Charitable Giving in 2021 Increased 2.7%
Guest post by T. Clay Buck
While charitable giving continues to increase, there are trends for every fundraiser and nonprofit to keep an eye on.
Earlier this month, the Fundraising Effectiveness Project released its analysis of giving in 2021. The good news is that in 2021 philanthropic giving continued to increase, as it had in years prior. This increase was bolstered by larger donations and, to an extent, by donors who continued to give to charities they had supported in 2020 – in fact, the percentage of new retained donors was up 26%!
The flip side is that the number of donors declined by 5.7%, meaning that higher value donations really drove the increase in giving, which presents strong opportunities for fundraising, particularly in donor retention.
What Is The Fundraising Effectiveness Project?
The Fundraising Effectiveness Project before, it is a collaboration among data providers, researchers, analysts, associations, and consultants reviewing aggregated data to report on trends in fundraising and philanthropic giving. FEP’s quarterly reports can be accessed at www.afpfep.org or in a free online dashboard at http://data.givingtuesday.org/fep-report.
Additional Insights From FEP
The last two years have been, well, volatile for fundraising – from the pandemic to economic fluctuations, nothing in our work has been “normal.” What is abundantly clear from all reporting is that people continued to give and wanted to support the causes that were important to them. Other reports indicate that social service and social justice organizations saw tremendous response. While many organizations had to postpone or outright cancel in-person events, there have been some reports indicating a rise in online giving. Despite the setbacks caused by supply chain issues, direct response continues to thrive and encourage strong results. As we begin to return, more and more, to in-person events and face-to-face meetings, there were huge innovations made in virtual and hybrid events, as well as in virtual visits for major gifts.
In breaking down the results further, FEP noted:
- Major Donors ($5,000 – $50,000) saw an increase of 1.9%
- Donors less than $100 declined by 9%
- Donors in the $101 – $500 range declined by 6.8% and comprised 28.5% of all donors
- Just 9.5% of all contributions came from donors who gave $499 or less
- Retention was lower with the least active donors. Smaller, more infrequent, and new donors are renewing at significantly lower rates.
It’s relatively safe to assume that some of the trends we are seeing in giving for the last two years have been similar to what is seen in times of crisis and natural disaster. In late 2021, the Indiana University Lilly Family School of Philanthropy released a report on understanding philanthropy in times of crisis. It showed that giving to human services and health organizations was one of the most common responses to the pandemic. Other reports indicate that social justice organizations also saw an increase in philanthropy, with a focus on increasing equity, justice, diversity, and inclusion.
The act of giving allows a donor to express agency over a situation. Giving makes us feel as if we have some level of control or autonomy over a situation. It also allows us to feel as if we are helping and making a difference, particularly when situations feel out of control or overwhelming. During the pandemic, it was clear that the need for services increased exponentially in many communities. Donors responded by giving.
The last two years also saw an increase in different ways for donors to express their philanthropy, and the situation in Ukraine has even further strengthened giving vial Mutual Aid approaches.
What Does This Mean for Fundraising in 2022?
First, in context of the Fundraising Effectiveness Project, take a look at your organization’s history and compare the trends – how many first-time donors during the last two years have renewed their support? How many of your longer-term donors (3+ years of giving) have continued to give or increased their support? Can you identify how many first-time donors gave to you during the last two years?
Second, evaluate your donor gratitude and retention plans. Donors want to know, first and foremost, that their gift was received and that it was used for the purpose they intended. Do you have an immediate thank you and acknowledgement process in place (that goes beyond just an automated email generated from the online giving page)? Do you have a process in place to report back to the donor on how their gift was used (i.e. reporting back on what your mission has accomplished recently)?
Third, take a hard look at your storytelling and the messaging you’re sending donors. We know there is always a need for our missions and the solutions we promise, so how we frame that to the people who care and want to help is critical in ensuring ongoing, continued support.
Let’s also be sensitive to the idea that some donors have no intention of renewing their gifts. Your mission may have caught their interest for a variety of reasons, and they may see their philanthropy as responding to whatever need is greatest at a given time. Giving donors choice and the ability to select how often they want to hear from us, what they want to hear, and how deeply they wish to be involved can streamline our engagement with them and help to identify those donors who are true believers in our work.
Finally, it’s important to acknowledge that the vast majority of the number of donors came from what are considered “small” or “micro” donors, e.g. gifts at or below $100. While it may seem the immediate ROI from smaller, newer donors is lower and that it’s possibly more lucrative to pursue higher-end, “major” gifts, there is very high value in these “small” donors – cash donors are more likely to make recurring gifts, the highest indication of likelihood to make a legacy gift is frequency, not amount, and these donors have higher potential for increasing the size of their gifts as they come to know your organization and mission better. Strategically evaluate how you can invest more in building substantive relationships with your “lower-end” donors through repeated communication, donor surveys, thank you and acknowledgement, and ongoing stewardship.
How Can Fundraising Intelligence Help
1. Screen Your New Donors
Run a batch screening on any new donors, at all levels, over the last two years. Review for higher level scores and capacity for identification of those donors who may be worth additional research or cultivation. Pay particular attention to those who have indications of additional philanthropic giving.2.Review Engagement and Affinity scores for indications of the most streamlined approach for additional communications and possible linkage to your mission.
2. Screen Your Current and Lapsed Donors
Identify those with multi-year giving history, review for upgrading and changes in giving, and identify those, particularly at the low and mid-range who have high giving velocity or planned giving scores for additional cultivation.
3. Review Long Lapsed Donors
Use wealth scores, screening information and previous giving history to identify any donors who had given multiple times previously, but have not given in the last one or two years. Identify those with higher scores or affinity to identify areas of opportunity for further cultivation, donor surveys, or re-engagement strategies.
Fundamentally, FEP’s report indicates that philanthropic giving is still very strong, and donors are actively engaged in giving. There are clear opportunities for fundraisers to engage donors in cultivating renewed giving through increased stewardship and heartfelt acknowledgement. It is also clear that giving will continue to fluctuate and bring new opportunities in the coming months and years as we continue to re-balance after the volatility and insecurity of the last two years.
T. Clay Buck, CFRE
Lead Fundraising Coach, iWave
Founder & Consultant, TCB Fundraising
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