Rossi’s Roundup: Grouchy sheep, benchmarks, digital reports and DAF

Rossi Roundup 11.21.23-1 When was the last time you evaluated your donor engagement strategies and sought to broaden the scope of opportunities for connection?

In the realm of fundraising, retaining donors is paramount. We are consistently exploring avenues to enhance it authentically, moving beyond mere transactional interactions.

Newsletters play a pivotal role in bolstering retention rates and reinforcing the significance of donors' contributions.

Ideally, your outreach efforts encompass both digital and print newsletters tailored to resonate with your specific donor base. Both provide a way for donors to be more engaged in various programs and influence recurring gifts, as well as the growth of your major donor and planned giving pipelines.

Surveys also have an impact on donor retention. It's imperative to allocate time for donor surveys at least once a year.

Soliciting feedback demonstrates respect for donors' perspectives and cultivates a sense of inclusion. Moreover, sharing insights gleaned from these surveys with your donors not only fosters transparency but also underscores the value you place on their input.

Here's one more thought: Have you considered adding further avenues for engagement within your donor thank-you letters?

Your expression of gratitude should not only acknowledge the impact of the donor's contribution but also illustrate how their generosity is actively transforming lives. Include a thoughtful sentence inviting them to reach out if they wish to deepen their involvement in this particular area. By doing so, you create an inviting space for donors to express their interest in offering additional support or engagement.

By now, you’ve likely read or heard the news about the proposed postal increase of 7.8%, taking the First-Class Forever Stamp from $.68 to $.73. This will take effect on July 14, if approved by the postal commission. It’s evidently one of the most complex rate cases in recent memory. More to come on postage once decided.

In case you missed it or didn’t find this article when researching animal behavior, grouchy sheep are the newest customers of Axe body spray (a deodorant popular with young men).

Marketed as Lynx in England, some shepherdesses have discovered the deodorant has an auxiliary benefit: When used among their flocks, it masks the hormones that provoke the rams butting heads.

Another shepherdess in nearby Suffolk has used Lynx to successfully convince ewes to mother orphaned lambs. Ewes identify their offspring by scent, and spraying them both confuses the ewe into believing a lamb is her own.

Don’t miss a super read from RKD’s Ronnie Richard, who discusses what nonprofits can learn from Major League Baseball in the Thinkers Newsletter on LinkedIn.

There were many benchmarks and studies released in April! Grab your favorite beverage and dive into some findings below.

1. Blackbaud Institute Spotlight

Blackbaud now teases us since they discontinued their Institute Index and annual Charitable Giving Report. The new quarterly Blackbaud Institute Spotlights draw from the Blackbaud philanthropic dataset.

A new Institute Spotlight on 2023 giving found that last year solidified a trend of stabilization following years of exceptional peaks. The best-performing organizations have channeled the generosity of pandemic-era donors into lasting support, with an eye to the future.

When looking at the fundraising landscape as a whole, stability was the overwhelming trend of 2023. On average, most organizations saw very little change year over year (-0.2% to be exact).

Online giving continues to make gains. The percentage of charitable giving donated through online sources rose from almost 8% in 2022 to over 12% in 2023. Total online giving remained stable during 2023, with no statistical change.

2. FEP 2023 Q4: As the Number of Donors Continues to Drop, Monthly Giving Could Be a Solution

FEP The number of individuals who made charitable contributions during 2023 fell 3.4 percent year over year, according to new data from the Fundraising Effectiveness Project. During the last three months of 2023 alone, donors gave 2.8 percent fewer dollars to charity than they did at year-end 2022.

This marks the second year in a row that year-end giving — the life’s blood for most nonprofits — has decreased relative to the previous year.

FEP’s data shows that those who gave most often had the highest retention rates, which supports findings in Neon One’s report on recurring giving that suggests these donors hold promise during tough economic times.

Four Insights:

Donors and Dollars Continue Their Post-Pandemic Drop.
Nonprofits Were Unable To Successfully Steward Newer Donors.
Nonprofits Still Struggle To Convert Donors to Loyal Supporters.
Small Organizations Are Defying Sector Trends.

AFP President Mike Geiger wrote in his weekly blog that there has understandably been a lot of concern around these continued declines, but AFP and Giving Tuesday are stressing the possible solutions and opportunities that organizations can be focusing on now.

Take Advantage of New Technology.
Increase Focus on Relationship Building.
Explore Non-Traditional Approaches to Philanthropy.
Don’t Get Discouraged.

Finally, don’t let these statistics deter you. Philanthropy is still very much alive and well; we just need to adapt our strategies and explore new ways to make an impact.

3. 2024 M+R Benchmarks Study

M+R The data in this report comes from 225 nonprofit organizations that contributed data on fundraising, advocacy, engagement, mobilization and marketing. Some of the findings reflect signs of trouble, some show the value of nonprofits taking a risk and others are pure perfection.

