The Year-End Giving Bonanza Is A Myth
I figure there’s no time like the start of the New Year to begin dishing out some heresy.
There’s an assumption among most fundraisers that the best charitable giving season is October, November and December — the so-called Year-End period.
The assumption is based on the belief that donors are in a giving mood and they engage in all types of holiday gifting. And that, in the U.S. at least, donors want to make gifts they can deduct on their upcoming tax returns.
Not so. The facts simply do not support this myth and the assumptions behind it. Rob Mitchell, the CEO of the fundraising forecasting service, The Atlas of Giving, believes it’s ‘time to stick a fork in the year-end giving myth.”
And that’s exactly what he’s done in a thought-provoking piece published right before Christmas. You can read it right here.
Here are the key takeaways from Rob’s piece based on his review of giving data going back to 1968 and continuing through November 2014:
- Fact is that our perception that year-end giving is more robust is based on “observed tradition”. In reality there is only “a slight increase” during this period, not a dramatic one. And, in some years, the 4th quarter is not even as good as other times of the year.
- This non-factual approach, what Rob calls ‘observed tradition’ or what the Agitator calls ‘tribal wisdom’, leads to thousands of nonprofits filling mailboxes, airwaves and the Internet with very aggressive solicitation activities.
- The result? This flurry of year-end asking is taking place at the very time when competition is most intense. “Most nonprofits would find that they get a better return investing in solicitation activities at times other than year-end.” [Emphasis added.]
It comes as no surprise to us that far too many fundraisers simply copy plans from one year to the next without questioning the facts and assumptions behind those plans.
Here, according to Rob, are some of the reasons organizations keep doing the same year-end things over and over based not on fact, but ‘tradition’.
- The fall gala is held the third Saturday in October because that is when it has always been held — not because that’s when the giving climate will be the most favorable.
- Mail drops occur on a predetermined schedule that has never been based on forecasted charitable economic conditions.
- Nonprofits are afraid to change the dates because it might skew comparisons to previous years.
- As for the issue of tax deductions, fewer than 30% of Americans itemize and claim a charitable deduction. And many of those donors make gifts at other times of the year. Of the 10 largest gifts made in 2014, none was made in the 4th quarter.
Rob also points out that many large nonprofits and charitable sectors experience their biggest giving at times of the year other than year-end. For example:
- Most gifts to higher education are made during April, May and
June each year. - America’s largest health charity, the American Cancer Society,
receives its biggest lift in giving during the 2nd quarter when its
Relay for Life fundraising events are taking place nationwide.
And, of course major events and economic conditions also play a large role in the timing of gifts. Year ending giving plummeted in 2001 following 9/11. Similarly, the recession-plagued 2008 year-end was terrible compared with giving in the previous 9 months.
Of course many readers will point out that online giving — especially in
December — spikes dramatically. And with many organizations overall giving might also rise in the final months of the year. This is true, but remember, it’s only a tiny fraction of overall giving across all channels.
Among the questions we have here at The Agitator:
- Why don’t more organizations investigate and challenge the timing of their appeals schedule instead of just copying it from one year to the next?
- Why don’t more organizations take advantage of the new and inexpensive forecasting technologies like that offered by the Atlas of Giving to plan their solicitations when the timing is optimal?
- Why are so many nonprofits swimming in the Year-End Sea of Sameness?
Do you think the presumed year-end charitable giving bonus is fact or myth?
Roger
14 responses to “The Year-End Giving Bonanza Is A Myth”
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It seems to me that Mitchell’s article is mixing apples and oranges. Of course gala giving (a large proportion of non-major-gifts giving) is not highest in the holiday season – you can’t get people’s attention the closer it gets to the holidays. Likewise major gifts, which are less likely to come in in November/December when donors’ attention is focused closer to home. No-one has been saying that 4Q is hands-down better for benefits or major donor commitments (no fork needed here!). And those are such a large proportion of overall giving, especially when you count in colleges and universities – so much so as to make this comparison meaningless in terms of year-end appeals.
