The number of individuals who made charitable contributions during 2023 fell 3.4 percent, year-over-year, according to new data from the Fundraising Effectiveness Project. During the last three months of 2023 alone, donors gave 2.8 percent fewer dollars to charity than they did at year-end 2022. This marks the second year in a row that year-end giving — the life’s blood for most nonprofits — has decreased relative to the previous year.
The research collaborative analyzed data on contributions by 4.8 million donors to 8,103 nonprofits in 2023. The report includes both warning signs — falling donor participation — and bright spots — increased giving to newsworthy causes.
In recent years, experts have touted recurring giving programs as a key strategy for raising dependable revenue, even in tough economic times. Another new report from nonprofit technology company Neon One digs into the data behind the strategy and shares tips from fundraisers who have had success with it.
Donors on the Sidelines
Donor participation fell across the board at year-end, with individuals who gave $500 or less powering the decline, according to the Fundraising Effectiveness Project. This segment of donors represents 83.2 percent of all donors, but just 7.3 percent of all dollars given.
Donors who gave $50,000 or more saw the steepest drop in participation — down 7.4 percent from last year-end. That’s significant because — although they represent just 0.3 percent of all donors — these donors contributed over half of all dollars given to charity at year-end.
One bright spot for fundraisers was donors’ strong turnout for international and foreign-affairs nonprofits, which brought in 51.2 percent more than they did in year-end 2022. Contributions to those organizations jumped in October, likely in response to the start of the war in Gaza.
Donor retention continued to be a challenge for nonprofits at year-end, but the rate of decline is flattening out from the 4.3 percent fall it took in 2021. The rate of donors who gave again in 2023 was down an estimated 2.5 percent from 2022.
Charities often struggle to convince donors who give to them for the first time to make a follow-up gift. In 2023, retention of these donors fell 7.5 percent from the previous year. Repeat donors, on the other hand, stayed flat — declining by just 1.1 percent.
Donors who gave more than seven gifts had the highest retention rates: 87.9 percent of these donors were retained in 2023. However, retention rates fell across all donors — those who gave just once through those who gave more than seven times — in 2023.
A new report from Blackbaud Institute that uses data from more than 5,000 Blackbaud customers also found a slight decline in donated dollars in 2023. The report noted that online giving rose from 8 percent in 2022 to more than 12 percent in 2023. Small organizations did well online, with 17 percent of all donations coming from online, compared to 12.5 percent of online donations for large organizations and 10 percent for medium sized organizations.
Building Donor Loyalty
FEP’s data showing that those who gave most often had the highest retention rates supports findings in Neon One’s report on recurring giving, which suggests these donors hold promise during tough economic times.
Small nonprofits with annual revenues under $1 million received $3,220, on average, from monthly gifts in 2018, according to a new report on recurring giving. By 2022, that total had more than doubled to an annual average of $7,556. Nonprofits with annual revenues of $1 million or more saw even greater average growth during that same period.
While the growth of the average monthly donor base over those five years was large — 127 percent — it’s worth noting that only a slim minority of nonprofit donors choose to make recurring contributions. Among nonprofits in the report’s dataset, the average organization had just 11 monthly donors in 2018 and 25 in 2022.
“For a lot of nonprofits, this was them beginning to build a base of recurring donors,” says Abby Jarvis, senior content marketing manager at Neon One and one of the authors of the report. The steady growth these groups achieved in five years should inspire more fundraisers to explore starting monthly giving programs, Jarvis says.
Researchers built their dataset with information from 2,149 nonprofits that used Neon One’s customer relationship management software between 2018 and 2022. The dataset included information about donors to those nonprofits, as well as data on members, event attendees, and other individuals who made financial contributions. The largest share of nonprofits in the dataset — 19.4 percent — were health and human services groups, followed by 17.6 percent of groups that did not specify their cause, and 15.5 percent in the arts, culture, and humanities.
Monthly donors show promise because they tend to be more loyal than one-time donors, according to the report. In 2022, the average recurring donor made monthly contributions to a nonprofit for 7.71 years. By comparison, one-time donors gave for just 1.68 years, on average, in 2022.
One-time donors tend to give, on average, more money each year than recurring donors. In 2018 one-time donors contributed an average of $2,082; by 2022, that average annual contribution was $2,155. On the other hand, the average monthly donor contributed $1,067 in 2018 and just $941 in 2022.
“Even though they’re giving less per year, they’re giving more over the lifetime of their engagement with the nonprofit,” Jarvis says.
Jarvis offers two theories for why monthly donors tend to stick around so much longer than one-time contributors. One is that donors who choose to give monthly typically do so because they have a deep passion for the cause. The other “less romantic” theory, Jarvis says, is that many monthly donors forget they signed up to make a recurring contribution.
“I wish I didn’t have to say that, because in an ideal state, the nonprofit who is receiving that monthly gift would be proactively building relationships with donors,” Jarvis says.
The report includes case studies from Neon One clients who have built successful recurring donor programs. One of the hallmarks of programs where donors are motivated to keep giving month after month is frequent communication with donors. “Helping someone feel like they are part of an in-group or part of a club or a society ... is really important, especially if they’re getting more relevant regular updates on what is actually going on,” Jarvis says.
For those seeking to attract more donors to a monthly giving program, Jarvis says, “an important thing is simply to ask.”
