Revenue Per Donor Up In 2004

June 1, 2005       Don McNamara      

Response to the Asian tsunami helped boost fundraising in 2004 to $1.2 billion for 40 national charities tracked for industry benchmarking by Target Analysis Group, Cambridge, Mass.

The money raised represented a 4.1 percent increase in median revenue per donor. Higher median revenue per donor was driven by higher average gifts across all donor segments, not by higher gift frequency, according to results of Target’s Index of National Fundraising Performance for 2004.

According to John Mastrobattista, vice president, marketing for Target Analysis Group, the findings are based on data analysis of actual donor transactions from high-volume gift sources, such as mail, telemarketing and the Internet. Target evaluated giving patterns across 40 organizations, 28 million donors and 48 million gifts.

“The Asian tsunami tragedy prompted an unprecedented volume of Web gifts to our participating international relief organizations during the final days of 2004 that continued well into 2005,” said Mastrobattista. “Some of those gifts were posted in 2004 and are no doubt responsible for a strong performance for that sector last year.” Target Analysis is still collecting data for the first quarter of 2005 and plans to report those findings in July, he said.

Although overall revenue increased, there was a decrease of 0.5 percent in median donor counts for the year. Target Analysis considers this figure to be statistically negligible, he said.

Mastrobattista explained that medians are the middle values in a ranked order of numbers. The Index uses this statistical practice to measure trends because it minimizes distortion caused by the wide range of organizations’ file size or extreme changes at a few organizations.

The Index findings show that median revenue trends for donor, health and international relief sectors were up strongly; median changes for membership, advocacy and environmental sectors were flat; and the animal welfare sector posted a median decline that offset most of the previous year’s gains.

The year’s median trends for donor counts were more varied than revenue. All sectors, except international relief, were within +/- 5 percent of 2003 levels. A modest increase in the health sector and environmental medians offset declines from 2003. The advocacy sector was flat after a significant 2003 increase.

Overall media retention rates decreased slightly in 2004 after modest gains in 2003. Health, international relief, donor and premium showed increases, but advocacy, animal welfare, environmental and membership had slight-to-modest decreases.

Retention rate growth among organizations that promote premiums outpaced traditional organizations, but the median 2004 retention rate of 51.7 percent for organizations using premiums still trailed the traditional sector median of 55.7 percent.

Reactivation rates showed another year of decline with a median decrease of 4.4 percent overall. Only the health and premium sectors had slight increases. Reactivation rates and donor counts are based on donors who gave between 1999 and 2002, did not give in 2003 and gave again in 2004.

“Once again, Americans demonstrated a willingness to respond to tragedy and disaster, as indicated by a 16 percent median growth in new donors to the international relief sector,” Mastrobattista said.

The sector did have trouble re-engaging lapsed donors, however. The health sector was another that was able to reverse a revenue decline from 2003.

For the purposes of this survey, Target Analysis excluded payments greater than $5,000, soft credits and matching gift payments. It included revenue raised by direct mail, the Web, telemarketing, events and other sources.

Gifts or donors are defined as new, retained or reactivated according to relative gift dates rather than organization-specific business rules or source codes. Retention rates for quarterly analysis are calculated by dividing the number of donors giving in the current quarter who also gave during the previous 12 months by the total number of donors who gave in the previous 12 months.

In terms of organization types, membership organizations typically reference anniversary dates or emphasize annual renewals, benefits, privileges, discounts or member cards. Donor organizations have “revolving” appeals on a monthly or frequent periodic basis without regard to membership or annual renewal cycle.

Premium sector participants include those that acquire all donors by front premiums (premium), those that use no front-end premiums in acquisition (traditional), and those whose acquisition combines front-end and traditional offers (hybrid).

The next installment of the Index will compare the first quarter of 2005 with the first quarter of 2004. It is expected that those findings will reflect the effects of January-March giving associated with the tsunami.