Reports continue to indicate that the number of donors is dropping. For instance, the Fundraising Effectiveness Project’s (FEP) Quarterly Fundraising Report for Q3 of 2023* found that donor participation fell 7.6% year-over-year. Obviously, this has alarm bells ringing across the nonprofit sector.
And yet…
Anecdotally, at least, organizations are reporting flat or even slightly increased revenue for the year-end. The natural conclusion is that fewer donors are giving more money, but is this actually the case?
We debate this paradox in this episode of the Go Beyond Fundraising podcast. Allegiance Group + Pursuant Chief Strategy Officer and President Trent Ricker led the conversation with Alicia Lifrak, Executive Vice President, and Matthew Mielcarek, SVP of Analytics & Insights Strategy.
The case of the missing donors is a puzzle we all want to solve. Is the donor count really declining? Or do we need to change how we count donors? Let’s dig in.
Let’s start with the data. According to the FEP Q3 report, the number of donors has decreased across all giving levels and life cycles. The most significant drop (-15.7%) came among micro donors who give $100 or less. Small donors — those who give $101–$500 — followed at -7.9%.
It seems generosity is cooling after the record-setting years of the COVID-19 pandemic, when charitable donations topped out at $517 billion in 2021. The pandemic incited many first-time donors to give, but efforts have failed to retain them. Even as the need remains at an all-time high in many cases, donors simply aren’t offering support at the same levels.
In many ways, Mielcarek says this drop in donors is a return to normal — donor counts have been trending downward for 10 years or longer. Of course, this isn’t the “normal” fundraisers have been hoping for.
There are some rays of sunshine. Again, many of the clients we serve at Allegiance Group + Pursuant report flat revenue for 2023, with some even seeing growth. In addition, many digital programs exceeded projections to yield positive results.
Giving Tuesday in the U.S. alone topped $3.1 billion, representing a modest increase of 0.6% from the previous year. December giving is still being totaled, but many clients also expect small growth there.
Mielcarek also shared that Allegiance Group + Pursuant clients have seen a dramatic reversal in response rate declines. These rates had been trending downward in the summer of 2023 and throughout the year but increased at year-end.
Based on the numbers, there’s good news and bad news. The good: Nonprofits are raising as much or more money with fewer donors, so they’re getting better at building loyalty. The bad: Organizations aren’t acquiring enough new donors to yield a positive coverage ratio.
So, again, if we’re still seeing dollars at a decent level, but the numbers keep saying there are fewer donors, where are they? Are there really fewer donors, or are they giving in ways that we aren’t able to count?
The bottom line is that donors are more complex than they used to be. Traditional attribution models can’t keep up with the many diverse ways donors can give. Peer-to-peer giving, crowdfunding, cryptocurrency donations — the donors behind these gifts are much harder to identify and measure than those who follow traditional paths to a donation.
Need proof? Airbnb raised nearly $37 million to support Ukrainians in the first two weeks following Russia’s invasion. Those missing micro and small donors? It’s impossible to measure, but they may be shifting to this type of urgent, cause-driven giving.
For Lifrak, it’s simple: we must change how we count gifts and donors. Of course, the solution isn’t necessarily straightforward. As fundraisers, it’s up to us to be more innovative about meeting donors where they are, which comes with challenges.
For one thing, too many nonprofits don’t have the resources to spend broadly on a solid branding and awareness campaign. That means many of your prospective donors likely don’t even know you exist! But a mass marketing appeal can be tricky and expensive, which seems like a risky move in an uncertain market. As a result, fundraisers become over-reliant on their existing files and try to boost them with lookalikes.
However, individuals who are aware of a brand are more receptive to its messaging. If you’re looking for an initiative to invest in this year, an awareness campaign would be a good one.
In addition, Lifrak believes the nonprofit sector has become too ROI-driven overall. You can’t build a long-term relationship with a donor if every interaction has to have an ROI. As a result, many organizations have scaled back long-tail programs in favor of those that yield quick revenue.
Overall, we’re optimistic about the year ahead. Deep down, people are generous and will give to those in need. But the studies just can’t account for the shifting – and difficult to measure – ways that people give in the era of technologies such as Venmo, Zelle, cryptocurrency, and grassroots efforts like the Airbnb example.
It’s time to rethink the traditional donor pyramid. Instead, strengthen your brand awareness so donors can find you — and be ready to serve them when they come knocking. To do so, partner with the teams in your organization who engage with the public to learn where your supporters spend their time.
What we’re suggesting is a more constituent-centric focus. Think about your donors’ engagement and value beyond fundraising alone and instead in the way they support your organization.
Diversification will be vital in broadening your reach beyond your traditional audiences. For instance, look to different demographics and generations and diversify your channels. If you’ve been avoiding social media or influencer marketing because you don’t understand it, it’s time to dive in because that’s where your donors are.
Finally, you must invest in technology that can take an acquisition effort that works, scale it, and then help you understand what’s behind the success through data. Tracking donors through an Excel spreadsheet no longer cuts it — we’ve moved past the point of being able to manage philanthropic campaigns that way.
Fundraising in 2024 holds promise, but you must take bold steps to get it. Donors aren’t missing; they’ve moved. And thankfully, they’re leaving breadcrumbs behind. You just have to know what to look for.
Listen to the full episode of the Go Beyond Fundraising podcast now.
*Fundraising Effectiveness Project’s (FEP) Quarterly Fundraising Report for Q4 of 2023 is released during Q2 of 2024.