4 Eye-Opening Discoveries from the 2012 Fundraising Effectiveness Report

By eleventy marketing group

Fundraising appears to have reached a crossroads. In a time of continuous and tremendous challenges, many nonprofits are struggling to raise funds beyond the break-even point. The recently released 2012 Fundraising Effectiveness Survey Report reveals that, in 2011, 100% of gains in giving were offset by losses in giving. Today we look at more findings from the 2012 Fundraising Effectiveness Project and attempt to gauge what they mean for nonprofits and the future of fundraising.

About the Fundraising Effectiveness Survey

The Urban Institute and the Association of Fundraising Professionals established the Fundraising Effectiveness Project (FEP) to research fundraising effectiveness and help nonprofit organizations increase their fundraising results. The groundbreaking annual Fundraising Effectiveness Survey, piloted in November 2006, collects fundraising data from nonprofit organizations beginning with data for 2004-2005.

The 2012 Fundraising Effectiveness Survey Report
The 2012 Fundraising Effectiveness Project report summarizes data from 3,184 survey respondents received as of February 2012, covering year-to-year fundraising results for 2010-2012.

Four Findings on Fundraising Effectiveness:

Gains of $1.1 billion in gifts were offset by losses of $1.1 billion

This is the most significant discovery of the survey – every $100 gained in 2011 was offset by $100 lost. It’s a real eye-opener, showing that fundraising was essentially a wash in 2011. While there was a $1 million dollar net growth in giving, this is an incredibly small number when you’re talking billions. This tells us that almost any increases nonprofits saw from new, upgraded and returning-lapsed donors were basically wiped away due to losses because of reduced giving and donor attrition. That means a lot of organizations did a lot of work to wind up back at square one.

Gains of 1.3 million in new and restored donors were offset by losses of 1.4 million in lapsed donors

It’s simple math here – more donors were lost than gained in 2011. According to the 2012 Fundraising Effectiveness Project report: For every 100 donors organizations gained in 2011, they lost 107 donors through attrition. In the fundraising world, that’s a huge problem. Sustainability requires that there are always more donors coming in the door than heading out the exit.

Growth-in-giving performance varies significantly according to organization size

Overall, the news was slightly better for larger organizations and worse for smaller nonprofits. Organizations raising $500,000 or more had an average 10% net gain, while organizations in the under $100,000 groups had an average net loss of -9.6%. With smaller organizations relying more on yearly giving to fund key services, this news hits particularly hard.

The largest growth in gift dollars came from new donors, while the greatest losses came from lapsed new donors

This finding from the 2012 Fundraising Effectiveness Project shows the power of new donors, and the key role they play in growth. Not only are new donors essential to maintaining fundraising growth, but retaining new donors can mean the difference between being in the black or being in the red.

Finding Ways to Widen the Gains/Losses Gap

As you can see, the findings of this report do not create an overwhelmingly positive picture of fundraising in 2011. So the question facing nonprofits now is: Where do we go from here? The report notes two things to keep in mind: (1) “the project goal is to help nonprofit organizations measure, compare, and maximize their annual growth in giving”; and (2) “research has indicated that there is an enormous untapped potential for giving in the United States”.

What those two things mean is we can use these findings as a springboard for better fundraising. Based on these results, nonprofits need to make a concentrated effort to reduce attrition and hold on to new donors. So how can you do that? By focusing a significant portion of your marketing on keeping donors engaged and invested in your organization’s core purpose. Show and tell people why their continued contributions are so important, and how their donations are making a difference.

Organizations also need to look for new and innovative ways to recruit new donors and volunteers. For example, tapping into the power of online fundraising can provide a cost-efficient way to reach new audiences and donors. You also need to develop and test different methods of keeping these donors engaged after you hook them. In order to grow and flourish moving into the future, nonprofits must find ways to widen the gap between gains and losses by increasing the effectiveness of their fundraising efforts.