Is the sky falling on fundraising?

You’ve seen the panic. Numerous sources, including Giving USA and The Nonprofit Times show that giving in 2022 (the most recent year we have figures for) was lower than in 2021.

A year-to-year fundraising drop is uncommon. This is only the 4th time the last 40 years. Worse yet is the amount of the drop: revenue was down 10.5% (adjusted for inflation), and giving by individuals was down 13.4%.

Much of the drop in revenue is caused by unusually high donor attrition. Poor retention is a perennial problem in fundraising, but in 2022, we lost donors like never before.

We don’t have a lot of information yet about 2023, but anecdotally, this year isn’t going great either for many organizations.

Maybe the sky is falling. But I don’t think so.

I think what’s happening isn’t so much a collapse in giving as it is a regression to the mean.

That’s something that tends to happen all over the place. When something is unusual, it tends to return to normal. If you are much taller than your parents and grandparents, you kids will likely be shorter than you. Things tend to move toward “normal.”

It’s happening in fundraising: 2020 and 2021 were record-breaking years for many fundraisers. The pandemic unlocked unprecedented levels of giving. We were all living through a self-evident crisis. Nonprofits of all kinds faced existential crises.

Donors stepped up to make a difference. New donors showed up in unheard-of numbers. Many donors gave larger amounts than ever. Many of us set new personal-best results in our fundraising. Our donors gave more than ever. Many new donors poured in

Now the pandemic is “over” — at least in the psychological major crisis sense. And fundraising is getting back to normal, regressing to the mean.

The largest drops in donor retention were new and second-year donors — people who gave for the first time in 2020 and 2021. Now that the crisis is past, many of those never-before donors are returning to their typical state of not giving.

Fundraising these past few years is behaving very much like it does around “normal” disasters (like hurricanes): Giving jumps, driven both by current donors giving more and by a surge in new donors, motivated by the crisis.

Then giving drops back to normal. The difference is that instead of happening over the course of a few weeks, this spike and drop is taking years.

Should you be worried about this drop?

Maybe. Here’s how to tell how worried you should be:

Instead of just comparing 2022 and/or 2023 giving to 2020 or 2021, ignore those years. Compare current giving to 2019 or before.

Many (maybe most) organizations find that current “down” fundraising is still better than 2019 — which was a pretty good year by pre-pandemic standards. So even though giving is down, you probably kept some of those new pandemic donors, and many of your upgraded donors are staying upgraded.

So while it hurts to be down, you’re actually up, bigger picture.

If your fundraising revenue now is lower than it was in 2019, you probably should be worried. That might indicate that you have a deeper problem than regression to the mean.

If that’s the case, you should take a deep look at your fundraising data and at your messaging to see if you can discover and correct whatever is going wrong.

If I were you, and realized I needed to take a deep look at my fundraising, I’d look for expert help. Here’s where you can get it for FREE: Book a 25-minute consultation with Sean Triner of Moceanic. Sean knows his stuff, and can help you find your way forward if times are tough.


Comments

4 responses to “Is the sky falling on fundraising?”

  1. I think this is a fair assessment. We don’t need “sky is falling” narratives outright but there are a lot of indicators that we’re resetting to previous levels overall.
    The issue isn’t the macro-economic environment. The issue is small to midsized nonprofits getting squeezed out on this return to normal. The centralization of assets continues to be a big issue and that is where a major alarm should be shed.
    Fundraisers need to pay attention to three major trends that they have control over:
    1. Donors and other supporters continue to need focused effort on engagement, with an eye toward building meaningful connections across all giving types and levels. Only focusing on major gifts is a “chickens coming home to roost” situation for many organizations
    2. The continued focus on transactional gamification of online giving is distracting from the bigger picture of creating a holistic narrative regardless of how someone wants to give. The vast majority of donors, regardless of generation, income level, race/ethnicity/gender, etc. are folks who want to feel like people care about them and that isn’t going to be through throwing confetti after gift made online. Omnichannel is and will always be the way forward, so ditching direct mail is a bad idea
    3. However, there’s a lot of head in sand behavior I’m personally witnessing by experts and nonprofits alike on what exactly is happening because of disconnected databases that are leading to a ton of bad copy, bad salutations, bad emails, bad addresses, bad experiences across the board. Continued M&A activity in the nonprofit technology sector will disrupt well laid plans by fundraisers, especially if they treat the technology is the magical wand to their problems.
    These are big issues and I do think we’re entering into a genuine paradigm shift on a lot of this, but revolutions often happen in waves and we’re in the beginning stages of a transformation across the sector in every aspect of how it works. But it doesn’t mean everything is getting burned to the ground to work.

