Podcast | Is 2024 a “Make or Break” Year for Nonprofits?

The Fundraising Effectiveness Project’s latest Quarterly Fundraising Report™ is out, and we’re digging in! In this episode of Fundraising Today, VP of Client Strategy Kristin Priest breaks down the key findings that compare overall philanthropic giving trends in 2022 and 2023. 

The report tracks macro trends in donors, dollars, and retention, then looks deeper at each category. The leading takeaway is that all three show a continued decline, but there is a glimmer of good news. For instance, in 2022, donors were down 10%; but in 2023, they’re only down about 3.4%. 

Join us as we discuss what the report means for fundraisers as we prep for the second half of 2024. Will we continue to see decreases, or is this the year that things start to stabilize? Kristin also shares five strategies fundraisers can use to acquire, engage, and retain donors. 

Want to hear more? Listen to the full episode:

Connect with Kristin Priest

Read the Blog: Why 2024 May Be a “Make or Break” Year for Nonprofits

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Transcription

Host: Welcome, everyone, to another episode of the Go Beyond Fundraising podcast. Today, I’m joined by my colleague Kristin Priest. Kristin, welcome back to the show. 

Kristin Priest: Thank you so much. Good to be here. 

Host: If this is someone’s first time listening or watching, I’d love to get a little bit of your background and your expertise in philanthropy and fundraising before we get into today’s topic about the Fundraising Effectiveness Project’s latest data. 

Kristin Priest: I’ve been in fundraising a little over 20 years now. I’m one of those folks that kind of stumbled into it right out of college, fell in love with it, and it became my life’s passion and work. I’ve worked in mid- and major gifts as well as some work in the annual fund. Worked as the fundraising practitioner up until about 10, 12 years ago when I joined our team and got to work on the other side of that table, coming alongside organizations. And I get to sit on the Insights Team. So, looking at things like reports and trends, understanding how the industry is changing and evolving, how donor preferences are shaping, and how as organizations we can come alongside donors and meet them where they’re at. 

Host: Awesome. Again, so glad to have you today. Our topic today is discussing a recent report that came out from the Fundraising Effectiveness Project, and I learned right before we hit record today that you were part of the founding of FEP. So, yeah, tell us a little bit more about that. 

Kristin Priest: It’s a part of right place, right time. I was completing my master’s in philanthropic studies at Indiana University as this idea was germinating among some researchers and thought leaders in the fundraising profession around what are those key metrics. Are there easy ways that we can get quick snapshots that will let us understand some of the movement that’s happening within fundraising? And perhaps go look at how we say the data that is actionable versus just interesting. And I love some really interesting data. But when it comes down to it, how do we identify and quickly track and monitor some of those effective measurements? 

And so, through my research, I got to be a part of the Fundraising Effectiveness Project and then the Growth in Giving Initiative for about the first five years as we kind of took this crazy idea and tapped into a lot of really smart people. And now 15 years later, we’ve got a marker that’s one of the leading ones every quarter in our industry. I’m so proud and excited of what we did and now where it’s gone. 

Host: Let’s dive right into this latest report. Could you provide a brief overview of the key findings from this latest FEP report, which compared the overall philanthropic giving trends of 2022 to the most recent complete year, 2023? 

Kristin Priest: So, FEP tracks three key metrics: donors, dollars, and retention. And then within each one of those, (it) looks at some additional analysis. Things like by giving level, frequency, where they’re at in your lifecycle. 

So, looking at those macro trends — the donors, dollars, and retention — we do see a continuation unfortunately of some of the decrease that we saw in 2022. Donors are down 3.4%, retention down 2.5, and dollars (are) down 2.8. So, we’re seeing that continued decrease, but a piece that’s important to remember is that we’re beginning to see some of that stabilization. In ’22, for example, donors were down 10%, whereas now they’re only down about 3.4. 

So, it’s still a concerning trend, this slow and steady decline that we need to find a way to turn. But it is a significant stabilization versus ’22 when we saw lots of unevenness. 

Host: Yes, we don’t have the overall chart of total amount given every year in front of us to look at, but something that we’ve been hearing for the last few years is when we’re seeing these declines, that it’s important to look back at the pre-2020, pre-COVID giving levels to see if these declines are truly declines or if they are back to giving as usual. 

