The following article is sponsored by Blackbaud.

As numerous reports tell us, it is a challenging time to be in fundraising. Giving USA reports that individual giving (when adjusted for inflation) has been decreasing since 2000, and donor retention rates continue to be a concern. The Fundraising Effectiveness Project reports that Q1 2024 saw a 1.3% decline in the number of donors from Q1 2023, as well as a 3% decline in overall donor retention metrics. The number of major donors ($5,000-$50,000) also declined by 4.8% and donor retention by 5.8%. In today’s fundraising climate, it is increasingly important to retain current donors and to identify those in danger of lapsing.

Identifying and Classifying Giving Patterns

One type of data analysis that can be used to improve donor retention is that of giving patterns, often referred to as recency/frequency/monetary (RFM) analysis. Blackbaud Analytics includes information on RFM analysis for an organization’s donors and prospects. This type of analysis is often used in prospect research and prospect management to identify the best prospects for assignment, as well as to prioritize the prospects in gift officer portfolios.

While the highest-scoring prospects often receive priority for gift officer outreach, using an upside-down approach to some of the components of this analysis — ultimately, prioritizing prospects in danger of lapsing — can potentially boost donor retention. Let’s see what this would look like in the portfolio of a fictional gift officer and Blackbaud Analytics client, Jae Doe.

Rating Donors and Next Steps

Doe has 107 prospects in their portfolio. The first prospect rating that they can examine in the Blackbaud Analytics platform is the velocity rating. This rating examines the prospect’s giving in the most recent year, compared to their average giving over the last three years (the M in RFM). A rising star rating indicates an increasing giving pattern, slow and steady indicates a stable giving pattern and at risk indicates a decreasing giving pattern. Doe’s portfolio is broken down as follows:

• 25 rated as rising star
• 15 rated as slow and steady
• 67 rated as at risk

To reduce the danger of lapsing donors and boost retention of their portfolio, Doe can choose to focus first on the group rated at risk. They can make a special effort to increase cultivation efforts with these prospects to ensure they feel like valued and engaged partners of the organization.

Doe can also examine Blackbaud Analytics’ past giver type rating. This rating combines recency and frequency measurements (the R and F in RFM) to track giving patterns over the last three years. A prospect rated as a regular donor is one who has given within each of the last three years. An occasional donor has given during one or two of the last three years and a non-donor has not given within the last three years.

Doe’s portfolio consists only of prospects who have given within the last three years, and their portfolio shows the following ratings:

• 16 rated as regular donor
• 71 rated as occasional donor

To further reduce the danger of lapsing donors and boost donor retention, Doe can choose to focus special outreach on the occasional donors. If Doe had non-donors in their portfolio, they could choose to prioritize this group first, followed by the occasional donors.

Beyond major gifts, this process could also be used in prioritizing retention-focused direct mail and digital engagement at the annual fund and leadership annual fund giving levels. Donors categorized as at risk can be segmented for appeals and opportunities focused on increasing donor engagement. While donor retention will continue to be a concern in today’s fundraising climate, taking an upside-down approach to traditional RFM ratings can be helpful in identifying donors in danger of lapsing and can inform strategies to maintain donor engagement and loyalty.

Blackbaud’s data intelligence capabilities make it easy for organizations of all missions and sizes to leverage powerful data, artificial intelligence, advanced analytics and sector-specific expertise to maximize impact.

Steffanie Brown
Senior Strategic Consultant, Blackbaud

Steffanie Brown joined Blackbaud as a senior strategic consultant in 2024. Prior to that, she spent over twenty-five years in advancement operations, specializing in prospect development for the last eighteen years. She served as manager and director of prospect research and advancement services at Florida Institute of Technology from 2011-2024.

Brown is in her second term on the Apra Florida board and is also a member of AFP Volusia-Flagler. She has presented to both Apra and AFP chapters on topics related to prospect research and relationship management. She lives in Titusville, Florida.