Mid-Year Charitable Giving Report: A Positive Response
Earlier this year, the Indiana School of Philanthropy predicted charitable giving would rise 3.6 percent in 2017. Based on the volume of individual contributions received during the first half of the year, it appears as if the industry is on pace to meet those projections.
According to a recent report by Merkle Response Management Group (RMG), the volume of individual contributions processed during the first half of 2017 increased 2.4 percent, as compared with the same six-month period last year. The report compares the total number of direct mail gifts received by nearly 60 national nonprofit organizations. That’s good news for the industry as it proves nonprofits can continue to rely on the sustained generosity of individuals (which make up most annual charitable gifts). Despite rumors of continued decline, direct mail remains a viable channel of giving by most Americans. Direct mail is growing in most charitable sectors (eight out of the 10 analyzed), including one of the hardest hit sectors—large national health organizations, which grew 3.6 percent over the past six months.
Highest and Lowest Contributions
The hangover from last year’s presidential campaign and election appears to have benefited both political and advocacy groups, as contributions were up 30 percent in January and ended the first-half of 2017 up 3.2 percent overall. The largest gains in contribution volume came from the international relief and wildlife charities, which increased 5.6 percent and 4.6 percent, respectively.
Overall contribution volume was up in four of the first six months of 2017, with the largest gains coming in January (up 22 percent) and March (up six percent). The biggest decline came in February as contributions fell 13 percent, and each sector that was up in January, fell in February—nearly giving back everything gained the previous month.
Performance Is Stabilizing
The industry is also seeing evidence that key performance metrics are stabilizing, perhaps even growing slightly. Retention rates and gift frequency appear to be comparable to last year, while average gifts are reportedly up slightly.
While two quarters of sustained growth is noteworthy, I don’t consider a 2.4 percent increase in contribution volume a sign that the industry is on the “brink” of dramatic changes in charitable behavior, as some in the industry suggest.
Outlook for the Next 4 Months
The economic outlook for the second half of 2017 projects sustained growth. It is anticipated that this should correlate to sustained growth in charitable giving for the balance of this year and well into the next. While this is good news for the overall industry, it’s important that as fundraisers we can’t take anything for granted. Take Hurricanes Harvey and Irma, for example. As in past natural disasters, the fundraising industry should experience a boost in overall giving as Americans and corporations respond generously to the need caused by both hurricanes.
Although, not all sectors benefit from the outpouring of support during a natural disaster. In fact, based on giving following Hurricane Katrina, non-relief organizations may experience a short-term (two-month) decline of six to 17 percent in giving, depending on the type of organization. The good news is that giving should return to normal following the brief drop.
Odds are that every organization will be impacted by Hurricanes Harvey and Irma. So, as we brace the final big push of the year, nonprofits must be nimble to respond to their individual circumstances. Use the next four months to start evolving your traditional fundraising campaigns and start adopting a more personalized approach based on the performance of individual donors.
Consider developing a nimble investment strategy—one that is not bounded by historical bias and/or traditional boundaries. Chase things that “matter most” and provide the greatest return on the organization’s investment. Be sure to closely monitor giving trends in September and October to determine Harvey’s and potentially Irma’s impact on your organization’s revenue and respond appropriately.
It’s great that our economy continues to improve, and we can reply on people’s generosity to rally behind and support America’s nonprofit organizations. But, take nothing for granted. Learn from the past. The market is unpredictable and a disaster can strike at any moment.
Answer these questions:
- Are you prepared to respond to the challenges and opportunities that will present themselves over the next four months?
- Are your strategies and tactics flexible enough to address changes in individual giving behaviors?
- Are you doing everything possible to capitalize on a positive economic outlook?