Now that we’re entering 2024 and it’s been three years since that kind of peak of giving in 2021, I’m starting to wonder if this is a continued stabilization, or are we actually seeing real decreases here? 

Kristin Priest: I think correction is a really important and accurate term to use. For many organizations, total donors, total dollars, they’re still well ahead of 2019, pre-COVID, pre-pandemic boom. And I think 2024 for many is going to be that pivotal year where it is simply, are we stabilizing at this new elevated plateau or baseline? Or is it now a continued hump where we can see some continued decrease? So, 2024 I think for a lot of organizations is going to be that telling marker around is it the continued slow-and-steady decline, or is this simply now we’re living in this new reality.  

Host: I definitely am going to be interested to see some of the Q1 reports that have come out around giving. And also, as we’re recording this at the end of April — hard to believe but tracking very quickly toward the mid-year, which is a little bit terrifying. So, we’ll have to see what some of those trend reports are looking like in June as well. 

So, let’s look at new donors. The report found that despite overall declines, new donor counts actually increased in 2023. So, what do you think drove this uptick, and how can organizations leverage this trend to keep these new donors around and continue to drive new donor growth in 2024? 

Kristin Priest: The 2.3% uptick in new donors was really one of the bright spots in the FEP report as I looked at it. If we look really closely at when that surge in new donors occurred, October/November is when we saw that big uptick, which likely indicates a significant portion were motivated by external factors, versus what we as organizations or fundraisers did. Those factors being global conflicts, the war in the Middle East, international disasters. When those happen on a really large scale, that’s when we see these big bulges occurring in new donor trends. 

But I think in addition to that, in 2023, organizations were being much more mindful about reaching out to more diverse potentials. Everything from our creative, so the copy and imagery we used in our acquisition pieces, to communication channels, where we tried to reach these new donors. I think that was critical in, over the course of the year, drawing more new donors to the organization. And moving forward, I think making sure that they feel seen and engaged in meaningful ways will be critical in maintaining and keeping them moving forward so they don’t fall into that lost universe. 

Host: Let’s also look at … one of the cool things about the FEP report is that it also breaks down giving at different, what they call “donor size” or “giving level.” So, they classify donors as micro-donors and then small donors, mid-size, major, and then supersize. So, they have a really nice spectrum of giving, and they break it down at those levels. 

Looking at those donors at the far-right side of the spectrum, the supersize donor, these people are giving hundreds of thousands of dollars to charity, and this group is where the FEP report observed a notable decrease in the number of supersize donors in 2023. What do you think is contributing to this decline, and what are some tactics that organizations can use to retain these high-level donors? 

Kristin Priest: This surprised me a bit, if I’m being real honest. Late ’22 was a tough time economically. We saw lots of unevenness for the first time in the stock market. And this was reflected in some of the pulling back of those large donors. So, given the economy was relatively strong in 2023, I had hoped to see some growth in what they call their supersize donors, those giving $50,000 or more, and that didn’t happen. 

I do think we can gather a bit of insight, though, when we look at the reporting organizations, 30% of their dollars reported in the FEP report come from human service organizations. So sometimes, the type of sectors reported — I’m thinking about the mass influx of smaller donations that may have come through human services. Health and education — we know education, higher education saw a significant decrease in larger donations. So, some of that, I think, is driving this data. So, if you’re an organization working in animal rescue, “That wasn’t our experience at all. We had major donors really show up.” You may fall more in line with some of your sector-specific trends. 

But looking at the industry overall, I think some of those takeaways for me, again as I look forward, as I mentioned thinking beyond your typical donor also expands to beyond your typical best major donor. I think sometimes we create those self-fulfilling prophecies. When we say too much, “Who do our current major donors look like? Let’s go find lots more folks that look just like them.” Rather than saying, “Who are those folks that have affinity, that have giving indicators?” That, say, if we reach out to them in ways that feel authentic and meaningful to them, we may draw a more diverse major donor pool. So, I think that’s one. 

The second is, again, thinking beyond our typical major gifts fundraising. Donor advised funds have been an important piece of major giving fundraising for a long while. I think we’re going to see that expand, we need to see that expand in ’24. Especially when we’re not as confident about the economy, where it’s going to be moving. Donor advised funds can be a really great space for donors to still fulfill their pledge commitments to that other giving that they want to act on but don’t feel as confident about. 

