Short-Term US Fundraising Numbers May Not Help Nonprofits Predict Much

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Within the next few weeks, many fundraisers in the country will be poring over the 2017 numbers from Giving USA — as will I. However, does obsessing about the national numbers really help much with a particular nonprofit’s fundraising capacity? The Giving USA annual study, which NPQ will cover in a webinar, is one of many studies that most good fundraisers look at during the year to get a sense of giving trends.

I was reminded, however, of the need not to concentrate too much on such numbers this last week when looking at the latest data from the Fundraising Effectiveness Project (FEP), whose 2018 First Quarter Report, they say, “shows some early warning signs for charities and giving.”

The project reports that almost every metric it examined in comparison to the first quarter of last year shows some decline.

Important Fact: The one category that did not follow that trend included gifts of $250 or less.

They report:

Key metrics in the study include the total number of donors (down 6.3 percent compared to first quarter 2017); total revenue (down 2.4 percent); and overall donor retention rate (the percentage of donors who continue to give to the same organization from one year to the next, down 4.6 percent). The number of new donors fell significantly (down 12 percent), as did the number of newly retained donors (new donors last year who have made a second gift this year, down 18 percent).

The same decline occurred in 2017…until a rousing fourth quarter saved the day. Was this a save unique to a year when the charitable giving deduction was significantly changed? Perhaps, but Elizabeth Boris, founding director of the Center on Nonprofits and Philanthropy at the Urban Institute, cautions that declines in giving in the early part of the year do not necessarily translate to decreased giving overall. It may be that the rush on giving in the last quarter of 2017 — in part an attempt to avoid changed tax incentives — temporarily exhausted the pocketbooks and the charitable attention of higher-level givers.

The new federal tax law, passed late last year, significantly changed giving incentives, which may have been a key factor in the extraordinary level of giving that occurred in the last quarter of 2017 (a 47 percent increase for donors donating $1,000 or more compared to the last quarter of 2016).

Some of that frenzy of end-of-year giving went into donor-advised funds, too, and we don’t know what the patterns of payout on those funds will be just yet.

This brings us to the danger of watching such numbers too closely. In the end, it may actually be more useful to monitor the state of the overall economy, which is provably connected to giving patterns, and the public discourse.

The question of popular relevance, for instance, may be far more predictive than any general numbers. Last week, we covered the story of Alzheimer’s Research UK, which has recently told the public that effective treatments for dementia may be in reach over the next few years. Given the greying of the population, this could not be more motivating on a highly personal level to donors. As a result, the organization finds itself exceeding all of its own very ambitious fundraising goals.

Ian Wilson, director of fundraising, says, “I think one of the main reasons the charity has grown as it has is that we’ve been very ambitious in terms of the plans that we have, mainly from a scientific perspective.” Wilson says that the organization’s starting point for the campaign was not how much money could be raised, but where they were relative to achieving their mission. “Then we asked how fundraising, communications and other aspects of the organization could underpin that.”

CEO Hilary Evans says that all of their planning was organized around the achievement of a specific goal, one that’s important to growing numbers of people all around the world. “Dementia is the leading cause of death in the UK and, increasingly, across the world,” she says. “There’s been chronic underfunding of dementia research and we haven’t really seen some of the success that has been seen in other, parallel diseases. So, we’ve positioned our strategy towards trying to find a disease-modifying treatment.”

Of course, it’s not that people are captivated by disease-related nonprofits as a category; in fact, that appears not to be the case, judging from the current state of the American Cancer Society and the March of Dimes. Instead, what’s valued may be the currency and immediacy of the issue in the population being addressed. This, then, speaks to our ability to make others care deeply and see their donations performing as effective agents of their consciences and social intentions.

Long story short, there are surely some hints for our future practice in the numbers we see in national reports of fundraising trends, but we must use that information advisedly along with the rest of what we know and feel in order to be effective fundraisers. In the end, your vigilance is probably better spent on doing something about what we already recognize as a problem — namely, retention; communicating with existing donors to keep that bond fresh, and with the community at large about the issues that you work on and their important role in helping you do so.

Originally published at nonprofitquarterly.org on June 4, 2018.