In the hustle and bustle of Giving Tuesday and the holiday season in general, we certainly understand if you missed the latest news from the Fundraising Effectiveness Project. The FEP Q3 report came out on Monday, Dec. 2, and it offered another great snapshot of the state of giving across the U.S.
The good news? Things are not as dire as they appeared in the Q2 report. Several key metrics have shown improvement from their low points in the previous report.
The bad news? There is still cause for concern about the overall downward trend when it comes to philanthropy.
To get some additional insight into the numbers, we spoke to Jon Biedermann, treasurer of the Growth in Giving Initiative at the FEP and vice president at DonorPerfect. Before we dive into his thoughts, here are some important stats from the report (all percentages are year-over-year comparisons to the first three quarters of 2018):
- Overall donor retention is up 0.7%
- Recaptured donors are up 1.8%
- Revenue is down 4.6% (though this is up from Q2 at -7.3%)
- Donors are down 3.6% (though this is up from Q2 at -5.8%)
WHERE ARE THE NEW DONORS?
In addition to the numbers above, the report shows a continued sharp decline in new donors (down 6.9% from 2018) and new retained (down 6.0%). And this is the area that Biedermann is most concerned about.
“The most troubling trend is the continued decline in new donors – i.e., fewer and fewer households are donating than before,” he said. “The only way to make up the difference is to have retained donors give more. That works for a while, but I am very concerned about the future of philanthropy as it becomes less democratized and more in the hands of the wealthy.”
Another recent report mirrors these findings.
The Indiana University Lilly Family School of Philanthropy details major changes to the giving landscape from 2000 to 2016. During that time, the number of households across the U.S. that donate to charity declined by 20 million.
WHY CONNECTION MATTERS
We can debate the causes for this trend – everything from the impact of religion to generational differences – but it’s clear that a seismic shift is happening in charitable giving. What can nonprofits do? First off, Biedermann says to simply be honest with donors.
“This type of information can and should be shared with donors,” he said. “That not only are donations down for their organization but that they’re down nationwide, so those who can step up should do so.”
This boils down to better communication and finding a way to connect with donors. Our experience at RKD backs this up.
When year-end giving declined in December 2018, we co-commissioned a research survey with McQueen Mackin & Associates to find out what had happened. We found that donors who had given less told us they felt less connected to the nonprofits they support, despite feeling the weight of marketing messages.
Simply put: Better communication = happier donors. Happier donors = donor retention.
DON’T FORGET TO ASK
Biedermann also suggests that nonprofit organizations should step up their efforts to ask more often for donations. Don’t fear solicitation based on anecdotes from board members or a “squeaky wheel” donor who complains.
“Nonprofits should focus on what the actual response data is telling them, and experiment with different frequencies and ask amounts to continually improve their response rates and average gift amounts,” Biedermann said.
He equates it to negative attack ads during election season. Most people say they don’t like them, but the data shows that attack ads work.
“Same thing here,” Biedermann said. “Most donors will say they prefer getting only one ask per year, but the way they behave is quite the opposite.”
He suggests the optimal time is to start asking for an additional donation after 45 days, and then adjust the timing based on your own response rates.
CROSSING THE FINISH LINE
A third of all giving happens during the final quarter of the year. That means the next quarterly report from FEP will certainly be the most telling about 2019.
The numbers show that the year got off to slow start, but a strong finish could make all the difference. Will we see a big jump in year-end giving or a repeat of 2018’s lackluster showing?
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