From our vantage point on the ground advising nonprofits in New York City, there is definitely a time and place for year-end appeals (both snail and e) – although saturation, from #GivingTuesday on, is definitely an issue. It would be interesting to see a comparison of June appeals and December appeals, say, but throwing in all contributed income skews the picture such as to be interesting academically but too muddied to be useful practically.
There are cultural differences. In Ireland Christmas IS a bonanza but it differs based on the kind of charity. Because we’re a homeless charity Christmas is huge for us. Our off-Christmas appeals to Current Donors have a 14-18% RR/€80-110 Avg Gft. But our Christmas appeal has a 42-48% RR/€135-155 Avg Gft. We do not increase our mail drops in Nov/Dec so a culture of Christmas giving really is the driver.
Most of our €2K – €20K gifts come in December too.
The issue of an overcrowded market is valid when you’re looking at Acquisition of new donors. Our ACQ campaigns work as well off-Xmas as they do year-end. And the type of charity really comes into play. Human services and children’s charities tend to do much better around Christmas than causes such as education and conservation.
The context for my comments is the Irish market. Because of a strong religious tradition Christmas is a far bigger deal here than in the US or UK. Donors get no tax deduction for their donation so that doesn’t play into our year-end except for corporates who write it off as a business expense.
I would posit that the tradition of Christmas giving varies regionally in the US. Local and regional charities are best placed to understand and take advantage of these traditions and may well see more of a year-end lift than a national charity.
Wow are you tackling tradition! I’m not sure I agree with his point of view.
I DO agree with the idea that nonprofits are too locked into the same old way of doing things, including the same old schedule. Don’t get me started!
I also agree that most donors are not necessarily motivated by the tax deduction at year-end.
But the research I’ve seen from Network for Good says that 1/3 of annual giving comes in the month of December. This research is quoted widely. I sure hope it’s correct! I just googled it and tried to find the original research online and could not.
Any Agitator readers have the data?
I wrote on the myth of year-end generosity yesterday on my blog, Generous Matters. I found Blackbaud as the source of the 1/3 of annual giving coming in the last quarter of the year, which isn’t that surprising considering the flood of appeals in the mailboxes of generous people. What would happen if organizations were as committed to asking year round? It’s my hunch that giving would shoot through the ceiling.
Rebekah brings up a good point: if we see more donations, is it because we’re asking more at the end of the year? And if so, wouldn’t it make more sense just to ask more throughout the year, where as the Roger points out, there’s less competition?
And then there’s factoring in each organization’s unique annual calendar. And history. When I worked for a parks and events organization, you might have guessed that summertime – when people were making full use of the parks – would be the best. But because before my tenure, the only real solicitation happened at year-end, the majority of donors gave at that time of year. So was it the best time to ask them (because that’s when they gave?) or did they give because that’s when they’d always been asked? I began to turn that around, but it takes time in the land of steady habits!
Great food for thought here, as always. Thank you!
My experience as a consultant predominately working with social service and environmental organizations is that there a significant difference in the number of responses and the average amount donated in the months of Nov/Dec when utilizing direct mail. I use the same donor centric letters to the same lists and I have proven results.
Events are very specific to the organization and usually are traditional and should not be a part of this specific conversation about the efficacy of holiday campaigns.
It may be true that only 30% itemize their donations but those are the target demographic that I seek especially for acquisition in the month of December for my clients.
Thanks as usual for the agitation!
Gail and Rebekah,
There is simply no way that 1/3 of all US giving occurs in December. The Atlas of Giving has giving data by month going back to 1968 and it clearly shows the ‘solicitation effect’ in most years – but not all. (think 9/11/01 and 2008). Our data shows that Q4 giving in 2012 was actually less that Q3 giving that year. 2013 was a good year for Q4 gifts but not strikingly so when you consider the trajectory that giving increased during the other 3 quarters.
