Charities Raising More Money, But Still Losing Donors
For the first time in five years, charity respondents to the annual Fundraising Effectiveness Project survey saw positive gains in giving, but still continued to lose donors faster than they gained them.
The survey, developed by the Association of Fundraising Professionals (AFP) and the Urban Institute, shows that for every $100 a charity gained in 2012 from new donors, the return of previous donors and increased giving from current donors, it lost an average of $96 from lapsed donors and smaller gifts from current donors—for a positive gain of $4.
The positive results mark the first time since 2007 that the net giving level was positive, and stands in stark contrast to 2009 during the recession, when the net giving level was $-19—that is, for every $100 a charity gained, it lost $119. In 2011, the net giving level was $0, meaning charities lost $100 for every $100 gained.
“The 2012 results are good news for charities, but we can’t get complacent,” said Andrew Watt, FInstF, president and CEO of AFP. “We are slowly but surely recovering from the impact of the recession, but we have a long ways to get back to pre-recession levels of giving. Plus, the difference in performance between small and large charities is startling, and we need to look at how the sector can better support these groups.”
Organizations raising more than $500,000 in 2012 saw an average gain of $16.60 in their net giving levels. In contrast, charities raising $100,000 to $500,000 experienced net losses of $-5.10, and nonprofits raising less than $100,000 saw net losses of $-13.50.
The report’s authors cautioned that growth in giving isn’t keeping pace with growth in the gross domestic product and inflation. An organization needs $100 in gains for every $94 in losses (a “net gain in giving” of $6) just to keep up with today’s GDP and outdo inflation.
Despite Revenue Gains, Still Losing Donors
Despite 2012’s net giving increase of $4, nonprofits continued to lose more donors than they gained. For every 100 new and returning donors added to a charity’s donor list in 2012, 105 departed without a gift, for a net loss in donors of -5.
This figure is a slight improvement from last year’s level of -7, but isn’t near the level of two years ago: + 3. Until the recession, charities were much better at retaining donors. For example, in 2007, the net gain in donors was + 13 (for every 100 new and returning donors, charities lost just 87).
“The results are troubling because we’re seeing a trend of charities relying on fewer donors giving larger gifts,” said Elizabeth Boris, director of the Center on Nonprofits and Philanthropy at the Urban Institute. “Charities need to work harder on reaching out to new and different groups of donors. More important, however, is keeping donors for longer than a year, since it’s much cheaper to retain existing donors than it is to continually find new ones.”
The FEP survey also looks at attrition in terms of how many donors in one year didn’t give the next year. On average, 56.8 percent of 2011 donors did not make a gift in 2012. This compares favorably with 2011’s 58.5 percent attrition rate, and continues a slow improvement trend that started in 2009.
However, donor attrition was somewhat better in 2007 before the recession at 55 percent. “While the slightly improved donor attrition rate for 2012 is encouraging, it continues to show that donor retention needs to be a top priority for nonprofits,” said Watt.
About the Survey
In 2006, the Urban Institute, AFP, and a group of donor software providers designed a survey to measure gains and losses in gift amounts and in the number of donors among the firms’ clients. This year’s survey concluded in February and gathered data for 2012.
The 2012 Fundraising Effectiveness Survey received data from 2,840 respondents covering year-to-year fundraising results for 2011-2012. Respondents raised over $1.3 billion from 1,556,000 donors for an average fundraising per respondent of nearly $469,000 and an average giving per donor of $856.