We continue our series on fundraising fundamentals. We wrote about building a campaign gift chart in February, building fundraising goals in March, and our 12 campaign beliefs in April.
The Fundraising Effectiveness Project 2023 year-end data was released last week during the AFP ICON conference in Toronto, and the data is sobering.
As the press release states, “the growing challenge for American nonprofits: a near-universal decline in fundraising metrics, including dollars raised, donor counts, and retention when compared to 2022.”
There are fewer donors giving fewer dollars and fewer are renewing their support.
The most generous donors, those giving $50,000 or more, had the greatest decrease in giving. Additionally, “small organizations performed the best in terms of dollars raised, remaining flat or slightly positive, with the largest organizations seeing the greatest decrease in fundraising.”
Achieving fundraising goals, which are often unrealistic, is hard on a good day. Knowing this data means development professionals must be strategic and pragmatic at the same time.
Strategic: We often tell clients, “Don’t let efficiency trump strategy,” which means don’t send a Dear Friend letter because it’s faster than mail merging or don’t rely on the auto-email tax acknowledgment from your CRM as the means to thank donors. We understand the need for efficiency, especially when you are short staffed, but efficiency does not always equate with effectiveness.
The strategy must be about relationships, not transactions. When efficiencies drive the work, we end up creating the very thing we fear: less support. It’s not feasible to raise more money from donors who only hear transactional messages from your organization. When that happens, donors feel like an ATM, and they give less or stop giving all together.
Work with your organizational leadership – staff and board – to determine how best to retain current donors and re-engage lapsed donors. With a national repeat donor retention rate of 58.2% and a first-time donor retention rate of only 18.5%, there are hundreds and thousands of donors who wrote you a check recently but are no longer supporting your mission. Focus on them first. The ROI will be huge.
Pragmatic: No fill-the-gap fundraising goals. Build a budget based on actual donor data rather than aspirational stretch goals, which we call “rainbow and unicorn budgets” because they are as hopeful as a rainbow and as fictitious as a unicorn. My session at AFP ICON last week was on this very topic.
Too many organizations are not analyzing data to determine fundraising goals, they are just filling a gap or are coming up with a generic percentage increase over last year.
That’s a problem. It’s exhausting for the development professionals who work their tails off to hit an unrealistic number and it puts the organization in a precarious position of being in the red. Accurate fundraising projections should drive the operating budget, which means organizations may have to trim expenses rather than inflating goals to meet expenses.
That may be easier said than done but use our spreadsheet and the Fundraising Effectiveness Project data to have critical conversations with leadership. The spreadsheet that we shared at AFP last week is linked here and the Fundraising Effectiveness Project spreadsheets to help you calculate your “fundraising fitness test” are linked here.
Use the FEP data to drive your annual fundraising plan.
How does your donor data stack up against the national data? If you increased donor retention by 10%, how much more would you raise? If you increased average gift size because of relationship building, how much more would you raise?
There is an urgency to these questions because your programs and services are critical to the people and places your mission serves.
When we dive deep into donor data, as our AFP colleagues have done, we gain tremendous insights into the health of donor relationships and the effectiveness of strategies.
Let us know how this helps your organization fulfill its mission.
