How Effective Is Our Fundraising?
The latest stats from Giving USA might be cause for smug satisfaction.
Overall giving in the U.S. reached record highs at $373.25 billion in 2015, up 4.1% from the previous year. This amount covers giving from US-based individuals and institutions to US-based 501(c)3 nonprofit organizations. [I come from the advocacy world and would note that this amount doesn’t include giving to the many nonprofits that engage in significant lobbying activities, which is not tax-deductible.]
Since the total includes giving by individuals, foundations and corporations, it’s tough to discern whether fundraisers can actually take credit for the growth, or whether economic recovery is the stronger driver — a rising tide lifting all boats. I will grant that the growth in giving in recent years has outpaced the growth in GDP. So, has someone become more generous?
Maybe not. The more telling observation has been made by Blackbaud’s Steve MacLaughlin, as cited in this Nonprofit Times article:
“For all the talk about giving and GDP or the S&P 500, the more telling statistic is giving as a percentage of disposable personal income,” said Steve MacLaughlin, director of analytics at Blackbaud. “This has been stuck at 2 percent for many years now,” he said. With 71 percent of giving now coming from individuals that increases the importance of disposable income in charitable giving trends, he added.”
Individual giving as measured by Giving USA totaled $264.58 billion, an increase of 3.8% over the previous year, a tad below the overall trend.
While we can all be thankful that at least the trend line is positive, are fundraisers really making any headway?
Effectively, Steve raises a ‘share of wallet’ question. Are we as fundraisers getting individuals — one by one — to give more generously via the fundraising programs and pitches we deliver at them? Can we? Or are we trapped beneath some sort of 2% of disposable income ceiling?
If we were seeing an increase in the share of wallet devoted to giving, I’d be more impressed, and more prepared to credit fundraisers and fundraising.
But until then, I say ‘thank god for rising tides’.
Tom
P.S. I’ll admit I’m out of touch with giving levels as a percent of disposable income in other countries. Can our global contingent of Agitator readers enlighten me as to countries that exceed the U.S. mark of 2%?
5 responses to “How Effective Is Our Fundraising?”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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Yes, the news about philanthropy in 2015 is good, sort of. Whether that good news is due to fundraising professionals or the economy (as Tom and Steve suggest) is not entirely clear, but indicators seem to show it is the latter. That’s not exactly good news. More worrisome are the following three issues:
1. Slowing Growth Rate. The rate of philanthropic growth in 2015 was lower than in 2014. While growth is certainly terrific, we’re seeing the rate of growth slowing. With the anemic national economy, we can expect anemic growth in 2016.
2. Decline in Volunteerism. There is a correlation between volunteerism and charitable giving. Unfortunately, there’s been a 12% decline in volunteerism over the past decade. If this trend continues, it will certainly make fundraising more challenging.
3. Increased Competition. The number of charities grew by 6.0% while inflation-adjusted philanthropy grew at a rate of 4.0%. In other words, philanthropic growth is not keeping pace with the growth in the number of charities. The additional competition undoubtedly makes fundraising more challenging, at least for some charities. Growth in the nonprofit sector only works if the philanthropic pie grows to keep pace.
Again, Giving USA certainly contains some positive news. However, the report also contains plenty of issues about which we should be very concerned.
For more, please read:
https://michaelrosensays.wordpress.com/2016/06/14/happy-days-are-here-again-for-now/
Tom…
Thanks for the mention. This is a topic that I’ve spent a lot of time looking into over the past two years for a new book that I’m working on.
Yes, GDP and the S&P 500 are helpful predictors in an econometric model, like the one Giving USA uses. Charitable giving as a percentage of GDP has been stuck at about 2% for 40 years. The S&P 500 declined 0.8% in inflation-adjusted dollars between 2014 and 2015.
I began to wonder if we’re too focused on that statistic. Maybe 2% of GDP is OK. But considering that 71% of giving comes from individuals, then disposable income becomes a lot more important trend to look at in the data.
Again, since the 1970s, the percentage of disposable personal income given to charity has been about 2%. As context, about 5% is spent on entertainment.
Both new donor acquisition and existing donor numbers have been in decline for 10 years now. If not for loyal donors giving more, episodic giving to disaster relief, the mega gifts, and an increase in bequests, then giving would be down for a larger number of nonprofits.
Share of Wallet and Share of Philanthropic Giving are two important metrics that don’t get much mention in the nonprofit sector. They are metrics that are more sustainable for the long-term as opposed to being completely at the mercy of economic ups and downs.
A reporter called me about the “increased in giving” for 2015 — with the release of the Giving USA report. And I wasn’t impressed at the results. 1.9 – 2% of GDP for the last 50+ years is nothing to cheer about. In fact, I think we should be embarrassed.
I believe this is our capacity / capability (or lack thereof) of doing fundraising well. I’m not so impressed with all of us, colleagues. We have a lot of learning to do. We have a lot of “just do it, darn it!” to do. And we have lots of research to do and apply. And I’m talking academy research.
So rant on, Agitators.
In light of the 33% decrease in giving due to the economical collapse in 2007, has giving recovered?
In the planned giving world, this is what we know: Wall Street is confident, and Main Street is skittish. The #1 question in making a planned gift is, “Will I have enough money to live on?” Main Street knows the stock market is inflated and interest rates have been too low for too long. They know there has to be an adjustment!
In regards to acquisition, we constantly see that only 25% of 1st time donors are making a second gift. How are we doing?
We also know that giving by high net worth and ultra high net worth individuals screws the individual giving number.Looking at the percentage of income being given by these people is perhaps a more important proxy for overall individual giving. I have made the argument that the number of individual donors is flat or declining, and why. There are no good numbers on this. See http://copleyraff.blogspot.com/2014/08/the-long-term-trend-that-is-going.html for the argument.