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All Donors Are Not Created Equal

Posted by Ben Miller on 01/2018
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Right now, many organizations are pulling together year-end numbers to see if they hit their fundraising goals in December.  

While there may be a collective sigh of relief, the need to raise funds never takes a break. This got me thinking about the high returns nonprofits count on in December and what can be done to help maximize efforts during the off-season. To help answer this question, we took a look at some of our client’s anonymized data.  

To better understand the large increase in donations at year-end, we wanted to see if the behavior of giving in December was typical of a certain type of donor. It’s easy to assume that December giving is high because of tax deductions, but according to the Motley Fool, only 25% take a tax deduction on charitable donations.

One might then assume that many people consider December the best time of year to give to the less fortunate. But this notion falls apart when you also see a spike in December for every other group, including: advocacy; the arts and culture; education; and medical research organizations.

Since we lacked the qualitative data to support a motivational hypothesis, we decided to focus on the quantitative data we did have. The first question we set out to answer was if there was a specific type of donor that only gives at year end.Scale.jpg

The answer we found was yes. There was a group of donors that gave exclusively between October and December. However, it was only 7%. And interestingly, the LTV of those donors was five and a half times LESS than those that gave throughout the year.  

Next, we used our predictive models to look at the overall likelihood of donors to give. We analyzed active 0-24 month donors who gave more than one gift within those two years. Looking at these donors as a whole, we found they were representative of general giving patterns, in that 16% of their donations came in December. Those results are in line with findings from the Blackbaud Charitable Giving report, which indicated there was twice as much revenue raised in December (16.5%) as compared to the remaining months (7.5%.)

But when we started to look at their probability of giving, we found something interesting. There was a unique difference between those predicted most likely to give and those predicted least likely.

The donors predicted least likely to donate in general, actually gave more over the course of the year than they did in December.

To illustrate this, we broke the donors into two separate groups and measured what portion of revenue each group contributed at year end. 

Group A = the top 50% most likely to donate overall = 95% of December revenue

Group B = the bottom 50% least likely to donate = 5% of December revenue

How does this information help nonprofits? Here are a few of our takeaways:

  • Nonprofits can save money at year-end by targeting those least likely names less often.
  • Nonprofits can ensure those most likely to donate are targeted more effectively at year end.
  • Reach deeper into lower tiers throughout the year to cultivate and work on increasing the LTV of those donors in the months that they are most likely to give which, as we now know, is not December.

What are your takeaways from this information?

 (If you're still not sure how your year ended, or would like to double check your results, take advantage of our free trial and find out today.)

Topics: Annual Fund, Year End Strategy, Revenue, Trends

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