Key highlights:

Revenue from one-time giving fell by 5% but represented 1.2 gifts per donor and gave $165 over the course of the year.
Revenue from monthly giving increased by 6% and accounted for 31% of all online revenue. Monthly donors made an average of 0.2 one-time gifts in addition to their monthly gift, with average one-time giving of $18.
Hunger/Poverty nonprofits had the highest average gift size for both types of giving: $45 for monthly giving, $174 for one-time gifts. Monthly donors made an average of 0. one-time gifts in addition to their monthly gift.
One-year retention for 2023 was 44%, which means that out of all one-time donors in 2022, almost half made another one-time gift in 2023.
Average online revenue declined by 1% in 2023, while direct mail revenue fell by 6%.
The majority of nonprofit website traffic came from users on mobile devices, but desktop users contributed almost 80% of online revenue.
Email accounted for 16% of all online fundraising — but while audiences grew, individual email metrics declined across the board.
The average response rate for fundraising email was 0.07%, a 16% decrease compared to 2022.
It took an average of 1,429 fundraising emails to generate 1 gift! Send 1,000 appeals, get $76 back!
The average email fundraising response rate dropped by 16%, and this downward slide was even steeper for some nonprofits.
For every 1,000 fundraising messages sent, nonprofits raised $76. This marks a 20% decrease from 2022.
Total advertising investment (digital and non-digital channels) increased by 13%. While search remains the most reliable platform, nonprofits are experimenting with connected TV, digital audio and other emerging channels.
About a quarter of nonprofits had active peer-to-peer mobile messaging programs in 2023, driving event attendance, recruiting volunteers and generating donations and advocacy actions.
The social media landscape is changing quickly. Nonprofits more than doubled TikTok audiences in 2023, while Twitter/X fans declined. About half of M+R Benchmarks participants reported working with social media influencers in 2023.

4. The Recurring Giving Report

The data in this report comes from 2,149 nonprofit organizations that processed transactions every year from 2018 to 2022. Neon One dug into five years of data to understand how recurring donors supported their favorite organizations.

These highly engaged supporters are a reliable, predictable source of support for the organizations they love. As the nonprofit sector faces increasing mistrust from donors and declining individual giving, they’re becoming increasingly significant.

There was a general decline in the number of active supporters in nonprofits’ databases over this time period. This lines up with data from the Fundraising Effectiveness Project and other sources. Here’s the good news: Recurring donors bucked that trend. Most nonprofits engaged more recurring donors every year between 2018 and 2022.

Findings:

Average nonprofit’s recurring donor base grew 127%.
Individual recurring donors gave about $949.19 each year.
Average monthly gift was $79.10.
Nonprofits had an average recurring donor retention rate of 78%.
The average recurring donor lifetime was just over 8 years.
50% of recurring donors give additional gifts.
Highest recurring monthly gift in this data set was $51,593.61.

Knowing when your supporters are most likely to set up recurring gifts is useful for many reasons, and it’s especially helpful when deciding when to send an appeal.

The data showed May, November and December are the most popular times to set up this type of gift. May had more recurring donations set up than any other month of the year. The three months in which donors were least likely to create recurring gifts were February, March and August.

5. First-Ever Nonprofit DAF Benchmark Study announced

The first-ever cross-organizational analysis on Donor-Advised Fund giving from a nonprofit perspective has been compiled. Over the past three months, K2D Strategies and Chariot have been reviewing applications and data from dozens of leading nonprofits around the country. They have officially closed the submission window and initiated their analysis on a 10-year data set that includes:

119 million transactions
27 million donors
324 thousand DAF gifts
89 thousand DAF donors
21 organizations

Key areas of the analysis will include:

Donor Behavior: Compare the giving patterns of DAF donors to traditional donors across metrics like retention rate, average gift size, second-gift timing, donation frequency and seasonality.
Conversion Paths: Learn how many DAF donors start with your organization through other channels and how their giving evolves once they use a DAF.
DAF Trends: Gain insights into overall DAF giving growth and per-donor trends.

An official release is expected in June 2024. If you’d like to be the first to know about updates related to the Nonprofit DAF Benchmark study, you can sign up here for their official announcements.

6. 9 Ways To Raise More From Donor-Advised Funds

Fundraisers can’t afford to overlook donor-advised funds. These accounts hold more than $228 billion in assets that have been set aside for charitable giving, and contributions to DAFs keep growing despite a decline in overall giving.

In fact, big donors are now contributing to DAFs more than to private foundations.

