Fundraising GPS: Steering On The Past Or Future? Or Both?
Fundraisers, unlike practitioners in most other sectors, generally navigate their way forward by steering through the rear view mirror.
Today, we’re offering Agitator readers two rear view mirror views … and one through-the-windshield view.
Two recent reports on 2012 US giving have just hit our desk. Plus one sophisticated forecast for 2013.
I regret to inform you that the 2013 forecast doesn’t seem all that rosy when compared to 2012. But first, the past.
Yesterday Blackbaud released its Charitable Giving Report for 2012. You can download it free here.
Key findings of the Blackbaud Report:
- In 2012 overall giving continued its slow recovery and grew approximately 2% in the year.
- Online giving grew by about 11% in 2012 compared to 2011.
- Online fundraising represented 7% of all giving in 2012, an increase from 2011.
- Small nonprofits showed the greatest increase in overall fundraising in 2012, while medium-sized organizations led in the online realm.
- All in all, giving throughout 2012 was “flat”, with Super-Storm Sandy relief efforts helping to boost year-end fundraising.
Next, a different view of 2012 and a preview of 2013 in two Reports published last week by The Atlas of Giving. You can download those reports free by clicking here.
Key findings of The Atlas of Giving 2012 Report:
- Giving to nonprofits rose 6.7% in 2012, an increase of $23.32 billion over 2011.
- Giving to environmental causes grew by 11% in 2012, more than any other portion of the US charitable economy.
- Gifts to the education sector increased by 8.8%, as did disaster-related giving, the latter fueled in large part by donations in the aftermath of Super-Storm Sandy.
- Meanwhile, giving to religion, the long dominant charitable sector, saw continued erosion of its share of the national giving pie — down to 35%. As recently as 2002, religious giving accounted for over 50% of all charitable donations.
“Overall, 2012 was a very solid year for giving,” said Rob Mitchell, CEO of The Atlas of Giving. “Robust stock market performance, an improving economy, and a few very large individual contributions were significant factors.”
So … how come Blackbaud is reporting an increase of only 2% and Atlas an increase of 6.7% for 2012 compared to 2011?
Blackbaud employs a sampling methodology weighted to larger nonprofits that raise lots of money via direct response. Some analysts I talked to feel Higher Education is underrepresented and there is no accounting for religious giving, which represents nearly 1/3 of all U.S. charitable giving. Nor, I’m told, is there inclusion of proceeds from Donor Advised Funds.
The Atlas of Giving tracks all gifts, including those to the education and religious sectors, as well as mega-gifts and contributions from Donor Advised Funds.
The manner in which each nonprofit raises money affects gift receipts. Thus, in a year like 2012 organizations that relied on large numbers of relatively small gifts from individuals were hit hardest because of high unemployment and an uncertain economic climate. And thus the principal difference between the Blackbaud and Atlas findings.
What about the future?
As we’ve noted in previous posts – here and here, the Atlas of Giving employs a series of sophisticated econometric models that are updated monthly. In the three years I’ve been tracking their forecasts they’ve been right on target: annually 97.5% accurate; for 6 months 98.9%; for 3 months 99.4% and for 1 month 99.99%.
For 2013 The Atlas giving forecast calls for only modest growth of 1.6%, one of the slowest growth rates in 50 years.
They reason:
“Expected declines in stock market returns, coupled with a 2% across the board hike in the payroll tax will hamper growth. An elimination or reduction of the charitable deduction would most certainly have an even greater negative impact on giving.
“The stock market and growing GDP is primarily what made 2012 a reasonably good year for many nonprofits. Our analysis tells us that forecasted drops in the investment markets will produce corresponding drops in giving,” says Rob Mitchell the CEO of Atlas. “At the same time, the drop in discretionary income resulting from the 2% payroll tax hike will be a factor in individual and family giving decisions.”
Again, you can read the Atlas of Giving full report, including the 2013 forecast and the 2012 data, at no charge here. And the Blackbaud 2012 Charitable Giving Report at no charge here.
What are you forecasting for 2013? Expecting to beat 1.6%?
Roger
P.S. Forecasting varies from organization to organization, region to region, so I was delighted to learn that The Atlas of Giving now makes available a Custom Giving version. For less than $1 a day you can get a windshield view of your future. Check it out here.
5 responses to “Fundraising GPS: Steering On The Past Or Future? Or Both?”
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A few points of clarification on the Charitable Giving Report.
The nearly $8 billion in giving from across 3,144 nonprofits is weighted based on Giving USA data, the gold standard in the industry. One reason we specifically did this was to create a broad-based index representative of the entire nonprofit sector.
The report contains information on 8 sectors, including Education and Faith-based organizations. Those two sectors represent almost 45% of giving in the US.
Last year, we came within 0.2% of Giving USA’s estimate for giving in 2011. Looking forward to seeing their report in June of this year.
