WARNING: 2018’s fundraising totals saw the largest year- over- year decline in the last five years.
That’s the conclusion of The Fundraising Effectiveness Project and its just-released 4th Quarter Fundraising Report. The results are a concerning. The number of donors declined -4.5% compared to 2017— the largest decline in 5 years.
It’s not all bad news. Overall, 2018 revenue increased by 1.6%. But realistically, a trend that shows fewer and fewer donors giving slightly more revenue is unsustainable and spells real trouble for the sector.
Where we left off
At the end of 2017 the sector saw an unprecedented fourth quarter that yielded 10% more revenue and 5% more donors as compared to 2016. Then in the First Quarter report we began to think the sky was falling. We started the year down ( -6.6% )in the number of donors and down (-2.1%) in revenue through the second quarter of 2017. Then, after a tremendous 2017 Third Quarter that saw the sector ahead on revenue—up +2.6% for the first three quarters. We even made some gains in the numbers of donors bringing the decline up to -4.3% year- over- year compared to 2016.
Perhaps at the end of 2017 we were overly optimistic. Some experts felt those 2017 results exceeded expectations because of newly passed tax reform laws, others thought it could be related to the disaster response.
Where we are now?
Unfortunately, we're still gazing out the window, looking for that reprieve to show up. It's nowhere in sight.
The results from Q4 2018 are concerning.
🚩 Number of Donors are down -4.5% in 2018 compared to 2017.
🚩 Revenue is up 2.6% for the $1,000+ donors. Revenue is down -4% for the $250-$999 group. And down -4.4% for smaller gift donors under $ 250.
Where will we go from here?
It is difficult to establish causality behind this trend, but Richard Rubin from the Wall Street Journal outlines how this may be related to the new tax law and the subsequent increase of the standard deduction. The data supports that claim as we have just witnessed the lowest fourth quarter in donations.
What can you do about it?
3 Action Steps:
- Benchmark your success
- Evaluate you acquisition and reinstatement investment strategies
- Set your goals and track monthly
Step 1: Benchmark Your Success
A vital first step is to ‘know your numbers’.
- Have you retained more donors than you did last year?
- Has revenue increased or decreased?
Step 2: Evaluate Your Investment Strategies
- Are you balancing new donor acquisition with lapsed reactivation?
- Are you spending enough on donor retention?
- Do you know how many donors you need to retain so your file doesn’t shrink?
We can help. Ask us to generate the 'Leaky Bucket' analysis and action plan for you.
Step 3: Set your goals and track monthly
Be proactive and stay on top of the health of your donor file. Set your goals [retention and value] and track monthly.
The DonorDashboard calculates this this for you [at no cost] - start tracking your metrics.
Download the full FEP report here.
Why this matters to us at DonorTrends
We consider Fundraising Effectiveness Project the most important sector benchmark, representing more than 17,000 organizations because it is most reflective of the problems and opportunities facing small and mid-sized organization. The transactions of these groups make up the Growth in Giving database [GiG]. This is the biggest database of its kind and best provides organizations across a variety of sectors benchmarks to gauge their own progress. Learn more at afpfep.org.
Now is the time to evaluate and plan. Don’t wait until it’s too late. Know your numbers and don’t hesitate to reach out to us today.