Bursting the Organization-Centric Bubble
If you still believe—or even worse, tout the fact– that your organization is the end-all and be-all this will burst your organization-centric bubble.
A study just released by The Blackbaud Institute titled Vital Signs: Monitoring Giving Patterns in the Donor Marketplace concludes that…
“…American donors are more valuable to American nonprofit organizations than the organizations are to the donors.”
While this conclusion may be evident to a few it’s apparently by no means clear to the vast majority of nonprofits. Otherwise, why would the vast preponderance of organizations ignore the importance of retaining donor.
Vital Signs is a wake-up call for every fundraiser who continues conducting business-as-usual. Continues to focus on acquisition. Continues to ignore the work and investment required to boost retention.
In short, most fundraisers persist in enlarging the size of their donor pool when they really should be focused on holding on to existing donors and increasing these donors’ loyalty and giving.
Here’s why according to this study authored by Chuck Longfield, who has diligently tracked donor and revenue trends of 1,042 nonprofits of all sizes in our sector for nearly 40 years.
- In the past 10 years, the number of nonprofits has increased by 23.4%, but individual giving has increased by only 3.4% That’s 5 times the rate of growth in organizations than in the growth of giving.
- Between 2010 and 2015, the total number of donor households making charitable gifts declined with fewer household giving larger annual gifts.
- The total number of donor households making charitable gifts declined 7% over the past decade. From 23 million down to 21.4 million.
- 20% of the donor households contribute 83% of the revenue.)
- The incidence of donor households adding new organizations to their giving portfolios declined (by 14%) as well. The exception to this is smaller, local organizations and there the revenue from new gifts increased by 15.1%.
- As a consequence of these trends the study concludes, “Donors are now more valuable to nonprofit organizations than the organizations are to donors.”
If there’s one all-important signal from Vital Signs it’s that in this highly competitive donor marketplace donor retention has become the essential strategy for successful individual giving.
I suggest you take some time and pore over Vital Signs. Not only will you find a wealth of data – demographics, retention by sub-sector (public broadcasting is highest, medical research the lowest), revenue trends by size of organization, and giving trends by sub-sector.
Here are the Vital Signs major takeaways:
- Competition within the nonprofit sector is growing far faster than individual giving.
- Although there are fewer donor households these few are increasing their value at a pace exceeding inflation. There is more value to be attained from retained donors.
- Sustainer giving has significantly greater value to contribute to the nonprofit sector than has yet been realized.
- The dominant impact where maximal giving is concerned is coming from the Baby Boom generation.
- Donor support is moving from national and international support to local and regional organization support.
- Donors are “either effectively or coincidentally moving from large to small organizations.”
- Enhanced modeling for identifying prospective donors can expand the reach of nonprofit organizations—particularly local organizations—beyond limits imposed by conventional use of donor lists.
As you read Vital Signs with its demographic and economic trends please remember that better retention requires an understanding of donors’ needs and preferences. Gaining that insight requires more than imprecise generalizations about age, income and education.
Once again, Chuck has pointed us in the right direction—and earned himself another Agitator Raise. Now it’s up to each organization to discover what characteristics—donor identity, commitment, satisfaction—within the broader demographic groupings distinguish its most passionate donors.