AFP and the Fundraising Effectiveness Project report that donor retention hit an all-time low of 42.6% in 2022 – a key metric that’s been on the decline since before 2020. University advancement leadership is rightfully concerned about this trend, as it specifically erodes the middle of the giving pyramid today, but also the future major gift pipeline.
Advancement leadership has rightfully identified that solving retention is critical to the immediate and future success of fundraising operations.
Strategic Shift: Multi-Year Giving for Mid-Level Donors
To address retention, and ultimately the health of the entire giving pipeline, savvy leaders have turned to solutions that encourage donors to make giving habitual. Two main factors drive this strategy. First, it costs 10-20x more expensive to acquire a new donor versus retaining an existing donor. Second, when an organization successfully retains a donor, the donor becomes increasingly likely to give for a third consecutive year. And, once a donor gives for three years, retention rates skyrocket to 80-90%.
Why Isn’t Every Donor on a Multi-Year Pledge?
The math is simple, donors with multi-year commitments are donors organizations can depend on, often for life. So why don’t fundraisers solicit multi-year pledges from all donors?
Natural obstacles get in the way of offering multi-year pledges to donors who give at an organization’s mid-level segment, whether that’s a $1,000 gift or a $49,999 gift.
Outdated Technology
The pledge process is typically manual, meaning paper still rules the day. And, when organizations do have digital processes in place, they often still require donors and fundraisers to print, sign, and mail PDFs, greatly slowing down processes.
Standardization
When pledges come into play, it’s necessary to maintain governance over not just the process, but also the agreements fundraisers propose and donors sign. Outdated forms, special circumstances, and capturing the necessary information to put a gift on the books prohibit scaling pledges to all donors.
Process
Process takes time. Between starting the necessary paperwork, getting it through internal and donor review, and finally executing a pledge requires time. Best case scenario, this is a 24-48 hour lag, but typically it’s much longer, clogging bandwidth for frontline fundraisers, leadership, and advancement services.
As a result, even the pledge process fails advancement leaders, because it is reserved for major gifts.
A Better World: Digital Gift Agreements
Advancement leaders seeking ways to extend multi-year and pledge commitments to mid-level donors are no longer stuck in theory. Many are turning to Digital Gift Agreements as tools that empower a multi-year strategy at all levels of giving. From Board members to leadership and annual giving donors, giving societies, and more – Digital Gift Agreements standardize the multi-year pledge process, improve the donor experience, and help organizations fight retention by starting the habit of multi-year giving before a donor ever has the opportunity to churn.