A 50-50 Proposition: It’s Donor Age And Retention

July 14, 2016       Mark Hrywna      

When nonprofit board members yell about wanting younger donors, Carol Rhine agrees. “Yes, you want 55-year-olds.”

Rhine, principal fundraising analyst for Target Analytics, shared industry trends and insights during a session today at the Bridge To Integrated Marketing & Fundraising Conference, sponsored by the Association of Fundraising Professionals Washington, D.C., chapter and Direct Marketing Association of Washington D.C. Almost 2,000 fundraising and marketing professionals converged yesterday at the Gaylord National Hotel and Convention Center in National Harbor, Md. The conference runs through Friday.

Most Americans become donors when they reach age 50. Younger people give money but they’re more likely to contribute to a friend’s 5K run or something like the Ice Bucket Challenge, according to Rhine. “People don’t tend to become thoughtful donors until they turn 50,” she said. That’s a result of some combination of their children becoming adults, reaching their peak earning years, and starting to look at retirement and what’s important in their lives.

Citing assorted studies and surveys by Target Analystics, Blackbaud, Giving USA and the United States Postal Service (USPS), Rhine painted a picture of return to pre-recession giving levels within some areas of the nonprofit sector amid declining donor levels during the past decade, and the economic factors that affect giving.

“The recession hit much harder than we thought,” Rhine said, citing Giving USA estimates that overall giving was down 14 percent from 2007-2009. Giving has not increased along with recent growth in disposable personal income, which is a result of falling fuel prices.

“We have seen mostly a recovery from the recession but we’re really not back to 2007. We’re sort of even with where 2007 was,” Rhine said. “If you look underneath the hood, it’s really foundation giving that grew; people didn’t give more money,” she said. And, $3.3 billion came from people giving gifts of $100 million or more.

“It’s the same headline we’ve had since at least 2010: More money from fewer people,” Rhine said. The biggest revenue loss has been from lapsed, multi-year donors and the greatest loss in donors has come from lapsed new donors.

Retention rates have been consistently weak, averaging below 50 percent. Nonprofits are acquiring too many donors who aren’t really attached to the organization, Rhine said. A retention rate of closer to 70 percent is what’s made monthly giving so popular and successful in the U.S.

The health subsector – not so much healthcare but disease organizations – has been in a big long decline in terms of revenue and donors. “If you don’t work in the health sector why does it matter to you? Because they have the big files, they feed the direct mail market,” Rhine said. Some organizations have seen their donor files drop by half. “It decimates the direct mail universes to lose that many donors,” she said.

Average mail volume has seen big declines, particularly in the cities. “For you national fundraisers, most of your donors live in cities,” Rhine said. People use the mail less but that doesn’t mean it’s not an important channel, it’s just not the channel in which people pay for things, she said. Who still uses mail? It’s people older than 55 who are college graduates. Older folks are still much more likely to receive bills in the mail but they go online to pay them.