Last week, we did some wringing of hands, gnashing of teeth, and rending of garments about the loss of the average individual donor.  But how wringy, gnashy, and rendy should we be?  What does our future hold?

So we did what any smart person would do when working with Fundraising Effectiveness Project data: fired up Excel and asked DonorTrends’ Ben Miller for help. (Ben is the volunteer statistician/analyst for the FEP.)   Great thanks to him – all mistakes in this are mine, not his.

Our goal: Using the data and trends seen in the FEP over the years we wanted to draw a picture of what the future holds for our sector.  We did this using several scenarios.

Scenario 1: Things stay as they are in 2018

What if acquisition, retention, and reactivation rates froze at 2018 levels for the next decade?  (I’d originally started this section with a whole description of what this would look like, but it was boring, so it’s at the end for those who wish to delve.)

Sad to say, we are not acquiring and retaining at replenishment levels.  In the next three years, we’d lose eight percent of our donor files.  Over the next decade (from 2017 to 2027), we’d lose 22%.

Sadly, there’s ample precedent for this scenario. In fact, historically, it would be a good thing if the drop were only this bad.  According to Blackbaud’s donorCentrics index, the number of donors on file at the average nonprofit fell steadily from 2005 to 2015, resulting in 25% fewer donors after that decade.

We have been buoyed, as mentioned last week, by the increase in giving among the wealthy.  And, as mentioned last week, this can’t, won’t, and mustn’t last.  To lose a quarter of our files on average, then to lose another almost quarter of our files over the next decade would be a downward spiral from which it would be difficult to recover.

But this isn’t the bad scenario…

Scenario 2: We continue down our current path

What if acquisition, retention, and reactivation didn’t freeze?  What if acquisition continued to drop 7.3% per year (like 2017-18), new donor retention dropped 4.8% annually (four-year average), and repeat donor retention inched down .8% per year (ditto)?  (And, by the way, this is not the only report to catalog this trend.  Epsilon just released their 2018 Non-Profit Giving Trends report; it shows donors dropping by eight percent.)

Instead of losing 22% of our donors in a decade, we’d do it by 2021.  Over the next decade, we’d shed 57% of an average donor file.

At this point, we could see venerable organizations going the way of Sears, Blockbuster, Radio Shack, Borders, etc., among our for-profit brethren.  At that point, we would get to find out if nonprofits shutting their doors would lead to those donors going elsewhere or poisoning the ecosystem in the same way that the behavior of bad actors leading to the financial crisis harmed the good actors alike.  After all, what does a co-op or a list exchange look like as nonprofits fail?

This should be a worrying scenario for even those who buck the trend and increase files and retention.  These are uncharted waters.  There may be dragons who burn the good and the bad alike.

Scenario 3: A new path

I’m cheating here.  Hope is not a strategy nor is it a scenario.  But it’s what I have.  It’s a hope that we turn around a documented trend that is now over a decade old and threatens us all in the decade to come.

Giving of yourself to help your fellow travelers on this small blue marble, be they humans, other animals, vegetable or mineral, is a good thing.  Perhaps it’s the best thing.  In a world often framed in zero-sum, it’s something one can do that helps oneself while helping others.  Giving selflessly, receiving gratefully, and spending wisely helps one and all.

To chart a different path, we must do two things: 1) accept the problem and 2) decide that what we do is worth fighting for. In short, it’s time to launch the Donor Sustainability Movement.  More on this on Wednesday.

I’m in.  Hope you are too.

Nick

P.S. As promised, methodology is below.  Please show me where I erred; I would love to be wrong.

Methodology

Scenario one assumptions

• Number of donors: The 2018 FEP report doesn’t yet report raw numbers, so based on 2017 numbers, which found 4.8M new donors, 4.9M repeat donors, 1.2M recaptured donors, and 9.8M lapsed donors. From here, the number of lapsed donors were tripled to fit with the number of donors that were being recaptured.
• Retention rates frozen at 20.2% retention for new donors and 61% for repeat donors
• Retention of recaptured donors was halfway between new donors and repeat donors at 40.6%
• Acquisition numbers were frozen at the approximate 2018 value of 4.44M (the 2017 number less 7.26%, the drop from 2017 to 2018).
• Reactivation would continue to fall at its current rate of decline (13%), but made the generous assumption that the lapsed donor population would not age off – if you were lapsed in 2017, you would be lapsed in 2027 and joined by everyone who lapsed in between. The only concession to aging off is decreased the number by one percent per year to account for death.

Scenario two assumptions

• Same number of beginning donors
• Retention rates drop at their average rate over the past four years: 4.8% drop per year for new donors, .8% drop per year for repeat donors. Recaptured donors would continue to have a retention rate halfway between these two.
• Acquisition numbers dropped by 7.26% per year
• Reactivation rates would continue to fall at the current rate of decline, but 10% of previous year’s lapsed donors would age off instead of 1%. This is likely a more reasonable assumption