October 16th, 2013

Graph Showing Gains, Losses, and Rate of GrowthAlthough camp season is a distant memory this time of year, when I read the new 2013 Fundraising Effectiveness Survey Report from the Urban Institute and Association of Fundraising Professionals, I couldn’t help but think of the old campfire song, “Make new friends but keep the old / One is silver and the other’s gold.”  That report is a powerful cautionary tale for nonprofits in our region.

The research

The headline finding in the report is that smaller organizations (<$100k in donations) saw a 13.5% decline in their fundraising in 2011-2012, due mainly to a median 41% attrition rate among new donors, which essentially wiped out their new donor acquisition entirely.  The nonprofits raising $2.5-5 million did best, with growth of 28.5% and median increase of 4.6% in number of donors due to a churn rate of just 27.4% of new donors.

Ruth McCambridge links this to an “arbitrary winnowing” that Paul Light predicted for the sector, where large organizations will do better but smaller ones will fall further and further behind.  For those of us who care about strengthening the sector — or the mission of our individual organizations — this should be scary news, and I see this pattern everywhere here in inland Southern California.  So many smaller organizations bring in donors on a transactional basis through things like special events, once-off campaigns, emergency appeals, etc. but don’t invest in building their skills and infrastructure for ongoing annual campaign management and donor stewardship.

What it means for nonprofits and capacity builders

The implication for us as capacity builders and nonprofit leaders is clear:  Focus on building  stewardship and relationship-building with donors, not transactional appeals for gifts.  It is great to bring in new donors, but it is not enough.  Nonprofits need to make sure that their support is built on an interest and commitment to the mission, and they need to cultivate that interest with ongoing, consistent, mission-based communication.

Some specific suggestions for various players in our sector:

  • Nonprofits with smaller fundraising operations (i.e. most everyone in our region!) wanting to build their individual giving need to focus not just on getting new donors, but also on retaining the new donors they bring in.
  • Acquisition campaigns like Give Big San Bernardino and Riverside need to also provide support and advice on retaining those new donors so they don’t feed the unsustainable donor churn and discourage nonprofits from fundraising.
  • Training/TA providers like AcademyGO and AFP need to focus on skill-building for donor retention and stewardship, and annual campaign management in general.
  • Funders and board members can incentivize donor retention through matching gifts tied to repeat giving by new donors.

Any other implications or strategies you would suggest?

A note from Max: Welcome to my inaugural blog post!  I’ve been meaning to blog for a while now, and was in the process of writing up these thoughts to e-mail out to my clients and colleagues in the San Bernardino County Capacity Building Consortium when it hit me — why not share this with the whole sector?  I can’t guarantee how often I’ll post new blog items in the future, but when my interest and thinking is piqued by a piece of news, research, or a story I plan to share it.  So keep your eyes peeled and like our Facebook page so you’re notified when a new post is up!