Donor Insight. Fundraising Action.

First Quarter 2018 Donations Are Down

Posted by Ben Miller on 05/2018
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The Quarterly Fundraising Effectiveness Project report was released this week and results aren’t good. At DonorTrends, we keep a close eye on FEP trends. It is the most important industry benchmark, representing more than 17,000 organizations. These transactions make up the Growth in Giving database [GiG]. This is the biggest database of its kind and provides organizations across the sector benchmarks to gauge their own progress.

Where we left off
In the 2017 Fourth Quarter report we saw a huge swing in the sector. Donor Retention was up. Revenue was up. Things were looking good.

Some attribute the rebound in Q4 2017 to newly passed tax reform laws, others think it could be related to the disaster response.

Thrilled with the upward trends, we’ve been waiting for this report to assess if growth would continue in 2018.

Where we are now

The results from Q1 2018 are concerning.

Gifts are down.

Revenue is down. [mainly due to $1,000 donors giving less in Q1]

There is a silver lining – lower dollar donors [less than $250] contributed more gifts in Q1 compared to last year.

Will we catch up? Look at this graphic that depicts the average % of dollars and donors by quarter. The majority of donations are generated in Q4, so we can expect to see slow progress between now and October, however the second quarter has the majority of donors averaging 29%, so the next month looms large for many organizations.

Donors and Dollars by Quarter
What can we do about it?

A vital first step is to ‘know your numbers’.

Have you retained more donors in Q1 than you did last year?

Has revenue increased or decreased?

If you don’t know, find out. We’re here to help if you need it.

Once you have your retention and revenue numbers you can evaluate:

• How do you compare against yourself?
• How do you compare against the sector?

The quadrants below represent these comparisons. Are you a Challenger, Leader, Climber, or Troubled?

Leaders: You are a fundraising superstar, tracking ahead of the sector and ahead of your prior year. Whatever you are doing don’t stop. Look into why things are going well, is it the political or economic climate? If it is, perhaps you should strike while the iron’s hot. If the there is a temporal component to your success, then invest now in acquisition and reactivation. It will not always be this easy to grow your file. Share the love, post your successes in the comments and let others know what you are doing right.

Challengers: You are tracking ahead of where you were last year, but behind the sector average. Given the sector average is declining this could spell trouble. You are on the right path, however. The first thing is to identify where you are weakest, what are the trouble areas. After you identify the areas that are lagging, it’s time to invest in improving those areas. If the retention numbers are weak, then focus on better donor communication and improving your contact cadence. If your average donation amount is below the sector, focus on upgrading donors. You can use predictive models to identify donors that are likely to increase and then ask those donors to stretch their gifts.

Climbers: You are ahead of the sector, but behind your prior year. That means you are traveling at a good speed, but in the wrong direction. First thing is to look at last year, was it an abnormal year? Are you tracking behind because there was a surge last year or is this a multi-year trend. If the pattern looks like a trend, then it is time to identify the cause. If the problem is related to retention, you will need to collect some donor feedback. Whether that is through a survey, a focus group, or even your own donor services team, you need to find out why their support is waning. If the problem is related to donation size, try to put it into context. Was there a capital campaign? Have your asks changed? What is going on with your major donors. Since likely you have personal relationships with these donors, reach out and ask them.

Troubled: You are tracking behind the sector and you are losing ground. The red flags are up, you need to be paying attention. Something is just not working. You should go into triage mode. First identify where you are losing the most ground. Then you should build a plan to first stop the decline and then focus on rebuilding. The next couple of years may be hard but getting a strategic plan that will allow you to invest in acquisition and file maintenance could save the program. It also may be time to do a creative audit, to see if the problem may be in your communications. It is never easy when performance is down. Don’t worry it is not too late to turn this ship around.

Data often is overwhelming but shouldn’t be. If you need help calculating or understanding your donor retention and revenue trends, give us a shout. … or if you’re a Data Ninja, get started here.

Download the full report here.

Topics: Donor Retention, Retention, Retention Rate, Fundraising Effectiveness Project, FEP, Action Strategies, benchmarks

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