(originally posted on BlogBaud)
Last week, Target Analysis Group released the latest Index of National Fundraising Performance. The index reports on fundraising results at 72 large, national nonprofits that have 39 million donors and over $1.9 billion in contributions.
There were some important findings in the latest index including the following:
- “After the disaster-heavy, record-growth year of 2005, index revenue reverted back to typical growth rates in 2006. Revenue growth over the first three quarters of 2007, however, was below historical averages.”
- “While revenue grew, donor numbers declined. This continues a decline that has been happening for several quarters; the index has not had an increase in donors since the third quarter of 2005, which brought in most of the revenue related to hurricane Katrina relief efforts. “
- “In the absence of donor growth, the revenue increases that most organizations experienced this year to date have been due to increases in revenue per donor.”
- “Acquisition and reactivation rates were both down and retention rates were fairly flat”
These trends aren’t very good and the index notes that “at some point increases in revenue per donor may not sustain overall net revenue growth.”
Mark Rovner blogged about this the other day and in the posting noted three big opinions:
- “The era of cheap direct mail and high response rates in acquisitions is over”
- “What currently passes for an online fundraising model is at best a stopgap”
- “This is not just about direct response. This is not just about philanthropy. EVERYTHING is going to change.”
I recommend giving Mark’s post a careful read because he hits the nail on the head. The revolving door of acquisition focused direct mail is in trouble and the same approach with email is equally doomed. The organizations that succeed will be those that build relationships and combine both online and offline channels to do it.
And then Seth Godin chimed in with the following comments on his blog including:
- “As soon as commerce started online, many non-profits discovered lots of income from their websites. This was mistakenly chalked up to brilliant conversion and smart marketing. In fact, it was just technologically advanced donors using a more convenient method to send in money they would have sent in anyway.”
- “The big win is in turning donors into patrons and activists and participants. The biggest donors are the ones who not only give, but do the work. The ones who make the soup or feed the hungry or hang the art.”
The reasons for the decline in donor growth are varied but the trend should be a wake-up call to all nonprofits. And the online activities of nonprofits are not immune to the problem. Many organizations have seen positive initial results through email marketing efforts, but by the second go around the retention numbers plummet. Email is no more a silver bullet than direct mail if organizations don’t retain, build, and steward their relationships with constituents.
This is why strategies or tactics or technologies that separate online and offline are ultimately not successful. Doing one and not the other or doing both of them in silos is a recipe for disaster. I’ve never met a donor that labels themselves as “online” or “offline.” How can you build a true relationship if both online and offline interactions can’t be leveraged?
While the information in the latest Index of National Fundraising Performance is not encouraging, it is good to see these issues being discussed on blogs, in articles, and hopefully in meetings as well. Thoughts? Comments? Questions? Answers? Let’s keep the conversation going…