Red Flags On First Quarter NPO Revenue

All but one of the fundraising metrics tracked by the Fundraising Effectiveness Project declined for the first three months of 2018, sending up warning signs of giving weakness.

The only exception was an increase was in donors giving $250 or less, according to data in the report released last week.

Key metrics in The Fundraising Effectiveness Project’s (FEP) First Quarter 2018 Report 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 (down 4.6 percent). The number of new donors dropped 12 percent, as did the number of newly-retained donors. Those are new donors last year who have made a second gift in 2018, down 18 percent.

“The reason we’re so concerned with these first quarter numbers for 2018 is because of what we saw in 2017,” said Jon Biedermann, vice president of DonorPerfect CRM Fundraising Software. “For the first three quarters of 2017, giving was way behind the pace of 2016. Only a record-breaking fourth quarter increase is why giving increased overall by the end of the year,” said Biedermann. “So far, giving is off to an even worse start in 2018, so we’re concerned about what charities may experience in their fundraising throughout the year.”

Elizabeth Boris, founding director of the Center on Nonprofits and Philanthropy at the Urban Institute, cautioned that there were two major caveats to the findings. First, previous studies by other organizations have found that a large majority of giving occurs in the final three months of the year, October through December. Declines in giving in the first quarter and beyond do not necessarily portend a year of decreased giving.

Second, the new federal tax law, passed late last year, significantly changed giving incentives and might have been a key factor in the giving that occurred in the last quarter of 2017, a 47-percent increase for donors giving $1,000 or more compared to the last quarter of 2016.