Year End Giving

When Is Enough Enough?

It’s estimated that as much as 30% of annual giving occurs in December and that for some organizations this can represent as much as half of their annual budget.

So, it is a big deal. And you’re right to want to do it right. But how do you know what right is?

One question we often hear is “How many contacts/outreaches should we have?”

Proponents of asking more typically argue more revenue justifies more asks. Opponents to asking more counter with concerns about donor fatigue. 

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The problem is, both may be right, a phenomenon that has been label “the frequency math effect.” An IBM study of email last holiday season concluded “During heavy volume time frames, the higher cadence of emails typically produces fewer opens and clicks per message sent but more opens and clicks in total.”

So, how might that apply to fundraisers?

The chart above summarizes the Year End results of two subsequent campaigns for one nonprofit client. This organization wanted to aggressively increase Year End revenue, so added one new email (email #5) and one resend (email 4a). (Emails 3a and 4a were re-sends of the original message to those constituents who hadn’t open it within the first 48 hours.)

Year 2 saw a 29.6% increase in total revenue, well above standard industry increases for the year. But it also saw a 29% increase in total unsubscribes and revenue per email sent dropped nearly 25%. Greater return, at a greater cost.

So, now, what should they do?

The fact is, most organizations have multiple donor development objectives: immediate return, on the one hand, and cultivation of future potential, on the other. It may not be possible to give equal weight to both objectives in every message, or even in every month. But somehow, a balance must be maintained.

Our recommendation was to slow the cadence considerably in January, and to focus solely on more engaging content. And of course, to continue to monitor open, click-through and unsubscribe rates across the file.

What are you doing?

Let the Reviews Begin!

Blackbaud recently released its 2014 Charitable Giving Report, the self-proclaimed "largest analysis of overall and online giving data in the nonprofit sector."

That claim is based on the number of organizations (4,798, up 16% from 2013) and amount of revenue ($16.2 million, up almost 30% from 2013).

While some of the insights offered may not be groundbreaking ("Nonprofits must continue to focus on both donor acquisition and retention to drive sustainable growth."), the sheer volume of data demands some respect. In addition, it's one of the earliest, most authoritative perspectives on how the nonprofit sector performed in 2014.*

Some trends worth noting:

  • Overall giving increased 2.1% (down from its 4.9% pace of 2013). This was somewhat lower for large organizations (1.3%) and higher for small organizations (5.8%).
  • Online giving showed a greater increase (8.9%, also down from the 13.5% of the prior year) Again, this was somewhat lower for large organizations (8.0%) and higher for small organizations (10.6%).
  • Online giving grew to 6.7% of overall giving (from 6.4% in 2013).
  • For the third consecutive year, December continued to shrink as a percent of total annual giving (from 18% in 2012, to 17.5% in 2013 to 17.4% in 2014).

I think this final observation is interesting for several reasons.

Hopefully it speaks to the efforts organizations are making throughout the year to build ongoing support. This has been particularly noticeable in the increasing emphasis on monthly giving programs.

It may also foretell the consequences of the arms-race-like competition among fundraisers - especially online fundraisers - during the end-of-year giving period. Blackbaud has not yet published its stats on end-of-year activity, but I anticipate trends similar to what was reported in last year's benchmark report: more total emails and more versions of those emails.

For online fundraisers, the impact of the fourth quarter fell significantly, from 35.4% in 2013 to 32% in 2014.

How can you use industry trends to fine tune your development efforts?

*Note: In the early assessment department, Paypal has reported that it saw an increase in donations processed of nearly 50% this past December. However that's likely more reflective of the increase in mobile payments - or the effectiveness of its 1% match - than an overall increase in giving.