Three Key Fundraising TrendsMarch 2023
Three Key Fundraising Trends
Nonprofit fundraisers have been forced to adjust to an unending series of changes and trends over the past three years of a disruptive pandemic, during which received wisdom about philanthropic giving has often been turned on its head. While economic conditions will probably continue to change in unexpected ways for the foreseeable future, fundraisers can capitalize on recent trends to bolster their organization's fundraising operations and increase their resiliency to future events. One vital resource for keeping in touch with philanthropic trends is The Fundraising Effectiveness Project (FEP) produced by the Association of Fundraising Professionals (AFP). The FEP reports on quarterly trends in fundraising and philanthropic patterns and is essential for development professionals looking to stay one step ahead. Here are three of the most important trends that the FEP has identified from the back half of 2022:
1. Total donations increased by 4.7% in Q3 of 2022 (YTD).
Donations increased by around 4.7% in the third quarter of 2022 from that time in 2021, which continued the decline in giving growth rates since 2020. While donations surged in Q2 2020 in response to the onset of the COVID-19 pandemic and remained positive throughout that year, their growth rate has since cooled significantly. The FEP attributes the lack of even larger declines in giving to consistency among larger donors, which has helped offset decreases in the number of overall donors. While these trends continue to shift rapidly, fundraisers can hopefully rely on their bigger donors to continue giving, even while the number of small ($101-$500) and micro (<$100) donors has fallen significantly.
2. The number of donors decreased by 7.1% in Q3 of 2022 (YTD).
Roughly 11.2 million donors made contributions in the third quarter of 2022, which represented a 7.1% decrease from that time in 2021. Parallel to trends in overall giving, a surge in donors in response to the pandemic from Q2 2020 to Q1 2021 was followed by donor participation rates falling significantly in 2021 and even more precipitously in 2022. The FEP helps account for this by citing that new donor acquisitions decreased by 19.2% YTD and new retained donors (who donated the previous year, but for the first time) decreased by 24.7% YTD. Clearly, every aspect of the donor cultivation pipeline needs to be enhanced to stem the decline in donor engagement among all types of donors.
3. Donor retention fell by 4.1% in Q3 of 2022 (YTD).
Donor retention rates dropped by 4.1% in the third quarter of 2022, which represented a smaller but still significant drop from that time in 2021. Retention rates received a small bump at the onset of the pandemic in Q2 2020 and growth in retention remained positive for several months before falling steadily and then precipitously in 2021 (-7.4% in Q3). Retention growth rates have been slowly rising out of the negative since Q2 2022, but still have a way to go to become positive again. New and lapsed donors have been particularly hard to maintain, which suggests that fundraisers could benefit from shifting energy toward retaining these types of givers.
The rapid fluctuations in all of these statistics make clear the continued uncertainty faced by development professionals and donors alike as they confront a sputtering economy and a plethora of global crises that compete for their generosity. By thoughtfully reflecting upon and leveraging these trends, however, fundraisers can stay ahead of the curve and put their organizations in a position to both weather these difficult times and expand in the near future.
Check out some episodes on fundraising from my podcast Your Path to Nonprofit Leadership:
- 198: Dirty Little Secrets of Direct Response Fundraising (Andrew Olsen)
- 181: What Are Your Donors Thinking? (Derric Bakker)
- 153: Why Diversification is Vital to Your Fundraising Plan (Holly Rustick)
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