Thank you for helping in every way you can, from boots on the ground, providing water, food and a place to stay for people and animals―as well as flights and transport. Aren’t we all glad that we have nonprofit organizations filled with compassionate people and focused missions?
On another note, I’ve been thinking about donor-advised funds.
Many donors are now making gifts of $100―and even less―from their DAF. Most of these gifts are soft credited, and many times the DAF coding is removed from direct mail appeals. So, I wanted to call out this special group of donors and ask you to make certain these individuals are indeed receiving a year-end appeal.
Speaking of year end, it’s time to discuss your organization’s data governance with your strategist and account manager. Make certain clear rules are reviewed and set for DAF coding and that these DAF donors are included in your strategy.
We know surveys increase donor retention, especially when results are reported. Additionally, donors who didn’t respond will most likely respond next time because they will see there is value in their opinions. Applause to the Humane Society of Missouri and their development team!
Finance chiefs at companies from Chipotle Mexican Grill to Yelp have grown more encouraged throughout the year that the U.S. economy will skirt a full-blown downturn. Still, they are mixed on whether it is time to unwind some of their belt-tightening or pursue new avenues of growth.
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In a weird turn of events, retention was up 1.3%, even though it’s fallen across many types of donor categories.
Over the last 10 years, the stability of donors who contributed over $5K drove a 69% increase in total donations. Now, these major donors are also demonstrating significant decline, donating nearly 10% less in Q1 2023. As these donors account for nearly three quarters of total dollars donated, their decline will amplify volatility and uncertainty for charitable organizations in 2023.
While total new donors continue to decline, donor retention also showed significant weakness at the beginning of 2023. Retention decreased across all donor categories in Q1, with recaptured donor retention falling almost 20% from an already low level.
The weakness in donor retention was compounded by a steep drop in new donors and dollars given by new donors, creating a troubling paradigm for charitable organizations. New donor counts fell by nearly 20%, and new donors gave 34% less in Q1, reinforcing sector reliance on long-standing donors (though this group also declined by 5%).
Last year’s FEP numbers were promising in some areas until year end, so there is still time for nonprofits to improve results by connecting with disengaged donors and building stronger bonds with loyal donors.
2. Gross Domestic Production rose at a 2.4 percent annual rate in the second quarter, up from 1.1 percent in the first three months of the year and a sign that the economy is growing steadily.
3. Inflation fell to its lowest annual rate in over two years in June, with prices increasing 3 percent over the previous year. That rate of growth is lower than the 4 percent logged in May. While the rate remains above the Federal Reserve’s target of 2 percent, inflation has cooled significantly since reaching heights of 9 percent last summer.
4. The National Unemployment rate decreased slightly to 3.5 percent in July, close to its lowest level in 50 years.
5. Consumer Confidence rose 11.2 percent in July from the previous month to its highest reading since October 2021, as measured by the University of Michigan Index of Consumer Sentiment. That indicates that Americans have become more optimistic about their finances.
6. The Stock Market: For the past several months, the stock market has largely rallied around signs that inflation is improving and excitement over new technologies like AI. One benchmark equities index, the S&P 500, ended the month up 3.1 percent in July. Another equities index, heavily weighted with tech stocks, the Nasdaq Composite, closed June up 31.7 percent over the start of 2023, its best first half since 1983.
The good news is that wages are finally starting to outpace inflation and consumer price growth has eased significantly, so much so that many investors are betting the Federal Reserve is done raising interest rates.
Looking at just the last year, Moody’s chief economist, Mark Zandi, calculates that the typical household spent $202 more this July than they did a year ago to buy the same goods and services.
The new Yahoo Finance Chartbook (50 charts) revealed that investor attention around pricing pressures has become squarely focused on disinflation, a key feature of any soft landing.
Have you ever heard of a donor who called up and said, “I’m ready to become a mid-value donor now!” It doesn’t happen. They tell you by their actions.
The rebound in assets could enable an increase in giving, assuming stock markets stay roughly at current levels or increase. FoundationMark estimates that during the first half of 2023, grant makers’ assets increased almost 8 percent as global stock markets recovered from a tough 2022.
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