And additionally, I’ll mention this highlights the need for us to focus on pipeline. And in particular on our mid-level donors. It’s understandable that we can get really focused on this year’s problem, finding this year’s major donors. But if we don’t have those long-term growth strategies in place, it becomes almost impossible to stop that short-term fundraising mentality with the urgency of needing those big dollars right now. And so, while it can be a tension point to, you know, “Oh man, the school year closes in three months and we’re short, so we’ve got to find four donors that can give these big dollars,” we also have to commit that timing to what I call the backbone of a good fundraising program. 

I have a special soft spot in my heart for mid-level donors. I worked for a long time as a mid-level gift officer. But looking to that audience as well for a pipeline and making some of our best long-term major gift prospects as well as our planned gift prospects. 

Host: I couldn’t agree more with that last point. We conducted a webinar with an organization that we have worked with for a long time, Lutheran Hour Ministries, and they recently reached out to a group of donors who probably fell in the mid-level. They were giving maybe a few hundred dollars a year, and they had never been approached to give more. 

And as of this recording, they’ve raised or gotten pledges of upwards of $500,000 from these folks. And they went and knocked on doors and gave them cookies and pie just to try to get their attention, and they really went after these mid-level givers with a super personalized approach. And it’s been amazing to see how effective it’s been, especially for a group of donors who unfortunately often get overlooked. 

Kristin Priest: I love that, and for mid-level donors or your major gift prospects, I call them the “surprise and delight” moments. What do those opportunities look like? It doesn’t have to have a significant cost attached to it. It can be a virtual experience; it can be a digital delivery. So, what does that look like for you? You can just create this moment for the donor to feel really special and connected and an important part of what you’re doing. 

Host: Moving on to additional financial implications, dollars donated decreased across donors of all sizes in 2023. What do you believe are some of the underlying reasons for this decrease? 

Kristin Priest: As you mentioned, it’s important to remember, even in ’22, we were on the tail end of that philanthropic boom period. During a solid economy, like we had for most of ’22, it’s easier to retain those new donors that might have come to us in ’20 or ’21, that might have joined due to a national or international event. But as we struggled with rising inflation and a less certain economic outlook, I think we saw the tail end of our pandemic donors shift. If we don’t have a really solid economic outlook, I use the term of being “in fortune” versus a charity of choice. And I think a lot of those donors that were on the far periphery of our cause drifted. It became a lot easier for them to make an argument of where else their dollars were going to go, whether that be to personal or family funding or simply doubling down on investments in those nonprofits that they felt most close to. 

I think we can also see this in the double-digit decrease of newly retained donors, meaning those donors that gave for the first time in 2022. We saw a bigger decrease in newly retained donors than we did in new donors, which, again, I think is indicating that we’re seeing a pretty aggressive drop in donors that joined for the first time in 2020 that just didn’t feel confident in coming back. And I think it’s, again, a strong argument where we need to focus on both our best donors and those effective strategies. Expanding our thinking around what a best donor looks like and how we want to engage them and how they want to engage with us. 

Some of that best effective strategy, it’s some of the tried-and-true methods. Revenue for sustainers was one of the few places where we saw an uptick. The revenue from our sustainers or those donors that tend to give through monthly giving patterns was up 2%, so it’s again underscoring our most loyal and most committed donors are showing up in bigger ways. So, how do we identify those who are most likely to become committed, to want to come closer to the organization, and invite them to experiences like sustainer, like engagement strategies that will drive them to perhaps a mid-level giving experience. 

Host: What are some things that nonprofits can do to really increase the value of sustainers? Understanding that even if someone is only giving a small amount to you every month — that repeated giving and keeping you in their budget — can be more valuable to you long term than a one-time large gift. 

Kristin Priest: And I think that’s important. We live in a subscription-based economy. I think, “Oh, I’m not a good monthly donor because I don’t really do monthly behaviors,” and then I’m slowly ticking off how many automated monthly subscriptions I have. I ran out of fingers. So, it is a behavior that we are just more and more comfortable with, especially younger generations, as we think about how we engage those folks who have sometimes seemed a little, at least for us older folks, they’re a little confusing. They don’t behave the way we think they ought to. But some of those patterns, it’s comfortable for them. 