  2. I think this is a fair assessment. We don’t need “sky is falling” narratives outright but there are a lot of indicators that we’re resetting to previous levels overall.
    The issue isn’t the macro-economic environment. The issue is small to midsized nonprofits getting squeezed out on this return to normal. The centralization of assets continues to be a big issue and that is where a major alarm should be shed.
    Fundraisers need to pay attention to three major trends that they have control over:
    1. Donors and other supporters continue to need focused effort on engagement, with an eye toward building meaningful connections across all giving types and levels. Only focusing on major gifts is a “chickens coming home to roost” situation for many organizations
    2. The continued focus on transactional gamification of online giving is distracting from the bigger picture of creating a holistic narrative regardless of how someone wants to give. The vast majority of donors, regardless of generation, income level, race/ethnicity/gender, etc. are folks who want to feel like people care about them and that isn’t going to be through throwing confetti after gift made online. Omnichannel is and will always be the way forward, so ditching direct mail is a bad idea
    3. However, there’s a lot of head in sand behavior I’m personally witnessing by experts and nonprofits alike on what exactly is happening because of disconnected databases that are leading to a ton of bad copy, bad salutations, bad emails, bad addresses, bad experiences across the board. Continued M&A activity in the nonprofit technology sector will disrupt well laid plans by fundraisers, especially if they treat the technology is the magical wand to their problems.
    These are big issues and I do think we’re entering into a genuine paradigm shift on a lot of this, but revolutions often happen in waves and we’re in the beginning stages of a transformation across the sector in every aspect of how it works. But it doesn’t mean everything is getting burned to the ground to work.

  3. Philip Tome Avatar
    Philip Tome

    Solid advice, Jeff (as usual).
    We’re seeing the same in the Canadian context. My experience is largely with the social services sector; we’re definitely seeing a regression to the mean. More than half of our donor file audits this year show just that!
    That said, for two years we’ve been trumpeting the need to invest in programs that improve retention; build out middle donor programs; and more clearly enable major gift fundraisers to seek transformational gifts.
    Tim’s response reminded me that we are seeing a MAJOR demographic shift in Canada. There are fewer and fewer donors (that is to say: people who report charitable donations on their tax returns). Giving to the younger set looks different (e.g. Apple pay gifts in response to their fav Twitch personality running a livestream fundraiser). Their habits are being established now.

  4. Philip Tome Avatar
    Philip Tome

    Solid advice, Jeff (as usual).
    We’re seeing the same in the Canadian context. My experience is largely with the social services sector; we’re definitely seeing a regression to the mean. More than half of our donor file audits this year show just that!
    That said, for two years we’ve been trumpeting the need to invest in programs that improve retention; build out middle donor programs; and more clearly enable major gift fundraisers to seek transformational gifts.
    Tim’s response reminded me that we are seeing a MAJOR demographic shift in Canada. There are fewer and fewer donors (that is to say: people who report charitable donations on their tax returns). Giving to the younger set looks different (e.g. Apple pay gifts in response to their fav Twitch personality running a livestream fundraiser). Their habits are being established now.

Leave a Reply

What this blog is about

The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

Blog policies

Subscribe

Get new posts by email:

About the blogger

Jeff BrooksJeff Brooks has been serving the nonprofit community for more than 35 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com. More.


Archives

Blogroll

Categories


Search the blog

The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

Recent Comments

About the blogger

Jeff Brooks has been serving the nonprofit community for more than 30 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com.

Blog Roll

someone’s blog