Fundraising: The Good, The Bad, and The Future

Last week the Fundraising Effectiveness Project (FEP), a partnership of the Association for Fundraising Professionals, #Giving Tuesday, and some donor software companies, released its Q4 2020 and full-year 2020 fundraising report. Since 2005, FEP has analyzed over 176 million donation transactions from more than 20,000 participating nonprofits, so it is one of the most comprehensive and accurate takes on the current state of fundraising and year-to-year giving trends.

Here’s the good news, based on their targeted sample of 2,500 nonprofits in 2020:

• Despite (or maybe because of?) the pandemic, overall giving increased by 10.6% in 2020 as compared to 2019.
• The number of donors also grew by 7.3%. Nonprofits increased new, first-time donors by 18.5%, and reactivated 13.7% more lapsed givers than in 2019.
• Finally, giving increased at all levels—15.3% for those giving under $250, 8% for mid-level giving between $250-$999, and a huge 10.4% for those who gave $1000 or more.

But, unfortunately, there is bad news too:

• Donor retention continued to decline in 2020, dropping 4.1%.
• 43.6% of donors from 2019 gave again to the same organization in 2020, the lowest rate since FEP started tracking this data in 2005.
• And only 19.3% of first-time givers to a nonprofit in 2019 gave to that same nonprofit in 2020.

But why? Why do such generous people no longer give to an organization?

Some factors certainly are beyond the nonprofit’s control. The donor changes her giving priorities or has a life experience that adversely affects her ability to give (e.g., she loses her job).

But most reasons why donors stop giving are in the control of the nonprofit. Givers, for example, no longer think that the charity needs them since they’ve never received information on the impact of their gift. Some even experience what might be called “donor amnesia”; they forget that they ever gave to the organization. Or perhaps they were never thanked for their gift—one of the worst nonprofit sins!

So how can organizations stop this donor churn?

First, if you don’t know what your donor retention rate is, and at what giving levels, and of what kinds (e.g., new vs. repeat donors), then you need take a look at your data and better understand its trends. For example, where is your organization losing the most donors and at what cost? Losing one $1000+/year donor has a greater impact on revenue than losing three $100/year donors.

Second, once you know your baseline performance and where you need to focus your efforts, start taking concrete, intentional steps to address retention. Do you have in place a welcome flow for new donors to your organization where they are thanked in a variety of ways before they are asked to give again? Are you demonstrating to them the impact of their giving through tangible, accessible, inspiring stories? Are you engaging them in personal ways, beyond formal written communications—e.g., a handwritten thank you note from a board member, a phone call from the Executive Director? Are you inviting them into a deeper relationship with your organization by asking them to join your recurring giving program?

Finally, many nonprofits think that the solution to their fundraising woes is to acquire new donors. Based on the FEP data, even if the number of new donors to your organization increased last year, you have about a 1 in 5 chance of retaining them. So why not instead pour resources and attention into the donor’s your organization has already, including those new supporters that came to your organization during the pandemic? Focus on communicating impact, thanking them, engaging them in new and surprising ways. They might just stick around.

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