Does 6% Decline In 2017 Giving Thru Mid-Year Spell Year-End Trouble?
The Fundraising Effectiveness Project recently released its Quarterly Fundraising Report covering the first half of 2017. It shows a drop in US giving of 6% below 2016’s mid-year level.
Should we worry?
Although there has been an increase over 2016 in the number of donors giving under $250 ( up 8.9%) and those giving between $250 and $1000 (up 14.2%) it appears that the important $1,000 + giving segment is down 8.9%. That’s a decline of $2.3 billion.
Before getting to “Why?” I want to make an important digression about the data set and the collaborative process behind the Fundraising Effectiveness Project. (FEP)
The Agitator (along with industry veterans like Chuck Longfield of Blackbaud and Jay Love of Bloomerang) has long argued that one of the major barriers to growth the lack of collaboration in the sector.
The Fundraising Effectiveness Project is a first-rate example of collaboration between for-profit, non-profit and academic experts who pool resources and brainpower to track key fundraising trends. Here’s how they do it:
- The Growth in Giving Database (GiG) is an anonymized collection of more than 142 million gifts made to more than 15,000 nonprofit organizations. The data is gathered through a collaborative partnership of software firms that include Bloomerang, DonorPerfect and Neon CRM. These data are supplemented with summary data from both Clearview CRM and eTapestry.
- The result of this collaboration is the world’s largest database of actual gift transactions from the largest number of nonprofits. So, when looking at trends there’s ample representative data. (The exception being very large educational and medical-based nonprofits.)
- The data set is hosted by the The Urban Institute, and the Fundriasing Effectiveness Project itself is supported by the Association of Fundraising Professionals.
- Analysis of the data is performed on a volunteer basis by Jon Durnford from DataLake, and Ben Miller from DonorTrends. All this is overseen by a working group comprising Erik Daubert, Cathlene Williams, Jim Greenfield, and the FEP’s godfather Bill Levis of the Urban Institute
Now back to the key questions: “Should we worry about the half-year decline of 6% and $2+ billion in $1000+ donors from last year to this? More importantly, why is it happening?
Jon Biedermann of DonorPerfect and one of the collaborators in the FEP says he was “surprised to see giving down through the first half of the year. “Traditionally, giving in the USA has risen in lockstep with the economy, typically resulting in 2% of GDP. “This year is different, and the data shows why: Major donors ($1,000+) are missing in action this year.”
Of course there are many reasons that might explain this, but Jon says a “peek into the past could reveal a simple reason: Major donors could be waiting for tax reform.”
“Why?”, asks Jon and answers his own question. “Because this has happened before. The 1986 Tax Reform Act discouraged certain types of charitable giving and as a result, giving ‘increased’ substantially in 1986 and fell the next year in 1987.
If outcome of the current ‘tax reform’ debate results in lowering the highest tax rate for contributions in 2018, donors will have an incentive to make a donation now, in 2017, in order to maximize their deduction.
But, as I noted in Talking Taxes, Congress is just now digging into the tax cut/tax reform issue so it’s too early to tell what the outcome will be.
Meanwhile, tax cut or no tax cut, we all should bear in mind that the current FEP report supports the key finding of the Vital Signs study by the Blackbaud Institute: “…American donors are more valuable to American nonprofit organizations than the organizations are to the donors.”
As we head into the home stretch of 2017 now’s the time to pull out all the stops. Call, visit, write, and thank your best donors.
What trends are you seeing where your $1000+ donors (or all your donors for that matter) are concerned?
P.S. Register FREE for this Webinar on the Fundraising Performance Quarter Report. It’s on Thursday, November 16th at 1:00 p.m. ET. You’ll meet two of the experts behind the report –Jon Biedermann of DonorPerfect and Ben Miller of Donor Trends.
The 30 minute session will cover revenue trends…the influence on disaster giving … and donor retention . Don’t miss it. Sign up FREE here.
P.P.S.A significant upgrade in the Fundraising Effectiveness Project is underway. The FEP will soon release its report on giving through September 30, 2017. This updated version will reflect giving to Hurricanes Harvey and Maria and will give you an opportunity to benchmark and measure your organization’s performance against that of 15,000+ other nonprofits.