Overall Donations and New Donor Retention is Down in 2016 - and continuing in a downward spiral!
This is a big deal.
Washington, DC: The Fundraising Effectiveness Project (FEP) released its third quarter findings and announced that both donor giving and donor retention is on a continued downward trend. FEP’s third quarter report indicates year-to-date giving through September 2017 is down by -4% compared to the same time period in 2016 and that donor retention is currently at its lowest point in five years, with an overall year-to-date retention of 45%.
General donations of less than $250 and mid-level donations between $250 and $1,000 are up by 6.9% and 20.1%, respectfully. However, major gift donations of over $1,000 have declined by -8%. It’s believed the increase in smaller donations reflects a response to the multitude of natural disasters experienced during the third quarter. Fundraising efforts were tracking at -6% in the second quarter but the third quarter closed the gap by 2%. CEO of DonorTrends™, Caity Craver, says, “The shortfall from major donations should be a huge concern to nonprofits, as 77% of all revenue generated to date is from major donors.”
Overall donor retention improved by 18% between the second and third quarter, increasing to 33%. However, this is still -1.9% behind 2016 during this same time period. The overall retention rate has been declining every year since 2013 and is poised to do so again in 2017.
In addition to concerns about the decline in gifts from major donors, new donor retention is also the worst it’s been in five years. Research shows that donors who give a second gift, especially within a year of the first gift, have a retention rate that often more than doubles. Therefore, these donors are critical because they have a much higher lifetime value for an organization. Currently, new donor retention is at 17.6%. At the end of the third quarter last year, it was 23.2%, the highest in five years. This is quite worrisome because prior years averaged 20.3%. If this downward trend in retention continues, the cost of fundraising will certainly increase with it.
According to Erik J. Daubert, MBA, ACFRE, Chair, Growth in Giving Initiative/Fundraising Effectiveness Project, Association of Fundraising Professionals Research Council, it’s possible that wealthy donors may be waiting to see how the Trump administration's tax policy shapes up before making large gifts. He said, "I’m optimistic that giving by major donors will pick up in the fourth quarter but my concern is that it won’t be enough by year-end to cover the growing needs of the more than 15,000 nonprofits we currently track in our research.”
To compare, giving between 2015 and 2016 at the end of the third quarter was up 3% and the corresponding number of donors giving was up by .6%. Through the third quarter between 2016 and 2017, giving is down by -8% and -5%, respectively.
Prior to the second and third quarters of 2017, this benchmark report was only available once a year. With the new release of quarterly reporting, nonprofits will now be able to compare their performance to the sector, better gauge their own trends, and self-correct more quickly when necessary.
About The Fundraising Effectiveness Project
The Fundraising Effectiveness Project was started in 2006 by the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute. It was established to conduct research on fundraising effectiveness that would help nonprofit organizations increase their fundraising results at a faster pace. To do this, they create measurable benchmarks using big data collected from across the sector. Participating companies, many of them competitors, voluntarily share their data (without donor names) as well as their analytic skills to create this database of information and reports, with the sole purpose of helping nonprofits improve their fundraising effectiveness.
The donor software firms that contribute their data are: Bloomerang; ClearViewCRM; DonorPerfect; eTapestry; and NeonCRM. DonorTrends and DataLake provide the data processing and analytics to produce the quarterly reports. Other participating organizations include: Giving USA; Association of Donor Relations Professionals (ADRP); National Association of Charitable Gift Planners; Philanthropic Service for Institutions; Lilly Family School of Philanthropy, Indiana University; Council for Advancement and Support of Education (CASE); and The YMCA.
For questions about this Press Release, contact Pia Payne at firstname.lastname@example.org or 410.300.8786. To access the report, visit http://afpfep.org/reports/download/. For more information about The Fundraising Effectiveness Project, visit http://afpfep.org/.
To access an on demand webinar that reviews the third quarter report in more detail, go to http://donorretention.donortrends.com/webinar-fep-registration