November 14, 2018
 
Nonprofits Gain in Donations, But Struggle to Retain Donors

September 4, 2018 — If the experience of Massachusetts nonprofits reflects national trends, the supporters who stick with them are increasing the amount they donate, but those organizations, especially smaller ones, are struggling to retain donors.

Overall donations to charities in the U.S. increased by 2% in 2017 while the number of donors increased by 0.7%, according to the Fundraising Effectiveness Survey Report, a product of the Fundraising Effectiveness Project (FEP) and the Growth in Giving database.

According to the report, the average gift amount crept forward, a 1% increase from $1,024 in 2016 to $1,037 in 2017. However, nonprofits with less than $100,000 in contribution income declined 8.2% from 2016 to 2017. Meanwhile nonprofits with more than $500,000 in contributions increased 9% in the same time.

The report also found that the donor retention rate increased slightly to 45.5%.

The donor retention rate—the percentage of donors who gave in 2016 and again in 2017 to the same organization—has hovered in the mid-40th percentile for the past decade, underscoring, according to FEP, how difficult it is for nonprofits to keep donations flowing from their supporters.

“While the overall growth in giving of 2% is positive, the millions of donors who do not repeat their giving is very concerning,” said Erik Daubert, chair of the FEP. “The fact that nonprofit organizations are losing 54.5% of their donors from one year to another is not a sustainable strategy.”

Daubert also noted how and why the FEP’s findings are different from other sources of data on the health of the U.S. philanthropic sector: “The FEP’s database looks at more than 13,500 organizations and $68 billion in contributions—actual dollars given to charities providing service—and does not include entities like donor-advised funds or complex algorithms to determine overall giving. The database includes a broad representation of many different subsectors and size of charitable organizations, making it an accurate reflection of what’s happening in philanthropy and fundraising.”

Lori Overmyer, chair of the Association of Fundraising Professionals Research Council noted that every $100 gained in 2017 was offset by $96 in losses through gift attrition and that every 100 donors gained in 2017 was offset by 99 lost donors through attrition.

She said, "The FEP encourages charities to delve into their own data and provides tools and templates for organizations to use in analyzing their new, lost, lapsed and recaptured donors."

“What we’re seeing in general is textbook fundraising—larger organizations faring better than smaller ones,” said Steve Birnbaum, vice president of SofTrek Corporation, a contributing data partner to the FEP. “There are always exceptions, but larger charities—with more available resources to direct towards fundraising—will typically do better than small ones.”

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