Survey: Charitable Groups Losing More Donors Than They Recruit
The latest Fundraising Effectiveness Project survey revealed that less than half of charitable donors contributed to the same organization two years in a row.
Between 2013 and 2014, charities gained $3.611 billion in gifts from new, current, or previously lapsed donors. That’s a sum any industry or economic sector would be overjoyed to look at — until the offsets are considered.
As reported by the Association of Fundraising Professionals (AFP) and Urban Institute’s Center on Nonprofits and Philanthropy 2015 Fundraising Effectiveness Project (FEP), those offsets resulted in that $3.611 billion figure being trimmed to just $173 million in net giving growth. Additionally, for every 100 donors charities gained, they lost 103.
FEP was established to bring attention to the gap between the insights gained by looking at the fundraising sum and those gained by examining the underlying churn of new, lapsed, and recurring donors.
“This is not a new phenomenon. One of the realities the FEP makes clear is that donors do not simply choose a few charities to support and stick with them every year,” AFP President and CEO Andrew Watt said in a statement. “Donors are remarkably inconsistent in their giving, whether it’s because they lost interest in a cause, were giving because a friend or family member asked them, or did not like how the charity was treating them. The charitable sector’s challenge is to figure out how to better inspire and retain donors from year to year.”
Big Hurdles for Smaller Groups
The challenges associated with attrition are worse for smaller organizations. Those that raised less than $100,000 in 2014 had an average loss of 7.8 percent, but organizations that raised at least $500,000 had an average growth of 10.4 percent. In many situations, it’s much easier to make money if you have money, and that often holds true for charities.
“While the difference was actually smaller in 2014 than it was in 2013, this is a trend that has continued for many years,” Wilson Levis, FEP project manager and affiliated scholar with the Center on Nonprofits and Philanthropy, said in a statement. “The importance of fundraising staff and a well-known brand cannot be discounted. Smaller organizations can be successful but it is tougher.”
For that reason, smaller organizations may want to check out FEP’s tools and resources, which allow charities and nonprofits to apply the same methodologies FEP uses to analyze its own fundraising efforts.
There is a bit of good news for charities: Recovery from recent economic instability continues, with donor-retention rates improving 4 points from a 10-year low of 39 percent in 2011-12; gift-retention rates improved to 47 percent, a seven-point increase from 2011-12.
At the end of the day, FEP recommends three interconnected strategies that fundraising teams should deploy:
- Allocate budget increases to fundraising categories, according to perceived need.
- Measure the return on those investments year over year.
- Base another round of budgetary allocations according to that ROI.
With that foundation, and a lot of hard work, your organization could ensure that it doesn’t fall on the wrong side of FEP’s baseline in the future.