Report: Net On $100 In Giving Is Just $5

May 2, 2017       Paul Clolery       (0)       0

SAN FRANCISCO — It appears that donors gave 3 percent more during 2016 than in 2015 but that doesn’t mean it was easy. Data from more than 10,000 nonprofits that collectively raised $9.1 billion during 2016 shows getting $100 cost $95.

That’s just a 5 percent margin. What’s worse is the donor retention rate was just 45 percent.

The 2017 Fundraising Effectiveness Project (FEP) includes the collaboration of the Association of Fundraising Professionals and the Urban Institute. The report summarizes data provided by donor software firms: Bloomerang, DonorPerfect, and NeonCRM. Additional partners and data providers include the 7th Day Adventists, DataLake, DonorTrends, eTapestry, ResultsPlus, and ClearViewCRM. The data were then cleansed to remove abnormalities, for example, any organization with fewer than 25 donors, or organizations that did not have any donors in 2015 or 2016. The final data set contained 10,829 nonprofits.

The data in this 10th annual report were released here during the annual international conference of the Association of Fundraising Professionals (AFP).

Participating organizations raised $9.129 billion during 2016 compared to $8.862 billion in 2015 for an overall rate of growth in giving of 3 percent. The average gift was $419 in 2016 compared to $400 in 2015, a 4.75-percent gain.

Gains of $4.893 billion in gifts generated from new, upgraded current and previously lapsed donors were offset by losses of $4.625 billion through reduced gifts and lapsed donors. While there was a positive $267 million net gain in giving, every $100 gained in 2016 was offset by $95 in losses through gift attrition, the data show.

Participating organizations had 8.91 million donors contributing in 2016 compared to 8.86 million donors contributing in 2015 for an overall rate of growth in donors of 0.6 percent (49,421).

The data show 4.882 million in new and previously lapsed donors were offset by losses of 4.832 million in lapsed donors. This means every 100 donors gained in 2016 was offset by 99 lost donors through attrition.

The largest growth in gift dollars/donors was from new gifts/donors, and the pattern was most pronounced in the organizations with the highest growth in giving ratios.

The greatest losses in gift dollars came from lapsed new gifts, particularly in the organizations with the highest growth-in-giving ratios. The greatest losses in donors came from lapsed new donors in all growth-in-giving categories. The average donor retention rate in 2016 was 45 percent; -0.5 percent change from 2015. The gift or dollar retention rate was 48 percent, no change from in 2015.

During the past 10 years, donor and gift or dollar retention rates have consistently been weak — averaging less than 50 percent, according to the data.

The annual Fundraising Effectiveness Survey, launched in November 2006, collects fundraising data from nonprofits beginning with data for 2004-2005. The Fundraising Effectiveness Survey enables participating groups to measure and compare their fundraising gain and loss ratios to those of similar organizations. Participants can use these industry data, which AFP provides for free, to make better-informed, growth-oriented budget decisions to boost donor revenue.

The survey’s backbone has been the cooperation and support of the members of the AFP Donor Software Group which collectively serve more than 50,000 nonprofit clients.

The FEP project has developed two downloadable Excel-based templates that fundraisers can use to produce their own Growth-in-Giving reports, enabling them to measure their gain/loss performance over time and against the statistics in the appendices of the annual FEP reports.

According to Erik Daubert, chair of the Fundraising Effectiveness Project, while the overall growth in giving of 3 percent is positive, there is a concern regarding the millions of donors who do not repeat their giving. “The fact that nonprofit organizations are losing 55 percent of their donors from one year to another is not a sustainable strategy. If nonprofits were a business where the majority of customers do not return, the business would quickly be out of business,” he said.

Small nonprofits are really struggling. Organizations with less than $100,000 in contribution income declined 10.4 percent from 2015 to 2016. Meanwhile, nonprofits with more than $500,000 in contributions increased 8.6 percent in the same time period.

Jason Lee, interim CEO and president of AFP, said that “tracking actual nonprofit transactions collectively is a relatively new trend. While similar data has been available in the for-profit world for years, analyzing donation history from thousands of nonprofits has finally created benchmarks that nonprofits can use to compare themselves to their peers. Nonprofits can now make better decisions based on this big data analysis, which helps all nonprofits raise more money they need to execute their missions.”

The Fundraising Effectiveness Project includes the collaboration of the Association of Fundraising Professionals and the Urban Institute. The Growth in Giving database, with more than 110 million donation transactions, is continuously updated by fundraising software firms Bloomerang, DonorPerfect, and NeonCRM. Additional partners include the 7th Day Adventists, the YMCA of America, DonorTrends, DataLake, and Softrek.

For more information and how to have your fundraising software provider participate, visit www.afpfep.org.

More information on the 2017 study, a free summary report and information regarding other tools to help measure effectiveness are available at www.afpfep.org.

You may also like: