Nonprofits Lost Donors, Half Squeezed Out Financial Gain

February 4, 2019       The NonProfit Times      

Slightly more than half of the Association of Fundraising Professionals (AFP) members who responded to a poll said that they raised more money during 2018 than 2017. Those respondents also reported fewer donors, which might be an ominous sign for later this month when the major donation processing firms release results.

And, those 384 AFP members said 28 percent raised the same amount while 18 percent reported raising less. AFP’s 2018 Year-End Fundraising Survey results showed 78 percent of respondents raised the same or more money in the fourth quarter of 2018 compared to the fourth quarter of 2017.

Some 91 percent of respondents said that tax code changes at the end of 2017 either had no impact or negatively impacted giving during 2018.

“When we’ve asked similar questions in other questionnaires, such as the Nonprofit Research Collaborative’s surveys, we typically see 60 — 65 percent of raising more money in a strong year — that’s cause for concern,” Mike Geiger, MBA, CPA, president and CEO of AFP said via a statement. “On the other hand, many organizations did raise more money, and respondents pointed to some ways to find success in their helpful comments.”

When respondents were asked what the most influential factor on their fundraising was in 2018, most identified issues that were very specific to their organizations, such as staffing levels or new fundraising campaigns. “What this shows is that your own fundraising, and what happens at your organization, is the most important factor in finding fundraising success,” Geiger said. “The economy, tax changes, the government shutdowns, other external factors, they do have an effect. That said, it’s what we decide to do, or don’t do, that has the greatest impact on reaching our fundraising goals.”

Respondents were mixed on their feelings about the impact of the economy on their fundraising. Approximately one-third (36 percent) reported the economy had a positive impact on their fundraising, while a similar percentage (35 percent) indicated it had no or very little impact. A smaller portion (29 percent) thought the economy had a negative impact on their development efforts.

Many respondents reported fewer donors in 2018, but those who gave typically gave more, according to AFP. Several remarked on seeing fewer gifts and much less donor activity in the fourth quarter of the year as compared with previous years. “We received distinctly fewer gifts in December compared to normal,” one respondent told AFP. “This may be the combined effect of the tax changes and the stock market/economic news in December. The growth we achieved was mainly due to our launch of a new initiative.”

The survey also asked about the impact of the comprehensive tax changes signed into law in December 2017, which, most significantly, doubled the standard deduction. Approximately 54 percent of respondents said the tax changes had little or no impact on their fundraising, though 37 percent said the changes had a negative impact. A small number (9 percent) reported the tax changes having a positive impact on giving to their organization.

In general, respondents did not see the tax changes having much impact on donors either. An overwhelming majority (73 percent) reported that very few or no donors expressed confusion or uncertainty about the tax changes. An even higher proportion (81 percent) indicated that very few or no donors expressed plans to delay giving until 2019 or use techniques like “bundling” to take advantage of the itemized charitable deduction. “Bundling” refers to donors giving every other year or every three years to accumulate sufficient gift levels to give to a charity and take advantage of the itemized charitable deduction.

Almost two thirds (64 percent) of respondents expect to raise more funds in 2019 than in 2018, compared to 23 percent who expect to raise about the same and 13 percent who expect to raise less funds.
In describing their outlook on the coming year, some respondents believed that the full impact of the tax law changes would not be felt until 2019.

“There’s still a lot to unpack regarding 2018 fundraising trends. With the impact of the economy, tax law changes, and many variables beyond what was covered in this survey, the use of donor-advised funds is also expanding exponentially, while the total number of people making philanthropic gifts continues to decline,” said Martha Schumacher, CFRE, ACFRE, MInstF (AD), board chair of AFP. “In 2018, as is true with every other year, fundraising revenue varied from organization to organization for a wide variety of reasons.”