Fundraising Effectiveness Project: Giving Increases Significantly in 2020, Even as Donor Retention Rates Shrink
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The Fundraising Effectiveness Project Highlights Good News Short Term, But Retention Losses May Pose Long-Term Challenges for Many Charities
Despite concerns that the COVID-19 pandemic would depress donations to nonprofits, giving in the U.S. in 2020 increased from 2019 by 10.6%, with the overall number of donors growing by 7.3%, according to the Fundraising Effectiveness Project's 2020 Fourth Quarter Report.
Significant increases were seen at all levels of giving, with smaller gifts (less than $250) leading the way, growing by 15.3% compared to 2019. Larger gifts ($1,000 or more) increased by 10.4%, while mid-level gifts ($250 to $999) improved by 8.0%.
At the same time, donor retention, an important benchmark that tracks the percentage of donors who gave to a charity in 2019 and then gave to the same charity in 2020, dropped by 4.1%.
"American generosity remains incredibly strong," said Mike Geiger, MBA, CPA, President and CEO of the Association of Fundraising Professionals. "After the first quarter of the year, when giving dropped 6% and the impact of COVID-19 was just beginning, many of us were very fearful about how giving would fare throughout 2020—especially as events like natural disasters can often lead to dips in overall giving for charities not involved in relief efforts. However, 2020 giving has outpaced 2019 contributions ever since and ended very strongly, led by huge increases in smaller-level gifts."
The Fundraising Effectiveness Project (FEP) is a collaboration among fundraising data providers, researchers, analysts, associations and consultants to empower the sector to track and evaluate trends in giving. The FEP releases quarterly findings on those giving trends, released both via downloadable reports at www.afpfep.org and in a http://data.givingtuesday.org/fep-report.
"One factor that may have helped the increase in smaller gifts was the universal charitable deduction," said Jon Biedermann, Chair of the Fundraising Effectiveness Project and President and CEO of The Biedermann Group. "It's striking that on December 31, there was a 28% increase of $300 gifts, which is exactly the maximum amount a donor can take using the universal charitable deduction, plus small-level gifts of $250 or more increased by more than 15% throughout the year. Obviously, there's a lot to unpack, and the impact of COVID-relief efforts can't be understated, but we'll continue to examine the relationship between small gifts and the universal charitable deduction."
Increased Need Inspires New Donors to Give
While giving benchmarks increased across the board, donor data was very mixed, reflecting how the pandemic and pandemic relief efforts changed how traditional donors gave and the number of new donors who felt inspired to contribute.
The 7.3% increase in the number of donors overall was led primarily by an extraordinary 18.5% increase in new donors and a strong 13.7% increase in recaptured donors (those persons who had given previously to the charity before 2019, did not give in 2019, and then gave in 2020).
"These latest figures show the desire of everyday people to respond to the needs of their communities in a variety of extraordinary ways," said Woodrow Rosenbaum, Chief Data Officer of GivingTuesday. "The events of 2020 inspired new levels of grassroots giving. We saw an increase in people giving to organizations they hadn't given to before, which is a great opportunity for organizations to continue to engage these new supporters."
"It's telling that repeat retained donors experienced such a small drop, as these are the most loyal supporters to any charity," said Doug Schoenberg, CEO for DonorPerfect Fundraising Software. "www.afpfep.org, while a free online dashboard is available at http://data.givingtuesday.org/fep-report.
The data analysis includes giving details from 2,496 nonprofit organizations based in the U.S. as a subset of the Fundraising Effectiveness Project. The FEP's database of organizations is made up of organizations that raise between $100,000 and $10 million, so the data is not representative of larger charities such as hospitals and universities.
From the Growth in Giving database, organizations that did not have a minimum of 25 donors and $5,000 in donations in each of the previous five years were removed from the study. From the remaining organizations, the FEP randomly sampled organizations from each of the four organization sizes based on 2019 annual donations: $100,001 - $250,000; $250,001 - $1,000,000; $1,000,001 - $5,000,000; and $5,000,001 - $10,000,000, so that there was a balanced stratification reflective of IRS filers.
The Fundraising Effectiveness Project
The Fundraising Effectiveness Project publishes quarterly and annual reports that examine key fundraising metrics, serving as a benchmark for nonprofit executives, development staff and researchers. The Fundraising Effectiveness Project and the Growth in Giving database are both administered by the Association of Fundraising Professionals in collaboration with GivingTuesday.
The Growth in Giving database is the world's largest public record of donation activity, with more than 204 million donation transactions, and is continuously updated by leading fundraising software thought leaders (in alphabetical order) Bloomerang, DonorPerfect, and NeonCRM. Additional partners include the 7th Day Adventists, The Biedermann Group, DataLake Nonprofit Research, and DonorTrends (a division of EveryAction). For more information and how you or your fundraising software provider can participate, please visit www.afpfep.org.