have dictate so much of what you can do. We’re committed to experimenting and exploring how we can deliver stronger, more performant results from our work through effective collaboration with our clients (who are really partners in the way we work).
We’re keen to share the work we’re doing in this space, so if you’d be interested in speaking with us on any of the themes we’ve raised in this post, please get in touch.
Discover digital products and services that solve real customer problemsFind out more