One of the most important investments any nonprofit professional can make is to better understand the current state of the sector. This means understanding fundraising trends, following changes in donor behavior and evolving your appeals, communications, and meeting cadences accordingly.
Use the following four fundraising trends to review your nonprofit’s past year, adapt the insights according to your individual experience, and set a plan to weave these action items into your strategy.
How Should 2021 Make Us Feel As A Sector?
While much of the sector-wide data is still being collected and analyzed, there are some early signs that we are shifting into a new phase of pandemic-related giving behavior. There continues to be an overall rise in the number of donors giving to nonprofits as well as the total amount donated by individual givers across the entire sector. There also has been an increase in the number of new recurring donors whose small monthly gifts provide sustainable revenue and spread impact out over the course of the year.
When Neon One analyzed its own network of CRM users in 2021, we saw some encouraging numbers within the billions of dollars raised. Key highlights are:
- Year-over-year growth of 11.9% in the number of new recurring donors compared to an already stellar 2020
- Year-over-year growth of 4.64% in the total number of donors who gave $1,000 or more compared to 2020
- An average of 477 online donations annually per nonprofit
While these stats are encouraging, it’s important to view them as sector-wide trends and not get complacent in your work since the trajectory could always change. Additionally, fundraising trends are not a direct indicator of how your organization is performing, so look at the data behind these trends and take it back to compare against your own performance.
*This analysis has been drawn from a multi-year examination of the Fundraising Effectiveness Project’s (FEP) data set, with 2021 data expected to continue in the same direction.
1. Increased Donor Pool
While a Lilly School of Philanthropy report came out in 2021 that shows a continued decline in household giving in the United States, the picture beneath the surface is much more complicated. GivingTuesday’s analysis saw that for the first time in a few years that donor acquisition trends have gone back up and that more Americans were donating to charities.
There are more donors giving smaller amounts to causes that have some meaning to them, either directly or indirectly. New donor retention (the percentage of donors acquired in 2020 who gave again in 2021) was at an all-time high in the first quarter and remained strong through the first half of the year. Retention overall is a top concern, but these bright spots provide hope.
Action 1: How Your Organization Can Find More Donors
More donors means more opportunities. We’ve curated some resources to help your organization acquire new donors and build strong relationships with them.
2. Retreating From Fundraising In A Crisis Hurts More Than Helps
A concerning trend has been the number of organizations failing to meet basic reporting minimums compared to previous years. Last year, FEP saw organizations leave the dataset within the year for the first time. The chart above shows the distribution of organizations by size for two categories of organizations: those which have not reported 2021 data (orange) and all 2021 organizations (light blue). The dark blue bars show the extent to which the proportions are equal.
FEP data shows 10% of organizations not yet reporting Q2 data, and over 7% still not reporting Q1 data. There are expectations that up to 4% of organizations may not report in 2021 at all, given that 4% of 2020 organizations still haven’t reported Q4 2020 results. The biggest impact has been with organizations that have revenue under $100,000 or below.
Organizational drop out within the FEP database may be due to a number of factors. For example, an organization might have switched CRM providers, or stopped using one altogether, and thus goes missing from the Growth in Giving Database.
The initial analysis by the project’s data scientists would suggest that a significant number of organizations ceased or reduced their fundraising operations due to the COVID pandemic.
Action 2: Create a Crisis Fundraising Plan
Pandemic giving trends clearly show that donor fatigue is a myth, with donors coming back to support nonprofits if asked. One of the worst decisions your organization can make when faced with a crisis is to stop fundraising. Your team can prepare for the “unprecedented” with a few key planning efforts.
3. More Small Dollar Donors
Closely tied to the expansion of the overall donor pool is the increase in the total number of donations under $500. These donations are typically the entry point for new donors, so this is a good time to flesh out your donor nurture efforts. Improve the chances of retaining these new donors by having your team ready to welcome them with open arms. Create a welcome email series to introduce new donors to your programs, share impact stories, highlight volunteer opportunities, and demonstrate what their support means to your organization.
This is also an opportunity to inform new supporters about your recurring giving program. Focus on the tangible impact that sustainable donations have on your mission and highlight the benefits of being a recurring donor.
Action 3: Give Big Thanks for Small Dollar Donations
Align your team around the value of small dollar donations and maximize each and every interaction your nonprofit has with a supporter. As mentioned above, this is a great segment of donors to invite to become recurring givers, but even if they don’t opt-in for monthly gifts, ensure your team gives them a rewarding experience with your organization.
- Create or optimize your recurring giving program
- Show appreciation for all donors.
4. Donor Retention Continues To Dip
Consistently decreasing donor retention, with especially high attrition among new donors, is one of the most concerning downward fundraising trends we’re seeing in the sector. 2021 has shown some potential reversal of this multi-year decline, but organizations need to stay focused on retention of both new and existing donors in order to properly project their revenue.
As donors are provided a wider range of ways to support social causes, nonprofits need to showcase the unique value they bring in making an impact on new and old donors alike. Otherwise, these donors will turn toward other avenues of social impact (e.g. socially responsible eCommerce) to make their passion known.
Action 4: How Can Your Organization Reverse Its Own Retention Crisis?
The likelihood that your organization will lose 80.8% of your new donors is extremely high and overall retention is not much better. So how can you adjust your fundraising strategy to help keep donors committed to your cause?
These are big questions to think about and with any trend, your organization should review what is most immediately important and impactful to your own operations. There is cautious optimism that 2022 will be a turning point for the better in our sector and by focusing on the basics around donor engagement, you will find success in your own work.
Donors: Understanding The Future of Individual Giving
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