No Cruise Control in Fundraising

Just weeks ago, Giving USA 2019 was released, providing the estimates for philanthropy for the year 2018. The report shows a flattening of charitable giving in real dollars with an increase of just 0.7 percent, and adjusted for inflation, a 1.7 percent decline.

In digging a little deeper, the report cited a 1.1 percent decrease in individual giving in current dollars and a 3.4 percent decline when adjusted for inflation. Overall, individual giving dropped below 70 percent of the total amount given for the first time ever. It came in at 68 percent compared to 70 percent in 2017.

It’s this stat – the drop in individual giving – that got my attention. It mirrors a study by the Lilly Family School of Philanthropy that showed the participation rate of household giving has dropped to 56 percent from a high of 68 percent in 2002.

First, some observations.

When looking at one year of data, it certainly doesn’t mean there’s a trend. But there has been a steady decline in giving by individuals. For example, in 2010, giving by individuals represented 75 percent of overall giving. In 2019, individuals accounted for 68 percent of giving, a drop of 7 basis points, or a 9 percent decrease. During this same period, giving by foundations grew as a percentage of the whole from 13 percent to 18 percent, a 38 percent increase.

There are a number of factors that could have impacted individual giving. One impact, for instance, could have been the passing of the Tax Cut and Jobs Act at the end of 2017. In the aftermath of that there was a surge of giving that could represent donors pulling their giving forward into 2017, negatively impacting 2018 giving. Or the dramatic drop in the stock market at the end of 2018 could have had a negative impact on those who preferred to give stock rather than cash.

Regardless of the cause or causes, the one thing that hit me is that there’s no such thing as cruise control when it comes to fundraising. There are forces at work that are always going to negatively impact charitable giving. And nonprofits must take full responsibility for gaining and engaging donors in such a way that they will continue to support the organization.

One clear sign that this intentionality isn’t happening as it should be are the findings of the Fundraising Effectiveness Project’s Q4 2018 report. It showed a continued decline in the donor retention rate (now at 44.5 percent year-over-year), and a continued decline in the new donor retention rate, which is now at 20.2 percent – an all-time low.

So what’s the cure? Allow me four recommendations.

• Organizations must understand that when an individual makes their first gift to the organization, it is an indication of interest, not commitment.

Think about a dating relationship. Rarely is there life-long commitment coming out of a first date! No, it takes intentional and proactive engagement to develop the relationship. And you must take responsibility for the relationship. It’s not the donor’s responsibility. It’s yours.

• You must be willing to commit the resources and energy to engage the first-time donor.

Just like you invested in acquiring the donor, now you must invest in moving that donor into a deeper relationship with the goal of long-term, ongoing support.

• You must commit to a fully integrated cultivation strategy that inspires donors to engage with, and continue to support, your organization.

This not only means regular communication throughout the year, but communication that’s served up through all channels (mail, website, emails, social). No matter how the consumer chooses to connect with you, they need to be able to hear the same message through all channels.

• You must make online giving as easy as possible.

The consumer, your donor, is increasingly used to making purchases and other financial transactions online with little to no friction. That needs to be true of your organization as well. And this need will only increase, as our latest research shows 37 percent of donors prefer to give online in response to direct mail compared to 32 percent of donors preferring to respond through the mail. The scale is definitely tipping to online transactions.

Nope. There’s no such thing as cruise control in fundraising; only the hard work of proactively building relationships with those who are investing in your organization – from their first gift through what could be a lifetime of support.

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