Charitable giving increased dramatically during the third quarter of 2018, making up all of the year-over-year declines after a sluggish first half of the year.
For the first half of 2018, nearly every metric the Fundraising Effectiveness Project (FEP) measured was lower significantly compared to 2017, including number of donors, total revenue from giving and donor retention rates. While the same is mostly true in the third quarter, one metric improved significantly: total revenue. While total revenue was down 2.1 percent at mid-year, giving totals are now ahead 2.6 percent of 2017 figures after the third quarter.
The FEP’s “2018 Third Quarter Report” compares fundraising year-to-date in 2018 to the same time period in 2017. The information from the report is based on the Growth in Giving Database, which includes more than 18,000 organizations and $72 billion in donations since 2005.
The change is especially dramatic when comparing just the third-quarter data in 2018 to 2017 (solely revenue generated in that three-month period on a year-over year basis). It is a 14 percent increase in revenue.
Data from the FEP’s “2018 Third Quarter Report” is based on a panel of more than 4,700 charities selected from the Growth in Giving database of 161 million individual transactions, which includes more than $72 billion in donations and 18,348 organizations since 2005. Organizations included in the panel have raised $5,000 or more from 25 or more donors in each of the past six years. Revenue figures have been adjusted for inflation.
The FEP was created in 2006 and includes the collaboration of the Association of Fundraising Professionals and the Urban Institute. The Growth in Giving database, with more than 161 million donation transactions, is continuously updated with data from leading nonprofit software firms.
Revenue from major gifts ($1,000 and up) increased significantly during the third quarter. Revenue from this group in 2018 was behind year-to-date figures by 2.1 percent at mid-year. But after the third quarter, revenue from this group is up 3.1 percent. In contrast, revenue from general donors ($249 and under) and mid-level donors ($250 – $999) remains behind 2017 levels of giving.
“At this point, there’s one major reason giving is increasing, and that’s money raised from donors giving larger gifts,” said Elizabeth Boris, chair of the Growth in Giving Initiative. “We’re very pleased to see this increase after what was a very slow first half of the year for giving. However, we are concerned that we are seeing increases essentially from only one group of donors, and that the total number of donors continues to lag.”
The total numbers of donors so far in 2018 is down 4.3 percent compared to 2017. The only group of donors that has increased in terms of numbers is repeat retained donors (those that have been giving to the same organization for two years in a row), up 0.9 percent from 2017. Numbers in other groups of donors, including new donors (first time giving to an organization); new retained donors (new donors giving for a second consecutive year to the same organization); and, recaptured donors (donors who stopped giving to an organization, then resumed giving this year), continue to trail significantly behind 2017 numbers.
“What these figures show is the continuing trend of charities receiving more revenue from a smaller group of donors,” said Ben Miller, chief analytic officer, DonorTrends and secretary, Growth in Giving Initiative. “Even with the increase in Repeat Retained Donors, this trend is simply not sustainable for the long-term, especially as the number of potential donors continues to slowly shrink. Charities need to do a better job of inspiring and retaining supporters, which is one of the goals of the Growth in Giving Database and the Fundraising Effectiveness Project.”
Donor retention rates for 2018 year-to-date are also behind their 2017 figures, as well as historical averages. The first-time donor retention rate, traditionally in the 16-17 percent range, is at 14.4 percent year-to-date through the third quarter. Repeat retention rates, historically around the 45 percent, are at 43 percent in 2018 year-to-date.
For more information on the 2018 Third Quarter Report, and to download the Report and learn about other free FEP tools to help measure fundraising effectiveness, please visit www.afpfep.org.