In a seemingly breathless but not surprising headline — “Giving Plunges 6% in First Quarter, Signaling $25 Billion in Lost Revenue for Nonprofits“– the Chronicle of Philanthropy announced the release of the 2020 1st Quarter Fundraising Effectiveness Report (FEP) noting a decline in individual giving in March.

Not a pretty picture.

But, optimism  continued to rule in some parts of the sector.   As Michael Nilsen of the Association of Fundraising Professionals (AFP), home of the FEP, noted,  “I would be surprised if the 11 percent drop in March was anything that’s going to hold.”

Click here for full FEP Report

In the FEP’s press release members of the FEP steering committee noted the effects of the pandemic on March giving and were somewhat upbeat:

• Steven Shattuck of Bloomerang and a FEP, Growth in Giving steering committee member: “Unfortunately, very few nonprofits were immune to the virus. But we did find some signs of hope.  For example donations under $240 were up six percent, which is unusual and will be watched closely since recent tax changes [the CARES Act ] allow all taxpayers –including those who do not itemize–the ability to deduct their donations this year.”
• Ben Miller, secretary of the steering committee and chief analytics officer the  DonorTrends division at EveryAction, noting that while donations under $250 increased in the first quarter of 2020, mid-level gifts ($250-$999) decreased by 2.2%, and higher-level gifts ($1000 or more) decreased by 7.4%.  Remarking on the rise of small gifts Miller said, “It is incredible that these smaller donations are up that much, and it reminds us of the collective power that donors have together.
• Elizabeth Boris, chair of the steering committee reported, “The first two months of 2020 started out strong. But in March alone we saw an 11% decile in donations… “I think nonprofits took a deep breath, almost certainly a reflection of the impact of COVID 19. “

The press release notes that if the 6% loss in the 1st quarter continues for the entire year, more than $25 billion to U.S. and Canadian nonprofits will have been lost to the pandemic.

Amidst this mixture of hope and despair there are some stats in the FEP that no one should ignore. The overall number of donors dropped by 5.3%  compared to the 1st quarter of 2019…the donor retention rate–the percentage of donors who gave in the 1st quarter last year and gave again in 2020 dropped 3 points to 16.4 percent.

Finally, the FEP  takes a bright view of the future: “Despite these drops, the good news is that nonprofits have a history of rebounding and innovating during adversity, and the first quarter of the year is not indicative of how giving will fare overall during the year.”

This Agitator’s Take

I’m sure not as sanguine about “rebounding”  and “innovating” as touted in the FEP press release. But, there are all sorts of predictions out there about the future ranging from wildly optimistic to despairingly pessimistic – and almost all are based on anecdote.

At this stage trying to track and interpret the effects of the pandemic on fundraising is an exercise in Whack-a-Mole analysis.

For example,  a visit to Twitterland reveals a multitude of success stories showcasing how well it’s going for those who are actually asking for money…a review of the fundraising blogs yields mixed takes on the future, mostly upbeat…while news outlets like The New York Times report that major foundations are increasing giving and even taking on billions in debt to meet the needs of nonprofits in trouble.

The FEP and Blackbaud Institute Index [which only had giving down 0. 2% compared to FEP’s -6%] are lagging indicators and have yet to reflect the April, May and June numbers that will help us begin grasping a truer picture.

Frankly, I see things only getting worse, not because I’m a pessimist, but simply because of what I think is coming in terms of the economy and negatives for fundraising. To name just a few:

• The positive effects of the CARES Act stimulus programs is just now beginning to wear off. Until now, the middle class and hourly workers had disposable income boosted by stimulus checks and extra unemployment income from the Feds, in the case of the latter.  Savings are up for many.  That leaves money to be spent on charities like food banks, hospitals, and social change movements.  What happens when the Federal money stops flowing?  Unemployment is ticking down but lots of small businesses are also running, in part and temporarily, on Federal stimulus.
• And what happens to donors considered financially safe or even well-off on fixed income with savings and money market rates at near zero and the stock markets in flux.  We know from the 2008 recession what low interest rates do to diminish or halt giving by sustaining and single gift donors on fixed incomes. And, we’ve already seen from the FEP’s report how the market fluctuations have affected mid-level and major gift donors.
• Most of all I have no idea what the rising angst of donors caused by disease and political and economic turmoil means for the longer-term.  If you’re a political or social change fundraiser you’re rolling in dough right now.  After November I expect bleak days.

As for the sector’s ability to “innovate” its way out of the coming decline I’m also not sanguine, for these reasons:

• Despite warnings and alarm bells the sector has never recovered from the sharp decline in new donor acquisition during and after the Great Recession of 2008.  Failure to figure out how to do so finds the sector today with far fewer donors than in 2008.
• Marry failure to acquire sufficient new donors with the abysmal decline in retention rates and today’s nonprofits face a world where more charities, with far greater needs, are chasing fewer and fewer donors possessing fewer resources.
• For the past four months I’ve seen countless blogs, webinars and Tweets about the necessity for innovation.  But frankly, I haven’t seen much so far.  Hopefully, you can point me to some we can feature. For now, I’m not sold on just how much and how well we’ll be able to innovate in the months and years ahead.

Before I work myself and you into a deep depression please understand I’m raising all this to merely point out that now is not the time to revert to the status quo.  Such resumption or reversion to old practices and mindsets is unlikely to work in a world caught in a medical and economic Cuisinart.

But for now, I’m simply expressing my opinion and feelings.  Until we have more firm data I’ll take to heart the admonition of novelist and Hollywood screenwriter William Goldman when it comes to predicting future success or failure:  “Nobody knows anything.”

Roger