NEW DATA: Fundraising Effectiveness Project
The 2013 edition of the Annual Fundraising Performance Survey Report put out by AFP and the Urban Institute was recently released. The report includes data from 2,840 nonprofits from 2012 and provides a nice snapshot of the sector’s fundraising performance. Let’s take a look.
Calculating Gain and Loss Ratios
If you’re not already familiar with the format of the report, it breaks down fundraising performance in two basic ways: (i) gains and losses in total dollars given and (ii) gains and losses in total number of donors.
For dollars given, the survey aggregates the total gains in dollars given to all the responding organizations during 2012 (from new gifts, upgrades, and gifts given by recaptured donors) and the total dollars lost by these organizations (from lapsed gifts and downgrades). And for donors, it sums up the total donors gained by the responding organizations (from new donors acquired and recaptured lapsed donors) and the total number of donors lost by these organizations (from lapsed donors). Here’s a chart of how the four basic totals are calculated:
Once the gain and loss totals are calculated for the survey period (2012), they are divided by totals from the previous year, which allows you to look at gain and loss ratios.
For example, the gain in dollars given in 2012 was $768,899,970. Dividing that number by the total amount given in 2011 ($1,297,748,426) allows you to express the gain in gift dollars in 2012 as a percentage of the total from the prior year (59.2%). In other words, the gains in dollars given in 2012 represented 59.2% of the total amount given in 2011.
Seems great right? Well, not too fast you then have to calculate the corresponding loss ratio. Taking the total figure for dollars in gifts lost during 2012 ($-734,546,482) and dividing that number by the total given in 2011 yields a loss ratio of -56.6%. In other words the 59.2% in gains in gift dollars was offset by losses of -56.6%, meaning that the net growth in dollars given was just 2.6%.
Calculating gain and loss ratios is a little less straightforward than just calculating net growth year over year, but parsing things this way gives you more insight into what is happening when you analyze the numbers. Let’s dive in.
The Basic Findings
- Gains in gift dollars came in at 59.2% of the 2011 total.
- Those gains were offset by gift losses of 56.6%
- Net growth in gift dollars was 2.6%
Put another way, among the respondents, every $100 dollars gained during 2012 was offset by a loss of $96.
As you can see, dollars given experienced modest growth, but hey it’s still a net positive. Interestingly, this was the first time since 2007 that the survey showed positive growth in gift dollars. It seems that giving levels are rebounding from the lows experienced as a result of the recession, which is an encouraging sign.
When it came to gains and losses of donors, the picture wasn’t as positive though.
- Number of donors gained in 2012 represented 54.1% of the total donors from 2011.
- Those gains were offset by losses of 56.6%
- Net growth in donors was -2.7%
Put another way, among respondents, every 100 donors gained during 2012 was offset by 105 donors that were lost.
Ouch. So even though the total raised grew modestly, responding organizations were still losing donors. But this is just the average across all responding nonprofits. Who did better and who did worse?
Over and Under Performers
One theme clearly emerges as you start digging into the numbers in this year’s survey—smaller nonprofits struggled the most.
Organizations that raised up to 100K for the year experienced a net decline in gift dollars of 13.5% and those that raised between 100K and 500K experienced a net decrease of 5.1%. On the other side of the equation, however, nonprofits that raised more than 500K experienced net growth. Here’s how the numbers shook out:
As you can see, larger organizations fared much better than their smaller counterparts. The disparate performance seems to largely be the result of the higher losses experienced by smaller organizations.
Organizations that raised up to 100K lost -72.3% of the previous year’s gifts, while those raising between 100K and 500K lost -57.6%. When you compare these numbers to the average loss among organizations raising over 500K (-50.6%), you can begin to see why smaller nonprofits fared so poorly.
A Couple Takeaways
The macro trend from the survey suggests that while nonprofits are raising slightly more money, many of them are doing so from a diminishing pool of donors. This will make low cost, high return acquisition strategies like peer-to-peer fundraising even more important moving forward.
It also seems like smaller nonprofits really need to do more to retain existing donors. It’ll be incredibly hard for any organization to grow its revenue with gift losses in the 60 to 70 percent range. Smaller nonprofits might be wise to formalize a donor stewardship strategy if they haven’t already done so and to devote more resources to strengthening relationships with existing supporters.
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Photo Credit: marco_1186