Economic factors are the principal drivers of giving. When unemployment is high, organizations that rely on many small gifts from individuals (Churches and large direct response driven charities) don’t do well. Conversely, when stock and real estate prices are high, organizations that rely on major gifts and campaigns do well (Universities and Donor Advised Funds). People can’t give what they don’t have whether it is assets or discretionary income.
The next most important driver of giving is solicitation. An overwhelming majority of donors do not give until they are asked. Timing of solicitations is a significant factor during a giving year. There is usually a Q4 bump simply because there is so much asking being done at that time.
As for the Network for Good / Blackbaud Index, the way that the Blackbaud Index is calculated is skewing their information about December giving. Their index is heavily weighted toward Blackbaud nonprofit clients – especially those who concentrate much of their solicitation in online methods. It is significantly underrepresented in the largest two giving sectors: Churches (34% of all giving) and Colleges and Universities (17% of total giving). The Index also does not account for Donor Advised Fund giving. It is also skewed toward larger organizations that can afford Blackbaud products and services. This leaves out hundreds of thousands of medium and small sized organizations. Blackbaud is sampling only 29,000 nonprofits out of a total pool of 1.4 million charities and churches.
The bottom line is that organizations that are nimble enough to focus their solicitations at times that are forecast to be better will do better – especially if their is not much competition from other nonprofits at that time.
Mal Warwick was once asked, “When is the best time of year for a direct mail appeal?” He said, “This month. If you ask me next month, my answer will be the same: ‘This month.'” His point was that the best time to mail is when you have something to say and you’re ready to mail and your constituency is receptive, all factors more important than the calendar. I would add only that the giving forecast should be favorable when you ask.
None of what Rob is reporting should be at all surprising. His three main points (though not stated exactly this way or this explicitly) are:
1) The overall charitable sector does not raise that much more money in the 4th quarter than any other quarter.
2) If one breaks down the overall sector into sub-sectors that story can and does change with some sub-sectors (e.g. education, health charities if we include event dollars) raising no more or even less in Q4 and others having that be, in fact, their biggest quarter.
3) Regardless of which quarter or time of year is biggest, there are both macroeconomic factors (largely ignored by the sector in making fundraising decisions, which is truly Rob’s main point, I believe) and factors entirely under our control – i.e. when the heck we ask for money – that matter far more than any one quarter, including the 4th, being inherently “better”.
If you raise more money in Q4 it is largely because you are asking more in Q4. By extension, you are spending a lot more. One of the key questions posed by this fact is whether that ROI (which Rob can’t answer because he doesn’t have access to the cost/spend data) for your big 4th quarter looks attractive relative to other time periods and by extension, if you should re-think your allocation and spend to shift money away from over saturated, diminishing return time periods to growth/upside periods.
First-movers will get first mover advantage in doing so but as Roger points out, the slavish adherence to last year’s spreadsheet will prevent this for all but the most forward thinking (or desperate).
We fundraisers could certainly achieve more balance in our lives around the holidays if we shifted some of the fourth quarter effort into other times of the year. I’m all for that!
A few comments on a topic that I’ve spent a lot of time working on, writing, and speaking about over the years…
December Giving: Rob and I are in complete agreement that the Network for Good stat that 1/3 of giving happens in December isn’t accurate. It may be true that 1/3 of their processing/dollars happen that month, but that does not mean it’s statistically representative of the entire nonprofit sector. This is like the stat that humans only use 10% of their brain or that we eat 8 spiders a year during our sleep. It gets repeated so much that people assume it’s really true without seeing the data.
Q4 Giving: Yes, in both 2012 and 2013, the Blackbaud Index data found that a little over 30% of total giving to the nonprofits in the data set happened in the last 3 months of the year. Remember that both Hurricane Sandy (2012) and Typhoon Haiyan (2013) happened in Q4. That helps explain why for those years, Q4 giving was slightly more. As I recall from 2010, we saw a similar shift to Q1 online giving after the Haiti earthquake.
