First-year donation behavior and risk of supporter lapse

Abstract

In this research, we explore supporter lapse behavior after making first-year donations to a nonprofit organization. We argue that two observable variables — the monetary amount of first gift at sign-up and the number of gifts given in the first year of the support relationship — can be used to approximate the level of commitment to supporting the organization and to predict likelihood of lapse in subsequent years. The reasoning is that the two variables are indications of the psychological resources as well as the financial resources expended in reaching donation decisions. The research hypotheses were tested using fundraising data extracted from the databases of two leading US-based nonprofit organizations. Results indicate that both variables had significant effects. Interestingly, the number of gifts given in the first year of the support relationship had a much bigger effect than the dollar amount of the gift at sign-up: In one organization, supporters who donated more than one gift in the first year were 39% less likely to lapse in subsequent years compared with their one-gift counterparts, while a tenfold increase in the dollar amount of the first gift at sign-up (e.g., from $10 to $100) predicted only 4% decrease in the lapse likelihood in subsequent years. Insights from this research may help to build better practices of supporter base management in “low-touch” fundraising programs for attracting, building relationships with, and sending appeals to supporters. Copyright © 2016 John Wiley & Sons, Ltd.