Thanks for the clarification,
For Agitator readers who want to know more about how the methodology behind the Blackbaud Charitable Giving Report for 2012 you will find the methodology here: https://www.blackbaud.com/page.aspx?pid=1025.
My statement that the Report reflects largely direct response-oriented organizations was incorrect. That is true of the Target Index of National Fundraising Performance, but not The Blackbaud Index on which the Report is based.
According to Blackbaud the Index of Charitable Giving was actually created to be much more representative and broader than Target’s Index of National Fundraising Performance.
Consequently both the “education” and ‘religion’ sectors are included in the Charitable Giving Index and, as Steve notes are weighted based on Giving USA data.
Roger
Roger – you state that “In the three years I’ve been tracking their forecasts they’ve been right on target: annually 97.5% accurate; for 6 months 98.9%; for 3 months 99.4% and for 1 month 99.99%”.
I’m wondering if you can tell us the source of data you are using to measure this accuracy? The IRS does not publish giving information on monthly, quarterly or bi-annual basis – only for the year in aggregate. Giving USA also does not break the data apart in those increments. So, what data source do you view as producing monthly data, that is 100% accurate, such that you measure others by how close they get to it?
David,
Here is the information that you requested.
1. The Atlas of Giving is a collection of econometric models (algorithms) that were developed using 42 years of published Giving USA data. (before they changed their methodology twice in response to pressure)
25 PhD Analysts and statisticians studied more than 70 potential economic and demographic variables to determined which had a relationship or correlation to reported past giving data. The research definitively determined that there are specific factors from the economy and demographics that are related to and/or drive giving. The factors are different for each of the models, though many share relationships to specific variables. For example, for the church/religion sector, unemployment rates play a significant role. However, unemployment rates have no impact on education sector giving. Gross Domestic Product is a factor in many of the models. Even auto parts sales are involved in one of the models. The coefficients of correlation for all but one of the models are greater than 95%. All are in excess of 91%. The national total giving model has a coefficient of correlation of 99.5%.
2. Because the variable factors involved in the models are available monthly, the Atlas of Giving is able to measure the velocity and trajectory of US giving with a monthly estimate. This is what the Atlas is most interested in – a useful tool for practicioners to benchmark results and use for data based budgeting and fund raising planning.
3. Also, because the variable input factors are regularly forecast by industry experts, the Atlas of Giving is able to provide a forecast for up to 12 future months. The forecast is updated monthly. As is true with any forecast, reliability decreases as the forecast period increases. In January of 2012, the Atlas 2012 forecast that giving would total $359.8 Billion. At the end of the year, the Atlas National model calculated a total of $369.23 Billion… This is a variance of just 2.55% on the totals, more than 97.45% correct. The 2011 forecast (provided in January of 2011) was even more accurate. The accuracy of the forecast for the past 3 years has been incredibly reliable.
4. As further evidence of Atlas technology accuracy. The Atlas of Giving was called upon by an Ivy League University to build a completely customized forecasting model for their annual fund. Starting with 20 years of the actual annual fund giving data from the University, economic and demographic variables were identified that impacted giving in this specific annual fund and a new model was developed. The results of the first year were dramatically confirming. The variance from the 12 month Atlas forecast to the actual result was just 1%. The Atlas had forecast a 12 month growth rate in the fund of 9.8%. At the end of the year, the actual result was a 9.7% growth. Pretty damn compelling – but not a surprise to us.
IRS data is not particularly useful. Remember that only about 30% of American taxpayers provide an itemized return and fewer than 40% of those claim a charitable deduction. So the importance of IRS deduction data is not a quality measurement of American giving. AND, deduction data for 2012 will not be available from IRS until Spring of 2014, so there is no contemporary value.
Another important note. The Atlas was able to rebuild monthly giving history by sector, source, and state for the last 50 years. Our data set contains more than 990,000 individual cells of data. This is a treasure trove of growing research material on charitable giving in the US that we would be delighted to share with a strong research University for mining information that will make Nonprofits more efficient and effective.
Rob Mitchell
CEO
Atlas of Giving
If there is a constant in the nonprofit world, it isn’t change – it is resistance to change.
Mr. Mitchell’s elucidation on the science behind his Atlas of Giving makes clear to me two things:
First, that his approach is consistent with the manner in which private sector industry analysts gather and process information. For-profit retailers, manufacturers and service providers rely on technologies which are almost identical in nature to what Mr. Mitchell has described as driving his Atlas reports and forecasts. The adoption and application of this type of pragmatic intelligence by the nonprofit sector is long overdue.
Second, that Mr. Mitchell is correct when he points to the velocity and trajectory of giving as the salient points in any analysis which is to have real decision-making utility for the nonprofit leader or fundraising manager. Quibbling over a few percentage points (or fractions thereof) is a pastime best reserved for the academic crowd. What we need to know is what direction we are moving in and how fast.
I join Roger in giving a tip of the hat to Mr. Mitchell and the Atlas for providing a much needed departure from — and advance beyond — the status quo.