How Artificial Intelligence Improves Donor Retention

Your donors are the fuel that keeps your organization running, and it is hard work to get even one person to commit to that first donation. So once we finally do get them invested enough in our cause to make a contribution, we need to hang onto them, so they donate again. 

This is called donor retention, and Artificial Intelligence can help you measure, understand and get better at it. 

Artificial Intelligence can be used to help you build a great donor relationship with every donor, helping each donor build an emotional connection with your organization and stick around for the long run.

What is Donor Retention?

Donor retention measures how many donors continue to donate to your organization year after year. We are at a pivotal shift in thinking about donor retention in the nonprofit sector. Many nonprofits have just accepted the “leaky bucket approach” to donor retention. 

In this approach, donors are lost after the first donation, and the pool of donors continues to leak, requiring more new donors to be brought in to keep up. In fact, 60% of all donors lapse year over year.

In 2020, the overall donor retention rate for new online donors was 25% and, for donors who had given before 2020, the retention rate was 63%

This is an expensive problem because getting that donor involved in the first place costs about 50% of the gift. This conventional fundraising approach requires fundraisers to ask, ask, ask new donors for donations leading to a transactional approach to fundraising and high churn for existing donors.

As nonprofit leaders are seeing the high cost of transactional fundraising and low donor retention rates, this mentality is changing. To increase donor retention, you need to build long-term relationships with your donors, no matter how small their contributions. Fostering this relationship can lead to long-term giving, saving you time and money. 

This article will explain how you can calculate your nonprofit’s donor retention rate and use Artificial Intelligence (AI) to increase donor retention. 

How to Calculate Your Nonprofit’s Donor Retention Rate

Experts agree monitoring donor retention rates makes a difference. When you calculate your nonprofit organization’s donor retention rate, you are essentially measuring the percentage of donors who donated last year who have come back to donate again this year. 

You can calculate your nonprofit’s donor retention rate by dividing the number of repeat donors this year by the number of donors that donated last year. 

Rather than performing this calculation over and over though, the best way to track this is through a software that will do it for you. There are many tools that will measure this key metric for you including, KIT, Keela, and Dataro.io. 

You can even add it to a dashboard so that you can keep an eye on it. Monitoring donor retention regularly will help you recognize when you are taking the right steps to improve donor retention and when you need to be spending some more time investing in your current donors. This is one metric you will definitely want front and center of your dashboard! 

How to Use AI to Improve Your Donor Retention Rate

The most important thing you can do to retain donors is to foster a great donor relationship with them. You want to give even the smallest of donors, the ‘major gift treatment’ that you give your high-value donors. This means getting to know their likes and dislikes, the causes they care about, and catering to these unique characteristics so you can maximize your opportunity for a donation.

Building this kind of rapport takes time and resources though and that just isn’t realistic for every donor—which is where Artificial Intelligence comes in. 

Artificial Intelligence can be used to help you build a great donor relationship with every donor, helping each donor build an emotional connection with your organization and stick around for the long run. 

Here are four ways you can use Artificial Intelligence to improve donor retention: 

1. Sending Personalized Donor Communication

53% of donors leave because of poor communication. You should be reaching out regularly and in the ways that work for each donor. 

AI-powered tools, like KIT, allow you to integrate your donor database with an email communication platform so you can reach out to donors through the medium that works best for them, and send the right messaging. 

For example, if Zoe is passionate about education and prefers receiving emails than mailouts, the tool will automatically funnel her into your email campaign on your education program so she receives regular updates. This ensures that she is up to date and remains connected to your cause, so when she thinks about donating next you are top of mind.

2. Gathering Donor Insights

If you’re going to keep your donors around, you need to learn as much about them as you can. AI can take the donor data that you have collected, analyze it and show you trends and patterns in donor giving so you can make more informed strategies to increase donor retention. 

For example, KIT can tell you when your donors tend to give the most so you know when to plan your next campaign or when a donor may be at risk of churning. 

3. Cultivating Donor Relationships

Part of that ‘major gift treatment’ involves making each donor feel like they are being treated as more than a name on a mailing list and that their donation matters. You can give each donor this fuzzy feeling using AI. 

Tools like KIT or Dataro.io can send you nudges when a donor may be ready to donate again and suggest exactly how much you should ask for based on their past giving and current trends. This tailored experience will help each donor feel cared for and help you reach them. 

4. Measuring Your Campaign Performance

While you are busy putting the things you’ve learned in this article to work, you should also be measuring your performance. 

How is your new communication strategy affecting your donor churn? AI software can measure key KPIs like the recurring donor churn rate and present these to you in a simplified dashboard so you can understand how far you have come. 

Even more importantly, AI tools can suggest tips to improve your performance, such as letting you know the best donors to reach out to for specific campaigns.  

Artificial Intelligence allows you to offer the best possible donor experience without spending more time or money doing so. It can help you know more about your donor base, cultivate individual donors and communicate better with them. By doing these three things, you are investing in donor relationships that last. 

What type of fundraising approach does your organization take? Are you stuck in the “leaky bucket approach”? Do your fundraising efforts feel transactional? Fundraising is changing (for the better!), and by using artificial intelligence software, you can increase your donor retention and build up a dedicated donor base.