9 takeaways:

Don’t wait until December to focus on DAF gifts.
Remind DAF donors to ask for a distribution.
Make the most of your data.
Treat DAF supporters like potential big donors.
Try to learn more about anonymous donors.
Connect with DAF administrators and advisers.
Tap into your networks.
Promote DAFs as planned gifts.
Just ask.

7. If You Don’t Have a Strategy for DAF Gifts, You Don’t Have a Fundraising Strategy

There are a few reasons fueling the momentum in DAFs. The first is that large, national DAFs equipped with user-friendly online interfaces have removed all of the friction for their donors interested in giving large, appreciated assets, such as stocks, crypto, mutual funds or even private company shares.

Moreover, thanks to particularly buoyant markets over the past 15 years, these assets are also worth a lot of money. And the federal estate tax exemption, approximately $7 million for individuals and $14 million for couples, is set to drop by half at the end of next year. Getting ahead of the looming change in tax law could spur an additional uptick in immediate-term DAF giving.

5 Ways for Fundraisers to Improve Their DAF Strategy:

Assess which current donors have DAFs.
Promote that you accept DAF donations.
Improve your attribution process for DAF donations.
Confirm charity database information is up to date.
Simplify your process for appreciated-asset gifts.

Any organization that’s taken these steps and developed a donor outreach strategy for soliciting DAF grants is poised to do well, regardless of market environments.

8. Economic Headlines

Economic headlines continue to vacillate from panic to “everything is going to be alright.” We’ve read how economists lowered their recession predictions, but stocks send mixed signals and/or the Fed may not lower rates all year. As fundraisers, the best we can do is read it all with skepticism.

U.S. Federal Reserve policymakers sifting through the latest inflation data will find little to fuel a sense of urgency to cut interest rates but also nothing to rule out the likelihood of rate reductions starting later this year.

Despite fears of a recession, the economy has looked strong. Overall GDP has increased in 13 of the last 15 quarters, the Dow Jones Industrial Average has reached record highs, the unemployment rate is a paltry 3.8% and inflation has slackened.

However, polls tell a different story. While public assessments of the economy are slowly improving, they still show profound dissatisfaction. As The Wall Street Journal reported earlier this year, U.S. consumer confidence is dramatically lower than would be predicted by traditional indicators.

The latest snapshot of the U.S. economy report showed that American consumers are still strong after years of hiring and wage growth. Spending on healthcare, insurance and other services continued to grow, according to the Commerce Department. Measures of underlying demand remain robust, leading economists to warn that the market was overreacting to an isolated data point. A slowdown in spending on goods, such as cars and gasoline, weighed down overall growth.
Many Americans believe that the economy and their finances are worse than they really are. In The Wall Street Journal’s latest poll of swing states, 74% of respondents said inflation has moved in the wrong direction in the past year. This assessment is simply not true. If hard economic data counts for anything, we can say unambiguously that inflation has moved in the right direction in the past year. The article claims, for the average person, inflation went down. Yet the average person thinks it went up.
With credit-card debt at record levels, refunds are helping people make ends meet. Americans are failing to pay their credit-card debt and auto loans at the highest rate in more than a decade. Tax refunds will be a lifeline for many of them. About 40% of Americans rely on refunds to make ends meet, up 4 percentage points from last year, LendingTree found. This year, the average refund is $3,109, as of mid-March.
The Wall Street Journal’s latest quarterly survey of business and academic economists shows forecasters ratcheting up their expectations for economic growth, inflation and the level of future interest rates. Growth has outperformed expectations, based on a combination of government spending, increased immigration and resilient consumer demand. Now, economists generally don’t think the economy will get anywhere close to a recession over the next year. Economists’ forecasts for U.S. quarterly GDP growth have fallen short of actual growth in the past year. They expect a slowdown through the first nine months of the year, though their current outlook for 2024 is brighter than it was in previous surveys.
The Wall Street Journal analyzed NielsenIQ data reflecting a selection of commonly purchased items that were valued at a total of $100 in 2019. Today, that same grocery list costs 36.5% more. The price of some items, such as eggs and sport drinks, climbed more than 40%. Prices for hundreds of grocery items have increased more than 50% since 2019 as food companies raised their prices. Executives have said that higher prices were needed to offset their own rising costs for ingredients, transportation and labor. Some U.S. lawmakers and the Biden administration have criticized food companies for using tactics such as shrinkflation, in which companies shrink their products—but not their prices.
The era of one-stop grocery shopping is over. Consumers are making 8% more trips to different retailers as inflation continues to upend household budgets. Consumers bought groceries from an average of 20.7 different retailers between March 2023 and February 2024, according to data firm Numerator, up 23% from the same months between 2019 and 2020. In addition to visiting more stores, shoppers are also traveling to cheaper ZIP Codes to shop and pursuing loyalty programs and promotions in greater numbers, retail analysts say.