Analysis: 2015 Mid-Year Giving Report

Now that we are halfway through 2015, let’s take a quick glance at some of the trends in charitable giving and the impact that the U.S. economy has had on consumer benevolence.

It’s been a rollercoaster for the U.S. economy thus far. 2015 started off looking pretty good: Consumer confidence was up, and many economists and the Congressional Budget Office projected as much as a 3.4 percent rise in the GDP. Since then, the news hasn’t been so rosy—Q1 was characterized by negative GDP growth and slow retail sales. By the end of June, Gallop’s consumer confidence index fell to its lowest level since November, as more than half of all Americans believe the economy is getting worse, not better. Overall, the S&P 500 ended Q2 essentially where it began.

In an effort to understand the correlation between these economic factors and consumer charitable giving behaviors, I reached out to Merkle’s Response Management Group—one of the nonprofit industry’s leading direct mail response processing companies. After evaluating many different charitable sectors (health, international relief, domestic assistance, pets, wildlife/conservation, advocacy and membership) and nearly 10 million contributions, here’s my analysis from their findings:

• 2015 charitable giving got off to a strong start as the volume of contributions received in January was up 12 percent over the previous January, and was 10 percent more than the average of the previous three Januaries. Six out of the seven sectors experienced year-over-year growth, three of which grew more than 18 percent—health, international and domestic relief.
• February contributions declined by 400,000, which was unexpected, as historically the volume of January and February contributions is very similar.
• Over the next three months (March through May) the slide continued, as total DM contributions declined by nearly 300,000—about 6 percent fewer year over year. Not all segments experienced declining results, including non-secular and secular international and domestic relief groups, which grew 3 percent and 14 percent, respectively. Although, contributions to non-secular relief organizations declined in May—the first time they declined in 2015.
• Things returned to somewhat to normal in June as the volume of contributions received in 2015 was within 2,000 (-0.2 percent) of what was processed last year. That said, DM gifts to health organizations declined for the fifth consecutive month, resulting in an 11 percent decline in the number of DM contributions received thus far this year.
• In total, the number of DM contributions received during the first six months of 2015 declined by 3 percent, as compared with the same period last year. The average number of contributions processed during these six months was the lowest over the past four years. It was two months in particular—February and June—that accounted for the large majority of the decline.

There are lots of factors that influence the number of DM responses an organization receives—two of which are mail volume and response rates. And while I haven’t fully analyzed year-over-year campaign performance, what I know is that year-over-year mail volume continues to decline (primarily in new donor acquisition), as does response to new donor acquisitions.

So what does the second half of 2015 have in store?
Economists point to factors such as increases in consumer spending on durable goods and services, and the combination of income growth and low inflation, that will help drive more disposable income, resulting in a stronger second half of the year. Barring any unforeseen event, the outlook for nonprofit organizations is likely similar to the first half. I expect that those who have positioned themselves for growth will continue to do well over the next six months, whereas those who haven’t should immediately begin to rethink their future growth strategies.