Fundraising Red Flags From First Quarter Of Slow Giving

All but one of the fundraising metric 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 today.

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.

While it is too early to conclusively state what the exact impact of the new tax law was on giving, it is very possible that the higher levels of giving in the fourth quarter of 2017 created a sense of donor fatigue and led to lower-than-usual levels in the first quarter of 2018, according to the report’s authors.

The latest data shows a continuing trend of fewer donors giving more money. With the number of donors down more than 6 percent, but giving revenue decreasing by just 2.4 percent, the charitable sector continues to see fewer, typically wealthier donors accounting for more and more of giving totals.

“This situation simply isn’t financially sustainable for the 1.5 million organizations that make up the charitable sector,” said Mike Geiger, MBA, CPA, president and CEO of the Association of Fundraising Professionals. “Donors who give $50 – $250 annually are the mainstay of many charities that don’t have major gift programs. The slow, long-term drop in the number of these donors is jeopardizing the work and impact of many charities.”

Data from the FEP’s First Quarter 2018 Report is based on a panel of charities selected from the Growth in Giving database of 154 million transactions from 17,597 organizations and $68 billion in donations since 20015. Organizations included in the panel have raised $5,000 or more from 25 or more donors in each of the last six years. Revenue figures have been adjusted for inflation.

To download the FEP’s First Quarter 2018 Report, visit www.afpfep.org