Fundraising is stuck in the middle right now. There are opposing forces pulling it in different directions. The result? Nonprofit organizations are mostly running in place when they should be surging forward.
On the positive side, more people are giving and they’re giving more. And nonprofits are using a lot of smart, creative efforts to bring new donors on board. But on the flipside—with unprecedented nonprofit competition and subpar retention efforts—donors are simply not committing to organizations long term.
In today’s post, we’ll look at some new stats from the 2016 Fundraising Effectiveness Report and explore some questions raised by the report findings that today’s nonprofits need to answer.
About the Fundraising Effectiveness Report
In 2006, the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute established the Fundraising Effectiveness Project to conduct research on fundraising and help nonprofits increase their fundraising results at a faster pace.
The 2016 Fundraising Effectiveness Report summarizes data from 9,922 survey respondents covering year-to-year fundraising results for 2014-2015.
10 Telling Stats on How Nonprofit Fundraising Changed in 2015
Here are some key findings from the 2016 Fundraising Effectiveness Report:
- $8.628 billion raised by surveyed nonprofits in 2015 (up from $8.196 billion in 2014)
- 5.3% growth in giving in 2015 compared to 2014 (an increase of $4.695 billion)
- 8.27 million donors contributed to these nonprofits in 2015 (compared to 8.11 million donors in 2014)
- 2% overall donor growth rate in 2015 compared to 2014 (an increase of 160,878 donors)
- $4.695 billion in gifts generated from new, upgraded, and previously lapsed donors were offset by losses of $4.264 billion through reduced gifts and lapsed donors in 2015
- Every $100 in new donations in 2015 was offset by $91 in losses through attrition
- Gains of 4.547 million new and previously lapsed donors were offset by losses of 4.386 million in lapsed donors
- Every 100 donors gained in 2015 was offset by 96 lost donors through attrition
- 46% was the average donor retention rate in 2015 (no change from 2014)
- 48% was the average gift or dollar retention rate (no change from 2014)
4 Questions Nonprofit Need to Ask About Their Fundraising Efforts
The results of the 2016 Fundraising Effectiveness Report point to a nonprofit trend we’ve been seeing over the past few years where giving is increasing only to have those positive gains held in check by the continuing challenges of donor retention.
These findings raise some important questions. Moving forward, here are four questions nonprofits across the industry need to ponder…
1. Why are donors leaving?
According to the report, over the last 10 years, donor and gift retention rates have consistently averaged below 50%. This is not a particularly healthy norm for the industry.
So what’s the cause? That’s what you need to find out. Make it a point in your organization to uncover the top five reasons donors are leaving. Reach out to donors and ask them why—then determine what actions you can take to prevent it from happening.
2. Why are donors giving in the first place?
Just as important as knowing why donors are taking off is knowing what compelled them to give in the first place. Was it because they received a piece in the mail? Or a friend asked them to give? Or something specific happened in their life?
The answer to this question is key to finding permanent retention solutions. If these donors never intended to stay with you long term, that’s important to know. As is if their expectations were not met in some way. Both these insights can help you reshape your strategy.
3. What have we done to create a culture of noncommittal giving?
This is an industry-wide question that’s ripe for discussion. How are the fundraising norms and practices of today creating an environment where people don’t stick with nonprofits or specific causes for the long haul? What is it we’re not giving people that’s made this a better option?
Our minds automatically shift to the idea that it’s donors that have changed. But maybe it’s not them; maybe it’s us. How are the actions of nonprofits contributing to the culture of one-and-done giving? This is some really good food for thought.
4. Should organizations start shelving acquisition in favor of retention?
This might be the big question. On a basic level, there are two ways for nonprofits to increase contributions: Get more donors coming in or reduce the number of donors going out. And we know that it costs less to retain and activate existing donors than it does to gain new ones.
So is the answer a complete shift in focus from acquisition to retention? Should you downgrade your acquisition efforts to 25% and upgrade retention to 75%? The answer to that question is going to be different for every organization. But it’s certainly worth exploring.
Because what we do know is this: The path the industry is on now simply isn’t working to facilitate organizational growth a high level. It’s designed to maintain rather than attain. If you want to buck that trend and accelerate growth, it’s time to do something different.