The Fundraising Cliff
Fundraisers face a similarly long-term financial problem, although there’s no December 31st deadline. Sadly few recognize the day of reckoning is at hand.
Rather than look at the real reasons for the now 6-year decline in acquisition and retention rates, and the generally declining number of donors in the pool supporting nonprofits, too many fundraisers ignore the long-term trends in favor of short-term excuses.
That’s why I urge you to read Steve MacLaughlin’s post — Are We Approaching the Fundraising Cliff? — over at Blackbaud’s npEngage blog.
Steve is the Director of Blackbaud’s Idea Lab and is exposed up to his well-trimmed goatee in donor data, indices, trends and other factual goodies. Here’s what Steve thinks is — and is not — happening and why it’s time for a wake-up call and some changes in behavior.
Sorry … That’s Not An Excuse
- We didn’t do so well this year because people gave to the presidential campaigns and less to nonprofits. Not an excuse for most organizations. Campaign fundraising has no apparent impact on overall individual giving. Less than 1% of Americans give campaign contributions of more than $200 to candidates, parties or PACs.
- Donors gave less because of possible changes to the charitable tax deductions. Not an excuse. Potential changes to the tax code encourage more donors to give now rather than wait for a change – probably less favorable – in the tax code.
- We’re getting less because donors gave to Hurricane Sandy Relief. Not an excuse. Giving to disasters does not take away from other nonprofit causes. Disaster giving is not a zero-sum game.
- People are giving less because of the economy. Maybe. Fundraising historically takes three years to recover from a recession, but this recovery period is slower and may be having some effect.
The Real Reasons You Should Worry
- Donor populations have been shrinking over the past 5 years and revenue per donor has been flat. There is some good news in that in the first half of 2012 donor numbers were on the rise for most sectors. Steve thinks this may mean we’ve reached a bottom. See the detail in Steve’s analysis for more info by sector.
- Anemic acquisition and poor retention have created a perfect storm for fundraising troubles. The Agitator has been warning of this for four years, but it’s good to see reinforcements arrive. As Steve puts it: “Without key changes the sector is likely to continue experiencing flat growth and an eroding supporter base.”
So What’s a Cliff-Jumping Fundraiser to Do?
Here are Steve’s recommendations. And I quote:
“Engagement Over Acquisition. Just getting more new donors isn’t enough. That’s been tried and it doesn’t work long term. There must be more focus on using multiple channels, including direct marketing, phone, online, social, and mobile. Acquisition is often an on/off switch. Engagement is a volume knob — not always on ’11’ but never on zero.
“Sustainable Donors Over Disaster Donors. The dramatic swings in disaster giving clearly have big impact overall fundraising. Good news in the world can mean bad news for giving. The focus must be on sustainability — not the next disaster. Showing outcomes and impact is proven to turn episodic donors into long-term supporters.
“Smart Data Over Big Data. Everyone is talking about ‘big data’ but not much is actually being said. We know that the use of analytics in fundraising is not a new concept. The focus now needs to be on the broad use of information and analytics by nonprofits that helps them make smarter decisions. No more guessing.
“All Year Over End of Year . Get ready for the 57 blog posts, articles, emails, and webinars about how much giving happens at the end of the year. Add another 23 about all the online giving that happens in the last two weeks. This is ‘best practice’ gone bad at its best. Diversify your fundraising across the entire year.
“Retention, Retention, and Retention. None of this works if retention rates do not significantly improve. Losing 30% to 40% of donors each year limits fundraising’s ability to grow. ‘What if it was all about retention?’ needs to be the question every board, leadership team, department, task force, and partner asks.
Change Means Changing . Change is hard. Whether it’s changing the world or making changes in the nonprofit sector. And the best way to start changing things is to change things. That sounds really simple — because it is. Change is what is needed to truly get fundraising growing again.”
Thanks Steve. You deserve an Agitator Raise.
P.S. Of Steve’s 6 recommendations above, which ones will you work on in 2013? And, does your budget reflect your intent?