But I think one of the pitfalls that I’ve seen some organizations fall into with monthly giving patterns is, we treat it like a set-it-and-forget-it. I can quote one of those home shopping programs. It’s not something where you can just invite them to give, they sign up, and then, “Great, we don’t have to worry about them until next year’s renewal.” It has to be a continued engagement strategy beyond the invitation and beyond the “How do we invite them to give more each month?” 

And so, how are you engaging them in meaningful ways that’s similar to our mid-level donors, more of that surprise and delight? Sometimes it means a branded monthly giving program; other times that’s not necessarily what we have to do as an organization. But how do we make sure that they continually feel valued and appreciated and understand that what they're giving is critical to the organization? Without that steady stream of support, knowing we have those loyal supporters in our corner allows us to be bold as an organization and really solve and tackle the issues that we need to. 

Host: Moving on to the all-important topic of retention. Retention is one of those tried-and-true fundraising metrics that we always want to be paying very close attention to. So, let’s dig into some of these declines we’re seeing in retention. What do you think might have caused the modest decline in metrics across various donor categories, such as dollars raised, donor counts, and those retention rates? 

Kristin Priest: There’s a couple of external factors. First, I’ll start with, we are seeing those new or crisis donors that gave in ’22, they didn’t necessarily give again. The economy means those on the fringe that we just talked about won’t necessarily give again. That can be a strong determinant for folks that don’t necessarily feel like they’re an intricate part of your organization. And the tail end of the pandemic, social justice, and other big national and international issues that we acquired in ’20 and ’21, so we saw some of that drift. 

Internally, I think we’re beginning to see a shift when we think about fundraising and the practices. I think we are seeing a shift — and we need to continue to see that shift — toward acquisition strategies, investing in stewardship, investing in patterns that will keep our donors. 

The one other piece I will call out is that, as we look at some decreases, especially in donors, sometimes I want to call out that this may not necessarily be as dire as we’re afraid it might be. One of the challenges we face in the industry is that donors are giving in ways where reporting and tracking hasn’t necessarily caught up with. So, GoFundMe, Facebook fundraisers, all those places where we might be able to track the dollars, we can’t necessarily always track every donor that was a part of that. And so, that’s a space where I always want to call out. Think about how people are giving, and how do we lean into our newer supporters, those that do want to be advocates for us, stand up on a platform and say, “In lieu of birthday gifts, please give to this organization”? 

Again, as the old curmudgeonly fundraiser, I get cranky. I’m like, “I want to know every new donor’s name and contact information.” So, how do we balance that and still enable folks that want to be fundraisers on our behalf to do that, and then leverage the same social platforms to try to get those folks to self-identify as being part of our donors? 

Host: Looking at the left side of the spectrum, those smaller donors, the report highlights a significant decrease in donors that are giving less than $500 a year, accounting for a substantial portion of the overall decline. Why do you think this group experienced such a decline, and what implications does it have for tactics to increase these smaller donors? Even though I don’t think $500 or anything between $200 and $500 is a small amount, it’s how this report chose to categorize them. 

Kristin Priest: In part, this is simply where the lion’s share of donors live, that $500 and under category. But I don’t think it highlights the importance of long-term impact. It can be, as we said, so easy to focus on those big gifts, the big revenue we need this year. But that trend is concerning and again, I think, going back to what we talked about, 2024 being a pivotal year, over decades, we’ve seen a slow but steady trend of an increase in dollars but a decrease in donors. 

During the pandemic, we bucked that trend, and now I think the question exists in ’24. Will we continue to see and pick up that trend of eventually moving to an increase in dollars but let that donor trend decrease, with fewer donors picking that up? And again, I have to go back to crowdfunding, all of these other ways where folks give that tend to be in those smaller dollar ranges. We don’t tend to see lots of individual folks giving over $500 through crowdfunding. So, I do think part of that is, you know, what’s happening underneath the surface, how people are giving versus are they giving or not. 

