Giving took a turn for the worse during the last three months of 2022, with both the number of donors and total revenue falling below the previous year’s levels. The finding comes from the latest report from the Fundraising Effectiveness Project, a research collaborative that examines trends in giving and is among the first definitive signs of challenges ahead for fundraising in 2023.
Declining revenue is especially concerning as it had been booming for years — increasing 69 percent from 2012 to 2022, even as donor participation dropped 19 percent.
The phrase “donors down, dollars up” became a kind of byword among fundraisers during the last decade, and the trend continued through most of last year. Nonprofits saw year-over-year growth in revenue during the first three quarters of 2022, but it fell nearly 2 percent during the end-of-year giving season.
Any gains made in the beginning of 2022 were wiped away by lackluster giving at the year’s end, says Woodrow Rosenbaum, chief data officer for GivingTuesday Data Commons, which partnered with FEP on the report.
“We’re back essentially where we were — and that doesn’t take into account inflation,” Rosenbaum says. “Put six-and-a-half percent inflation on top of that, and we’ve got a problem now.”
Year-Round Communication
There were fewer donors over all at the end of 2022, but the decline was sharpest for the 83 percent of donors who gave $500 or less. At the end of 2022, 15 percent fewer people gave $100 or less than at the end of 2021. Likewise, the number of people who gave $101 to $500 in the last three months of 2022 declined more than 8 percent from 2021 levels.
It’s not that fundraisers aren’t trying hard enough to get through to these donors, Rosenbaum says, but rather that their strategies need tweaking. The stewardship tactics that fundraisers use to build strong ties with wealthier donors just don’t work with everyday donors, he says.
“We actually have a much bigger opportunity with those grassroots givers to engage them more often and in more ways — and not to worry so much about this idea of competition because the data do not support that we’re in a scarcity environment with grassroots givers and even midsized donors,” Rosenbaum says. He notes that small-dollar donors are more likely than others to give multiple times a year.
He points to GivingTuesday as an example of successful grassroots donor engagement. In 2022, people contributed $3.1 billion to nonprofits on the global day of giving — 15 percent more than they gave the year before, and much of it came in small sums. Donor participation increased, too, rising 6 percent year-over-year.
To that end, Rosenbaum encourages fundraisers to communicate with their supporters more frequently and about more topics. The outpouring of small contributions to social-justice groups during 2020’s summer of racial-justice protests shows that grassroots donors are willing to give year-round, he adds.
“You can talk to your donors more often. You can talk to them about more things. You don’t have to worry so much about seasonality. We can do it all year, and we have to,” Rosenbaum says. “Right this minute, we have to get on the street, we have to start talking to people about our mission and inspiring them because that’s what’s going to make the difference when we do hit the giving season.”
‘We Can Do Something’
Previously, the biggest donors insulated overall fundraising revenue from a decline, but there were fewer of these donors at year-end, too. Still, the decline in giving among major donors was far less precipitous. The share of people who contributed $5,000 to $50,000 fell 3 percent year-over-year. Likewise, the share of donors giving $50,000 or more dropped 2 percent.
Together, the biggest givers represent roughly 3 percent of all donors but they contribute nearly three-quarters of all dollars raised . So when major donors slow their giving, it hits philanthropy hard. Indeed, the report blames them for “almost all” aggregate revenue losses in the last three months of 2022.
With an unpredictable economic future, it’s likely that major donors will continue to be skittish into 2023, Rosenbaum says. “It’s not good news, but we can do something about it.”
Fundraisers can’t control the stock market or inflation, but they can make moves to broaden their base of support. Two strategies he recommends are building a deeper bench of loyal, small-dollar supporters and appealing for gifts from donor-advised funds.
To turn around declines in overall revenue and donor participation, it’ll be critical for nonprofits to attract new donors and keep their current supporters close. The report cited a pronounced drop in new donors in December, a make-or-break month for most nonprofits. In the last three months of 2022, the share of new donors giving to nonprofits declined nearly 9 percent .
The largest drop in donor participation came from people who had made their first gift to an organization the previous year. The rate of participation by those donors fell nearly 22 percent from 2021.
Rosenbaum encourages nonprofits to spend the next eight months connecting with new grassroots donors and re-engaging with those who have given before. “That’s a prescription for success.”
It’s also a strategy nonprofits have shown they can master. At the end of last year, organizations made progress in attracting new gifts from donors who had previously given but whose support had lapsed for at least a year. These so-called recaptured donors grew nearly 3 percent during the last three months of 2022.
