Charities Retain More Donors But Giving Losses Continue to Exceed Gains

Source: Association of Fundraising Professionals 09/14/2011

Nonprofit organizations in the U.S. improved their efforts to acquire and keep donors in 2010, but continued to lose money through lost donors and smaller gifts, according to the latest report of the Fundraising Effectiveness Project (FEP).

Net giving levels have not yet recovered to pre-recession levels, but they were far better than in 2009. For every $5.35 that organizations gained in gift dollars from new, current and previously lapsed donors in 2010, $5.54 was lost through gift attrition (reduced gifts and lapsed donors), for an average net loss of $0.19 or -1.9 percent.

The 2011 FEP Survey Report, an initiative of the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute, compared fundraising gain and loss ratios in 2010 to those figures in 2009. The FEP measures giving gains by charities (gifts by new donors and previously lapsed donors, as well as increases in gifts by current donors) against giving losses (decreases in gifts by existing donors and lost gifts from lapsed donors) to analyze growth rates.

The 2010  numbers mark a significant improvement of 15.8 percentage points over the average net loss in 2009, which was -17.7 percent. The median growth rate was 0.8 percent in 2008, 16.0 percent in 2007, 13.1 percent in 2006 and 18.5 percent in 2005.

In a promising trend, nonprofits saw an average net increase of 1.7 percent in the number of donors in 2010. This compares favorably to a -3.2 percent average net loss of donors in 2009.

“The economic turbulence battering nonprofits and donors continues. For nonprofits contending with rising service demands and reduced funding, the challenge is building on the hard-fought gains they’ve made with donors while minimizing their departures,” said Elizabeth Boris, the director of the Urban Institute’s Center on Nonprofits and Philanthropy.

“Giving improved—but only very slightly—in 2010 after two very disappointing years,” said Andrew Watt, FInstF, president and CEO of AFP. “Giving rates still have a long way to go before we reach pre-recession levels, and it all begins with reducing the number of lapsed donors.  This is one of the biggest challenges charities face, losing nearly 60 percent of donors every year and relying too heavily on new donors. It’s much less expensive to retain and inspire existing donors than it is to find new donors, so charities should focus on stewarding their current donors and reducing losses there.”

Gifts by new donors grew by 21.7 percent in 2010, while giving by “recaptured” donors (who gave in the past, then stopped and have now renewed their contributions) increased by 12.4 percent. Giving from existing donors grew by 19.4 percent. Together, these growth rates resulted in a total gain ratio of 53.5 percent.

Losses in gifts from downgraded (-20.3 percent), lapsed new (-14.4 percent), and lapsed repeat donors (-21.0 percent) resulted in a total loss ratio of 55.7 percent.

Growth-in-giving performance varies significantly according to organization size (based on total amount raised), with larger organizations performing much better than smaller ones.  Organizations raising $500,000 or more had a median 8 percent net gain, while organizations raising $100,000 to $500,000 had a median 2.3 percent net gain.  Respondents in the under $100,000 groups had a median net loss of -12.2 percent.

The full FEP Survey Report can be obtained at the AFP website at http://www.afpnet.org/fep and on the Urban Institute’s website: http://www.urban.org/center/cnp/Projects/Fundraising-Effectiveness-Project.cfm.

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The Association of Fundraising Professionals (AFP) represents over 30,000 members in 225 chapters throughout the world, working to advance philanthropy through advocacy, research, education and certification programs. The association fosters development and growth of fundraising professionals and promotes high ethical standards in the fundraising profession. For more information, go to www.afpnet.org.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation. It provides information, analyses, and perspectives to public and private decisionmakers to help them address these problems and strives to deepen citizens’ understanding of the issues and tradeoffs that policymakers face. For more information, go to www.urban.org.