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Welcome to the May issue of Fundraising Talks. As we move forward in 2023, innovative approaches to discover and engage donors will continue to play a critical role in prospect research and fundraising. The challenges that lie ahead in 2023 can be mitigated by understanding trends from the past years. A document published by the World Economic Forum in May 2023 says that chief economists are divided on the likelihood of a global recession. Philanthropy in higher education is operating in a constantly changing economic landscape and there is now a greater need to have the right tools and strategies to adapt to any environment.
Have you seen the new report by the Association of Fundraising Professionals (AFP)? The Fundraising Effectiveness Project (FEP) was created in 2006 by AFP and the Center on Nonprofits and Philanthropy at the Urban Institute to perform research on fundraising effectiveness. It includes metrics such as donor retention and acquisition rates and number of donors and dollar amounts raised by participating nonprofits. The FEP reports are released quarterly. Most recently, the FEP Quarter 4 (Q4) report from April 2023 provides the following insights about fundraising performance:
- There was a sharp decline in donor participation in 2022. Decline of donor participation began in 2012 and was down by 10 percent in 2022. Giving also decreased in Q4 in 2022 during the year-end giving season. 2022 marked the second consecutive year with a significant decrease in donor participation.
- When looking at donors by donor size (which includes groups at different giving levels) 83.1 percent consist of those contributing less than $500. Approximately 90 percent of the decrease in donors is due to loss of donors that are in a giving level of below $500.
- 15 percent fewer gave $100 or less at the end of 2022, compared to end of 2021. Also, individual giving at the level of $101 to $500 saw a decline at the end of 2022.
- The overall donor retention rate was 42.6 percent in 2022, which was the lowest rate on record. Many donors who were acquired in 2021 did not contribute in 2022. Donors who gave in the past and not in 2021 grew 2.8 percent.
- When looking at donors by donation count, the number of one-time donors dropped the most, which also influenced the decline in overall donor participation.
Even though Q4 FEP reports some challenges in areas such as donor participation and dollars raised and retention, we believe that these numbers can be improved. An article by the Chronicle of Philanthropy suggests improving communication and fundraising strategies for smaller-level donors to engage them throughout the year and encourage them to give multiple times a year.
Communication strategies should include ways to report back to donors about the impact of their gifts and express gratitude to donors at different giving levels. We wish you continued success in your fundraising efforts. As always, please feel free to reach out to us with questions, comments, or any assistance with fundraising research!
Best Regards,
Sapna and USM Advancement Research Team
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