Target Analysis Group yesterday released the fourth quarter results from the their Quarterly Index of National Fundraising Performance.

The good news is that the post-tsunami and post-hurricane revenue declines that dominated most of last year have come to an end. The bad news in Helen Flannery's and Rob Harris' analysis is the revelation of a longer-term trend marking a general decrease in donor populations.

In 2005 and 2006 a pair of significant natural disasters had a profound effect on national charitable giving. The Indian Ocean tsunami of December 2004 and the U.S. Gulf Coast hurricanes in the fall of 2005 generated unprecedented non-profit revenue.

In 2006, after the immediate effects of the tsunami and hurricanes on giving subsided, the Index revenue and donor numbers declined substantially. As expected, declines were particularly severe for the three sectors that had received the most disaster-related giving, but showed up to some extent for most other industry sectors as well. The entire index had generally negative trends across all key measures in the first three quarters of 2006 as organizations experienced a correction from the disaster-related spike back to more typical giving levels.

In the fourth quarter of 2006, for the first time in over a year, median revenue growth for the index was again positive. As a result, revenue for the entire year of 2006 grew a median 0.7% over 2005. The authors note: “This is an encouraging sign and is an indication that donors have returned to their pre-disaster giving patterns.”

BUT…although revenue appears to be back on track, “donor numbers have nevertheless continued to decline” according to the Report. Median donor counts are down 2.8% from 2004 to 2006, and have fallen a cumulative 1.4% over the past five years.

Why? Helen and Rob postulate that this “appears to be due not only to declines in new donor acquisition, which is down 6.7% over the last two years, but also to declines in both first-year and multi-year retention rates.”

So far, most organizations have been able to compensate for these donor declines with increases in revenue per donor, enough to keep revenue growth ahead of inflation, but the Report warns that at some point these increases alone may not sustain overall donor growth.

“Non-profits appear to be in a period of relatively normal revenue growth right now,” says Rob Harris, the co-author and Vice President of Analytic Products at Target Analysis Group. “But it will be important to monitor donor growth rates because continuing declines could jeopardize revenue in the long term.”

For a complete summary of key findings, go to http://www.targetanalysis.com/ and stay tuned to The Agitator for more on the key issues of donor acquisiton and donor loyalty and retention.