Donations Decline for the First Time Since 2012, Fundraising Effectiveness Project Data Shows
As more than 3,600 nonprofit leaders and fundraisers gathered in New Orleans at AFP ICON, the Fundraising Effectiveness Project released its full-year 2022 data. And the results weren’t good — the number of donors declined 10% despite some gains in the middle of last year.
Dating back to 2012, donor dollars had been rising — until now. Through the third quarter of 2022, giving was up 4.7%, but at year-end, there was a 1.7% decline. The year-end reduction in dollars flowing to nonprofits over the full calendar year should be a surprise since the end of the year is usually the most lucrative time for nonprofits.
Nonprofits struggled to acquire new donor dollars at year-end in 2022 as the year-over-year rate for donations from new donors decreased sharply in December. Overall for the year, new donor contributions decreased 8.7%. Additionally, nonprofits had trouble retaining 2021’s new donor gifts, which declined 21.8% and only accounted for 8% of total dollars.
“These findings are undoubtedly concerning,” Mike Geiger, the president and CEO of the Association of Fundraising Professionals and the AFP Foundation for Philanthropy,” said in a statement. “Apart from the fact that high inflation makes the year-on-year results that much more stark, the numbers suggest a return to the familiar decade-long decline in donors we saw prior to COVID. As an industry, we need to find ways to be more proactive in building sustainable giving models so we aren’t as dependent on economic forces we can’t control.”
While the number of donors has been steadily in decline for five of the past six quarters, donations saw slight bumps in the second and third quarters of 2022. This disparity has been attributed to major donors carrying the weight. Though major donors have kept donations rising or steady in the past, they also pulled back in the fourth quarter of 2022.
“As more and more donations are tied up in large donors and the economy hangs in the balance, the health of the sector may be tied to the stock market in 2023,” Woodrow Rosenbaum, chief data officer of the GivingTuesday Data Commons, said. “The positive growth in GDP for the final two quarters of 2022 may have staved off a more precipitous decline, but as large donors tend to be more responsive to economic shifts, it is urgent for the sector to ramp up grassroots engagement. This report should be a wake-up call. A strong focus on broad, grassroots support is more critical than ever.”
The decline in donors hasn’t been sudden. It started in 2012, but the sharp decline in 2022 could signal trouble ahead for fundraisers and the nonprofits they serve. Overall donor decline in that time is 19%. During the same timeframe, donations have increased by 69% since 2012.
The leading cause of donor decline? An 18% drop in retention of new donors.
New donors in 2021 failed to maintain the same giving level in 2022, resulting in a 26% decline. New and new retained donors accounted for 81% of the drop. That even included a 3.5% decrease in repeat retained donors who are typically seen as loyal donors.
The struggle to retain donors is widespread and resulted in the lowest recorded donor retention rate at 42.6%. In 2022, retention decreased 3.5% year over year. After a steep decline in January and February, retention rates started to climb, but fell again in the fourth quarter.
Retention numbers are down across the board — by type of donor, by size of donation, and by number of donations. New and recaptured donor rates dropped 16.9% and 15.2%, respectively. Micro donors (less than $100) and supersize donors ($50,000 or more) saw the greatest declines, with 5.3% and 4.7% year over year, respectively. One-time donors had the poorest retention rate at 31.7% — 2.8% less than 2021.
Health-related causes as a group was the only type of mission that didn’t decline in donor dollars; however, the growth was less than 1%. When it came to the organizations’ size, fewer organizations raised between $5 million and $25 million than in 2021, which the Fundraising Effectiveness Project attributed to more organizations falling below the $5 million benchmark. The report also noted the largest organizations saw decreased funding as well.
At the Generosity Road Show — a fundraising-themed trivia show that made its final stop at AFP ICON on Sunday and was hosted by Tim Sarrantonio, co-chair of the Fundraising Effectiveness Project and director of corporate brand at Neon One — Rosenbaum explained that 2020 resulted in the reversal of a multi-year trend of declining donors, as Geiger alluded to in his statement.
“Since then, it's been a steep and reasonably steady decline of the number of donors to nonprofits in the U.S.,” he said to attendees after a question revealed the recent 10% donor decline. “And 2022 performed particularly badly. … So by the end of 2021, we essentially lost all of the 2020 gains, and now we're below that.”
Creating the quarterly report is a collaborative effort to evaluate the latest industry trends via aggregate data compiled from nonprofit software providers, including Bloomerang, DonorPerfect, Keela and Neon One, supplying aggregate data and DataLake Nonprofit Research and Bonterra providing analysis. Classy and Community Brands have also begun contributing aggregate data, the Fundraising Effectiveness Project announced. The 2022 data includes 7.4 million donors, who gave 9.6 billion to 8800 organizations.
Amanda L. Cole is the editor-in-chief of NonProfit PRO. She was formerly editor-in-chief of special projects for NonProfit PRO's sister publication, Promo Marketing. Contact her at email@example.com.