Blackbaud Index: Just a few corrections to Rob’s comments. The Blackbaud Index is weighted based on Giving USA’s estimates of where giving goes so that we don’t over-represent or under-represent any particular sub-sector. Based on the Giving USA report for 2013 data that is: Religion (31%), Education (16%), Human Services (12%), Health (10%) and so on through the sub-sectors that we report on monthly. Since 2010, we’ve been reporting monthly on large, medium, and small nonprofits in the US as a completely free resource. As of November 2014, we’re now analyzing $16 billion in real charitable giving data from more than 4,400 nonprofits. There are actually more medium and small nonprofits in the data set than large ones. Chuck Longfield created and oversees the Blackbaud Index methodology. I think his credibility and reputation in the sector over the past few decades is very solid.
Focus is Everything: As others have mentioned, if you focus on raising money in December, then you’re going to raise money in December. If you focus in June for end-of-fiscal-year, then you’ll raise money in June. If your big peer to peer fundraising event is in September, then you’ll raise money in September. This has 0% to do with the calendar and 100% to do with focus.
End of Year is a Trap: A few years ago, I wrote about the end of year giving trap (http://npengage.com/nonprofit-fundraising/the-year-end-online-fundraising-trap/) and I think the self-cancelling prediction problem has gotten worse. Procrastination is not a strategy and the reality is that the most successful fundraising programs aren’t waiting until December to make or break the year. The very largest gifts aren’t happening then either. For the past few years, I’ve declined tons of media requests for giving data during the month of December because I don’t want to feed the problem. I wish others would do the same.
Sustainers are the Key: Most of this entire debate about when giving happens goes away if more nonprofits in the US focused on sustainers. Much of the rest of the world already understands this. But there are signs of hope in the data.The giving distribution for US Environment and Animal Welfare organizations is much more even because so many of these nonprofits have shifted to monthly giving programs. And yet far too many orgs resist changing because of the short-term revenue drop. In exchange for maintaining the status quo, they have to deal with poor acquisition rates and dropping donor retention. Balanced fundraising is the way to go, but it takes courage and leadership.
A group of us read this last week and had a lively discussion; in fact we still are today! Admittedly, we are all pretty much focused on working with organizations on their digital efforts in Canada and the US. We decided to recap our discussion here http://npengage.com/nonprofit-fundraising/is-end-of-year-fundraising-really-a-myth/.
Though there were lots of points being made, the one that we spent the most time discussing was the ‘chicken or the egg’. What comes first: donors giving because they feel generous/inspired around the holidays or donors giving because they were asked? Either way, organizations need to ask more often and in a timely, thoughtful and strategic way. Not just because “it’s that time of year”.
You know, it’s funny how one word can make a big difference. By ignoring one word in the title of the blog – the meaning changes entirely.
I did not say that year-end giving was a myth. What I said was that the Year-end Charitable Giving BONANZA is a myth. It is true and we’ve got 46 years of monthly giving data to prove it.
Of course there is a rise in Q4 giving… in most years – but not all. And even when there is an increase, it is not a dramatic one when compared with the 9 other months of the year. There is no BONANZA. A lift? Yes, usually. A Bonanza? Definitely not unless all you are measuring is online giving.
We are looking at the entire charitable giving economy – not just a certain sized NPO or certain sectors, or certain methods of giving, or certain sources.
Danielle is correct. Organizations need to rely on good data to reach outside their comfort zone of tradition and test new strategic solicitation techniques and timing.
I strongly disagree with much of this article, if you isolate cash gifts from committed givers Nov and Dec income is multiples of other months, and if you look at RoI and latent income (what would come in if the Fundraising team all went home for Nov/Dec) then year end is by far the biggest income for the organisation I work for.
It’s absolutely true in my nonprofit that December isn’t the biggest month of the year – August and March are, based on major donor giving and a friends-asking-friends event that we hold.
That said, when you compare, say, the results from our summer appeal with our year-end appeal, the latter wins hands-down – we receive more than triple what the summer appeal does in December. So while adding appeals throughout the year is a great idea, December remains the highest priority month.