The Real Reason Donors Aren't Coming Back

And why it's costing your organization more than you think.

It’s now widely accepted (although often widely ignored) that most donors don’t give to an organization a second time. It’s been that way for years. That fact alone should shake the foundation of fundraising strategy — yet many nonprofits are still doing the same things while expecting different results.

I was at a conference recently where a participant recited customer retention rates in for-profit businesses as compared to nonprofits. Did you know that the average customer retention rate across all for-profit industries is about 75%? Granted, that number encompasses a variety of industries, but ours, even with ongoing donors, doesn’t get anywhere near 75%. Even retail is 63%, and hospitality is 55%. For our new “customers” (donors), we’re at 18-20%, depending on your source.

According to the most recent Fundraising Effectiveness Project (FEP) report released in April, donor retention continues to decline. In fact, for every 100 new donors that come in the door, less than 20 will give to the same organization the following year. In fact, in the first half of 2024, FEP estimated that only 11.1% of those 100 new donors returned to give in the next year. (Happily, that number improved by the close of the year, but it’s still not good.)

So if you feel like you’re on a never-ending treadmill, you are.

Some estimates say that it costs about $1.00-1.50 per dollar raised to acquire a new donor, but only $0.20 per dollar to retain that first-time donor. In other words, it costs a nonprofit about 5-7x more money to bring in a new donor than to retain an existing donor.

So why aren’t we paying more attention to this, trying to remedy the situation instead of continuing “business as usual”?

The way to fix it – or at least dramatically improve the situation – isn't rocket science. The first step is to acknowledge the problem, which I realize is uncomfortable. But without accepting that numbers from dozens of studies don’t lie, we’re stuck in an endless loop.

Once we decide that this is a crisis, and a ridiculous way of spending donor funds, we can start to fix this. The first step is to understand why it’s happening. And while there are lots of theories, one reason continues to rise to the top: most nonprofits don’t truly understand their donors. Not in a strategic, supportive, honest way. Not enough time is spent discovering who donors are, what motivates them, and what they expect from their giving experience. Can you tell what motivates a donor by understanding their past donations and level of wealth? That core information is important, but there’s so much more to the story, and donors (like anyone, really) hate when someone assumes something about them without knowing who they are as a person.

Instead, the focus remains almost exclusively on chasing the “big” money with, ideally, a quick turnaround. Fundraisers are still being trained, incentivized, and measured on their ability to close gifts that have at least 5-figures in them, and I’ve heard of many organizations lately who won’t really give you the “time of day” for anything less than a 7 or 8-figure gift. Anyone giving less than $10K — especially those in the $1K–5K range — might get a thank-you, maybe a holiday card, but not much else. (Actual interactive “get to know you” contact, anyone?)

And let’s be honest — spending most of your limited time on the big donors makes sense in a system obsessed with quarterly revenue targets and short-term wins. But it’s a dangerous game. Organizations that rely on a small group of major donors leave themselves exposed to sudden funding drops when one of those donors changes course. The pursuit of "big gifts only" has become the nonprofit version of putting all your eggs in one basket.

This isn’t just a retention problem. It’s a trust problem. Donors today are more savvy, more curious, and more values-driven than ever before. They expect a relationship, not a transaction. They want connection, transparency, and meaningful communication. And most nonprofits? They're just not delivering that — especially at scale.

Many younger donors – including those with significant resources — have reported that they would prefer to wait to give substantial amounts of money to a nonprofit until they feel they can trust that nonprofit. Many of them start by volunteering, to “check out” the culture of the organization and to get a sense of how they treat people who don’t have a big dollar sign on their forehead. They’ll ask a lot of questions about where the money goes and what their impact, as an organization, looks like. You might not know much about these donors (in terms of capacity or otherwise) because they’re new to the game and might not show up accurately on wealth screens. With the Great Wealth Transfer, they might have money — “new money” that doesn’t show up anywhere at all – but it’s there (or on its way).

It’s critical to understand that it’s easy to believe that young people don’t have financial resources, but there are far more young wealthy people around than there were in the past. Check out this article suggesting that “Millennials may have ditched their “broke generation” stereotype.” The same report shows that, “Household wealth among Americans under age 40 — which includes most millennials, who are currently ages 28 to 43, and some Gen Zers, who are currently in their teens and up to age 27 — grew by a whopping 49% between 2019 and 2023”.

We need to rethink how we engage donors across the spectrum, not just at the top. That means budgeting for donor experience, investing in systems that support personalized communication, and recognizing that long-term sustainability doesn’t come from a handful of major gifts, but from a broad base of committed supporters who feel seen and valued.

Here’s the good news: this kind of change is possible. And it doesn’t require a complete overhaul of your operations — just a shift in mindset. It starts with committing to seeing donors as people, just like you, regardless of their giving level.

Because the real question we should be asking isn’t “Why aren’t donors coming back?”

It’s -- What would it look like if they did?

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