But I think, again, this is a part of that trend. We got a little anxious, I think, in ’22, some programs needed to cut acquisition just in order to make budgets, and we’re seeing some of the impact there. So, I think, I get it, it can be scary, but I think this is that call to be bold and to lean into those strategies that we know we have to. Thinking both short term and long term, how do we make sure that we’re responsibly working within our organization to shift any decrease (in donors). 

Host: Let’s look forward a little bit as our last topic for the show today. The government just came out with (its) Q1 economic report, and the first quarter of 2024 showed some uneven economic results, with slower than expected GDP growth. There was also some increasing inflation around personal consumer expenditures — so, people spending on things other than the essentials like groceries and gas has gone up. And there’s continued noise in the news. There is a lot of tension right now with an upcoming presidential election that is going to be happening around Giving Tuesday. 

So, in this pivotal year for philanthropic giving, how can nonprofits be sensitive to all the factors that are at play and pull out all the stops this year to focus on the strategies they need to be focusing on? 

Kristin Priest: So, there are a handful. A couple of them, you’ve heard me say already throughout our conversation, a couple new ones. First, this is like my drumbeat: rethinking or expanding — I should say expand — how we think about the ideal donor. Who we want to reach out to. Everything from demographic, age, expanding that audience. 

The second one is to consider AI solutions for efficiency and effectiveness. But I always think it’s important to bear in mind, any time there’s a new, shiny object, have conversations about what AI cannot replace. There are things that we shouldn’t use AI for that culturally aren’t a right fit. But leverage technology, leverage those solutions to better understand your donors, to better create timely conversation, timely outreach with your donors. 

Focus on sustainers, and that subscription behavior. That’s, again, a space where our most loyal donors often live, and, frankly, it’s a spot where we can have a lot of fun as an organization. When they sign up, when they agree to give to us for the course of the year, we get to have really fun conversations with them over the course of that year, reinforcing … the change that they’re having in the world. 

The election year — man, that is, I don’t want to say that’s a tricky one, but rather harness the energy of the election year. Yes, there’s an election going on, it’s going be pretty noisy, and we aren’t always, as a nation, our best individuals during that time. But lots of causes and issues will be drawn forward as a result of that. So, especially if you’re an organization that can speak to why, in the light of the conversation that’s happening around us as a nation, why you and your work are more important than ever, I think there’s an opportunity there to really take advantage of that energy. As a country, we are more anxious to bring about good or change in the world, so let’s harness that energy. Of course, being mindful of the days leading up to the election and immediately following, we’re going to have a very noisy fourth quarter, and so thinking very mindfully about our communication calendar and how the election will wrap into that. But let’s not shy away from it, let’s lean into it. 

And then, finally, again, those donor advised funds — they’re going to be a disruptor in this space. Embrace them, leverage them. 

Think about donor engagement outside our traditional cycle of cultivation, solicitation, stewardship. Donors expect a true brand experience nowadays. That’s what they’re getting from their favorite for-profit. So, how do we deliver a brand experience that feels near-real time, deeply personal, and aligns with how I, as the donor, want to experience your brand, where I want to experience it, on which channels — so, the omnichannel. Leverage technology to the degree we can to meet that experience that our donors are hoping for. 

Host: I’m really glad that you brought up donor advised funds. We don’t have time today to get into that, but we have some episodes in the past that have been observing this phenomenon and providing some tools and strategies to get more distributions from your donors’ donor advised funds. It’s definitely an area to watch, as it was one of the few giving vehicles that actually increased in 2023. 

Kristin, thank you so much for your time today. Any final thoughts as we wrap up? 

Kristin Priest: I think just my final thought is, as you look at the FEP report, it can feel very doom and gloom. The percentages, the trends are down. But as we’ve talked about, the bigger context of what’s been happening is an important piece to keep in mind. Look at your sub sector trends. Those varied quite wildly, as well as trends by organization size. So, there’s opportunity here. I think there’s some exciting insights that we’re seeing. 

My word for ’24 is “bold.” Don’t be afraid to be bold in this year, where there’s lots of important conversation happening. And we get a chance to be a part of that and to invite our donors to feel powerful, to feel like the change or the good that they want to see done in this world. Along with us, they can be a part of something really impactful. 

Host: Thank you so much for your time and thank you for being one of the founders of this report that we look forward to every quarter. And I look forward to having you back when the next report drops.