Charitable Giving, Donor Retention Levels Increasing, Reaching Near Pre-Recession Levels
For the fourth consecutive year, charitable organizations across the U.S. saw growth in both the level of funds they raised, as well as how well they retained donors from year to year, according the 2014 Fundraising Effectiveness Project (FEP) Survey Report.
The FEP, developed by AFP and the Urban Institute in conjunction with donor software providers, measures gains and losses in gift amounts and in the number of donors among participating charitable organizations.
The latest report shows that for every $100 a charity gained in 2013—from new donors, the return of previous donors and increased giving from current donors—it lost $92 from lapsed donors and smaller gifts from current donors, for a positive gain of $8.
This overall gain marks the fourth consecutive year that giving has grown since 2009, the brunt of the recession’s impact on giving. That year, the net giving level was negative $19 —that is, for every $100 a charity gained, it lost $119.
In addition, the 2013 net giving level of plus $8 exceeds many years’ giving performance before the recession. Since the FEP was started in 2004, the highest net giving was seen in 2007, just before the recession started to affect giving. The level that year was +$14—that is, for every $100 a charity gained in 2007, it lost just $86.
“Results this year indicate that the giving climate continues to improve—good news for charities—but we still have quite a way to go before we reach the high water mark of 2007 and surpass it,” said Elizabeth Boris, director of the Center on Nonprofits and Philanthropy at the Urban Institute. “The trend toward higher net giving is encouraging as the effects of the great recession slowly recede.”
Donor Retention Levels
Despite 2013’s net giving increase of $8, nonprofits continued to lose slightly more donors than they gained. For every 100 new and returning donors, 102 departed without a gift, a net loss of two. However, that figure is an improvement of 2012’s value of negative 5 (a net loss of five donors), and from the 2011 level of negative 7, the worst ever donor retention level reported since the FEP started in 2004.
The best donor retention level was reported in 2004: plus 18, that is, for every 100 new and returning donors, just 82 left without making a gift.
Another key metric the FEP follows is the donor retention rate: the percentage of donors who made repeat gifts to charities. The most recent report shows that 43 percent of 2012 donors made gifts to participating nonprofits in 2013. That figure is the highest the donor retention rate has been since just before the recession began to affect giving in 2007. The highest rate (50 percent) occurred in 2005, and the nine-year average is 44 percent.
“Donor retention is one of the most important benchmarks that charitable organizations need to look at when analyzing and working to improve their fundraising effectiveness,” said Andrew Watt, FInstF, president and CEO of the Association of Fundraising Professionals. “Charities are good at attracting first-time donors, but engaging them and inspiring them to continue to give throughout the years continues to be an issue. The Fundraising Effectiveness Project offers a number of tools and resources that charities can use to retain donors and keep them involved.”
Giving Levels by Size
Another slowly improving area is the difference in net giving levels between sizes of charities, as 2013 saw smaller and mid-level organizations increase their performance. Charities raising $100,000 to $500,000 had a net gain of 1.9 percent (an increase of 7.0% percent from 2012), organizations in the under $100,000 group had a net loss of -2.4 percent (which was still an increase of 11.1 percent from 2012). The largest organizations, raising $500,000 or more, had a 10.5 percent net gain (which represented a 6.1 percent drop from 2012).
In 2012, the difference by organizational size was more pronounced, with organizations raising more than $500,000 seeing an average gain of 16.6 percent in their net giving levels. In contrast, charities raising $100,000 to $500,000 experienced net losses of 5.1 percent, and nonprofits raising less than $100,000 saw net losses of $13.5 percent.
Resources and Tools
The Fundraising Effectiveness Project as developed the downloadable Excel-based Growth in Giving (GiG) Fundraising Fitness Test that allows nonprofits to measure and evaluate their fundraising programs against a set of over 100 performance indicators by five donor giving levels. In addition, seven GiG Reports provide concise, yet informative pictures of fundraising gains and losses-growth in giving and attrition – in a simple, reader-friendly format that executive staff and board members can understand. These tools and resources can be found at http://afpfep.org.
“We are proud to be a leader in helping the nonprofit sector understand fundraising effectiveness metrics,” said Erik Daubert, MBA, ACFRE, chair of the Growth in Giving Initiative. “Our groundbreaking Fundraising Fitness Test enables nonprofits to evaluate their own performance against themselves and national benchmarks; we encourage all nonprofit leaders to take advantage of it.”
About the Survey
In 2006, the Urban Institute, the Association of Fundraising Professionals, 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. The survey is based on a convenience sample of organizations that have given consent for their data to be used for this project.
The 2014 Fundraising Effectiveness Survey received data from 3,576 respondents covering year-to-year fundraising results for 2013. Respondents raised over $2.44 billion from 2.2 million donors for an average total annual giving per respondent of nearly $683,000 and an average annual giving per donor of $1,116.
The full study, as well as a fact sheet, is available at http://afpfep.org.