Charities Experienced Yet Another First-Half Drop in Giving in 2019

Will Giving Recover in Latter Six Months As It Has in Previous Years?

Data from the Fundraising Effectiveness Project (FEP) has again revealed significant decreases in charitable giving and other fundraising metrics in the first six months of the year, making the latter half of 2019 even more critical than usual for charities.

The FEP’s Second Quarter Fundraising Report shows that every metric it measures about giving has decreased in the first half of 2019 compared to the first half of 2018. Most critically, overall revenue from charitable gifts is down 7.3 percent, while the overall number of donors is down 5.8 percent. Revenue from gifts of $1,000 or more are down 8.2 percent, while mid-range gifts, from $250 to $999, have fallen 3.5 percent

“What’s so alarming is that this trend has continued now for several years, and in fact has gotten worse and worse every year,” said Erik J. Daubert, MBA, ACFRE, chair of the Growth in Giving Initiative/Fundraising Effectiveness Project Work Group. “To borrow a sports analogy, we’re moving the goalposts farther back each year, and charities are having to depend significantly more on major gifts at the end of the year to cross the goal line. That worked in 2017 when we saw an extraordinary level of major gifts in the fourth quarter, likely due to the comprehensive tax law changes. But last year, major gifts never came close to that level, leading to very flat giving.”

Decrease in Giving in 2019?

Members of the FEP are concerned that a slowing economy and talk of a recession may lead to a precipitous drop in giving in 2019 if the traditional major gift bump at the end of the year fails to materialize. In addition, with the doubling of the standard deduction from the 2017 tax law, some donors are “bundling” their gifts—that is, giving more in one year to reach the charitable deduction threshold, and then reducing gifts the following year. That trend could exacerbate the potential drop in giving and create even more uncertainty for recipient organizations.  

“We are not saying that the sky is falling, but reliance on year-end major gifts may be unsustainable,” said Jay Love, chief relationship officer and co-founder at Bloomerang, one of the three data providers for the Growth in Giving Database. “It may not be a perfect storm for giving, but with a global trade war, fluctuating stock market and lagging economy, it certainly could be a very bad storm.”

Donor Retention

A key aspect of the FEP is measuring donor retention, as it’s much less expensive for charities to retain existing donors than it is to continue to find new donors. The overall donor retention rate, that is the percentage of donors who give one year and then give again the next, is 25.8 percent, down almost one percent from the same time last year.

“The Fundraising Effectiveness Project was originally created to improve donor retention, and we believe that if charities focused their efforts on retention, giving would improve dramatically,” said Jeff Gordy, president at NEONCRM, also a data provider for the Growth in Giving Database. “The FEP website—https://afpglobal.org/fep—contains a number of tools to help charities understand their retention levels by different types of donors and identify where charities should invest their fundraising dollars to achieve better results. I strongly encourage all charities to use the tools, including our Fundraising Fitness Test.”

The only good news—or the metric that is doing least poorly—is recaptured donors, down just 1.1 percent from the first half of 2018. Recaptured donors are donors who stopped giving in 2018 but have given a gift in the first half of this year.

“It’s a great first step if charities are focusing on retention and trying to re-engage donors who have stopped giving,” said Daubert. “Such donors clearly have an interest in the cause, as they’ve given before, and could potentially be loyal, long-term supporters.”

About the Report

Data from the FEP’s 2019 Second Quarter Fundraising Report is based on a panel of 4,456 charities raising more than $4.7 billion in 2018. Organizations included in the panel for the quarterly reports 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 2019 Second Quarter Fundraising Report and other quarterly reports since 2017, and to learn about other tools to help measure fundraising effectiveness, please visit https://afpglobal.org/fep.

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The Fundraising Effectiveness Project was created in 2006 through the collaboration of the Association of Fundraising Professionals and the Urban Institute. The Growth in Giving database, with more than 161 million donation transactions, is continuously updated by leading fundraising software thought leaders (in alphabetical order) Bloomerang, DonorPerfect, and NeonCRM.  In addition, Softrek contributes data on an annual basis. Additional partners include the Philanthropic Services to Institutions, Seventh Day Adventist, the YMCA of the USA, DonorTrends, and DataLake. 

The quarterly FEP reports are intended to provide a snapshot of giving behavior in the US in real time.  Representative of most nonprofit sectors in most US states, it is meant as a companion study in addition to other research, including the long established Giving USA Report issued each June which measures all philanthropy, in all sectors, across the United States.

For more information, including how to have your fundraising software provider participate in the FEP, please visit https://afpglobal.org/fep.

* * *

The Fundraising Effectiveness Project was created in 2006 through the collaboration of the Association of Fundraising Professionals and the Urban Institute. The Growth in Giving database, with more than 161 million donation transactions, is continuously updated by leading fundraising software thought leaders (in alphabetical order) Bloomerang, DonorPerfect, and NeonCRM.  In addition, Softrek contributes data on an annual basis. Additional partners include the Philanthropic Services to Institutions, Seventh Day Adventist, the YMCA of the USA, DonorTrends, and DataLake. 

The quarterly FEP reports are intended to provide a snapshot of giving behavior in the US in real time.  Representative of most nonprofit sectors in most US states, it is meant as a companion study in addition to other research, including the long established Giving USA Report issued each June which measures all philanthropy, in all sectors, across the United States.

For more information, including how to have your fundraising software provider participate in the FEP, please visit https://afpglobal.org/fep.