Nonprofits have not been immune to the impacts of the COVID pandemic, economic turmoil, social movements, and other unpredictable events impacting our world.
Charitable giving revenue continues to grow (4% from 2020 to 2021, according to Giving USA 2022), but so does competition. Nonprofits that add flexibility to giving methods, integrate social and digital channels into prospect and donor communication, invest in modeling and analytics, and provide a positive donor experience stand to outpace others in the years ahead.
Cyclical Donor Trends
Calendar year 2020 through 2021 Q1 was an outlier period in the history of fundraising. As opportunities for discretionary spending were limited due to the pandemic, people had more income to distribute to charitable giving. This resulted in an unique influx of revenue and new donors to many organizations and specific sub-sectors.
According to Blackbaud’s donorCentrics Index of Direct Marketing Fundraising, nonprofits on average saw a YoY growth from 2019 Q4 to 2020 Q4 in overall revenue of 11% and overall donor file size of 7%. New donors grew by an unprecedented 22%.
Compare that to 2020 Q4 through 2021 Q4, with a 8% growth in YoY revenue, but a 2% decrease in donor file size and 5% decrease in new donors. Reactivation and retention rates were also down significantly over that year. Those downward YoY trends continued into 2022 with a return to the pre-pandemic trend of fewer donors giving higher amounts.
For many years, the Consumer Confidence Index and Index of Consumer Sentiment were leading indicators of upcoming fundraising performance. If donors felt confident about the economy, they spent discretionary income and gave more money to charities.
Over the past four to five years, we have seen a significant shift in those trends. Confidence could be low, but the financial markets were soaring and distorting personal assumptions. At other times, the market was tanking, but confidence was steady. Inflation and rising interest rates are a real threat to charitable giving, resulting in a pessimistic outlook for growth in giving for the next 12 to 18 months.
The NextGen team excels at anticipating and responding in real-time to global challenges. We are well positioned to grow your donor base and increase fundraising revenue through information-driven strategy, award-winning creative, proven tactics, and innovative ideas.