Donor Retention Economics: What Keeping a Donor Is Actually Worth (2026)

Picture a nonprofit that acquires 1,000 new donors through a year-end campaign. Based on the first-time retention rates the Fundraising Effectiveness Project has reported for years, often below 20% to 25%, somewhere around 200 of those donors will give again next year. By year three, the cohort has largely evaporated. Meanwhile the acquisition itself was probably a break-even proposition at best: it is widely observed across AFP and FEP benchmarking work that recruiting a brand-new donor frequently costs as much as or more than the first gift returns, while mature fundraising programs overall spend roughly $0.25 to $0.35 to raise a dollar. Acquisition fills the bucket. Donor retention determines whether the bucket holds anything.

The Definition and the Math

Donor retention rate is the percentage of last year's donors who give again this year: donors who gave in both years, divided by all donors who gave last year, times 100. If 1,000 people gave in 2025 and 430 gave again in 2026, retention is 43%, which happens to sit right around the sector average FEP reports. The blended number, however, is a composite of two very different populations. First-time donors retain at rates that often fall below 20% to 25%. Donors who have given two or more times retain at roughly 60%. A nonprofit that reports "43% retention" is really reporting a first-gift cliff averaged with a loyal core, and the two segments demand opposite strategies.

First-Time vs Repeat: Where the Value Actually Lives

Work a five-year cohort and the economics become vivid. Take 100 first-time donors giving $100 each. At 20% first-year retention and 60% retention thereafter, the cohort produces roughly 100 gifts in year one, 20 in year two, 12 in year three, and about 7 by year four: around $143 of revenue per original donor over five years, most of it from the loyal handful. Now lift first-year retention from 20% to 35%, a change stewardship alone can produce, and every subsequent year's base grows by three-quarters. The same acquisition spend yields roughly half again more lifetime revenue, with zero new marketing cost.

This is why the second gift is the most important conversion in fundraising. A donor who gives twice has crossed from transaction to relationship, and their forward retention roughly triples per FEP data. The operational translation: the weeks after a first gift deserve more design attention than the appeal that generated it. Prompt, specific thanks within 48 hours. A follow-up that reports what the gift made possible, with no ask attached. A second-gift invitation timed months later, framed around impact rather than urgency.

LYBUNT and SYBUNT: The Reports That Pay for the CRM

Fundraising has its own vocabulary for lapse risk. LYBUNT means "gave Last Year But Unfortunately Not This year"; SYBUNT means "gave Some Year But Unfortunately Not This year." They are the two highest-yield reports in any donor database, because a lapsed donor is not a lost donor until time makes them one. A LYBUNT contacted within a few months of their giving anniversary responds at rates no cold list can approach; a SYBUNT who lapsed three years ago has mostly become an acquisition target again. Disciplined development offices run the LYBUNT report quarterly and treat the giving anniversary, not the calendar year-end, as the trigger for outreach.

The catch is that LYBUNT discipline requires a database that can produce the report, which many small nonprofits running on spreadsheets cannot. If pulling last year's donors who have not yet renewed takes an afternoon of manual cross-referencing, the report will not get run, and the lapses will not get caught. A structured assessment like Do You Need a Donor CRM? helps an organization decide honestly whether spreadsheet-era infrastructure is the thing capping its retention.

Monthly Giving: Retention by Default

The single strongest structural fix for donor retention is converting one-time donors into monthly donors. Recurring donors flip the default: instead of requiring an annual decision to give again, they require a decision to stop. The retention consequences are dramatic, with monthly donor retention often cited near 80% to 90% in Fundraising Effectiveness Project and Bloomerang analyses. The revenue math compounds quietly: a $25 monthly donor delivers $300 a year, renewing largely automatically, so a single converted monthly donor frequently outproduces ten one-time $50 donors across five years.

Building the program is mostly a matter of placement and framing. Make monthly the visually preferred option on the donation form, translate amounts into concrete recurring impact, and steward monthly donors as members rather than transactions, with an annual impact summary instead of twelve receipts. Organizations that treat the monthly program as a core product rather than a checkbox routinely watch it become their most stable revenue line.

One operational caution: recurring giving introduces its own retention task, the failed credit card. Expired and reissued cards silently cancel monthly donors who never decided to stop, so the program needs an account-updater service or a prompt, warm outreach sequence for failed charges. Shops that treat a failed payment as a service issue rather than a lapsed donor recover most of them; shops that let three failures pass unnoticed convert their best donors into accidental SYBUNTs.

The Stewardship Practices That Move the Number

Retention is the output; stewardship practices are the inputs. The ones with the strongest track record across sector research: thank-you speed, ideally within 48 hours, because gratitude decays fast; impact reporting that closes the loop on what gifts accomplished before any new ask; a communication cadence that contacts donors more often with news than with appeals; segmentation that speaks differently to a first-time $25 donor and a fifth-year $5,000 donor; and a deliberate first-time donor onboarding sequence, since that is where the cliff is. None of these require budget so much as system. A development office can grade itself across all of them in minutes with a Donor Retention Grader and see which practice sits furthest below peer norms.

Putting Donor Retention on the Board Agenda

Boards underweight retention because the reporting hides it. The annual development report celebrates gross revenue and new-donor counts; the attrition that offset them appears nowhere. The Fundraising Effectiveness Project built its growth-in-giving methodology around exactly this blind spot: its reporting has repeatedly shown that across the sector, gains from new, upgraded, and recovered donors are largely offset by losses from lapsed and downgraded donors, leaving net growth near flat for many organizations even in years when gross fundraising rose. A board that sees only the gross line approves another acquisition budget. A board that sees gains and losses side by side starts asking the retention question.

The fix is a one-page dashboard with five numbers, each reported for first-time and repeat segments: retention rate, reactivation rate on LYBUNTs, monthly-giving share of revenue, average gift, and net new donors after attrition. Add a single derived figure, projected five-year value of this year's donor file at current retention versus at a five-point improvement, and the stewardship budget conversation changes character. Development directors who bring that math to the table stop having to defend thank-you letters as a soft expense; the numbers present stewardship as the highest-margin fundraising program the organization runs.

Retention as the Foundation of Fundraising Strategy

Retention numbers also gate what fundraising strategies are even available. A capital campaign presumes a loyal base of multi-year donors who can be upgraded. A major-gifts program presumes years of relationship data. An organization leaking most of its donors annually will find every advanced strategy underpowered, because each one stands on the retained base. That is why readiness work starts with the donor file: a Fundraising Readiness Assessment scores the base alongside case strength and board engagement, and a Fundraising Strategy Recommender matches the revenue mix to the organization's actual capacity rather than to a conference keynote.

For the consultants, CRM vendors, and capacity-building firms that serve this sector, the same diagnostics double as lead capture: an executive director who has just scored her stewardship system and seen the gap named is a far warmer conversation than a cold proposal request. That pattern is laid out in our overview of lead generation tools for nonprofits.

The economics resolve to a single sentence: a donor kept is several donors acquired. Organizations that measure retention by segment, run their LYBUNT reports on schedule, invest in the second gift, and build the monthly program stop refilling a leaking bucket, and the compounding does the rest.