online fundraising

Winners/Losers in Annual Benchmark

Blackbaud released the annual Luminate Online Benchmark Report this week, "nine years strong and more vibrant than ever."

It is must-read material; I encourage you to download and wade through the detail. It's a one-of-a-kind perspective, based on the activities of 685 organizations that sent out 6.3 billion emails and raised 1.5 billion dollars.

Yes. With a B. In Both cases.

(Or, you can cut straight to the chase and use the new "interactive benchmarking tool that visualizes your nonprofit’s performance within the industry.")

First, the good news.
• Housefiles are growing: median file size up 11.82%
• More of these constituents are giving: 15.19% of active addresses up from 15.08% last year (because organizations are "presumably doing a better job of cultivating their support.")
• Revenue is up 8.89%: number of gifts up 7.01% and average transaction up 2.05%.
• Fundraisers are hearing the retention drum beat. For the fifth consecutive year, first time gifts dropped as a percent of total online revenue. While revenue from first time giving was up 1.76%, revenue from repeat gifts was up 15.4% and from sustaining gifts up 16.85%.

But now the bad news.

Houseflies may be growing, but:
• Median online revenue per usable email address fell 2.89% (from $12.77 to $11.77)
• The percent of organization supporters who advocate fell by .69%

I would contend that both of these are tied to another, seldom-discussed factor: the report notes almost off-handedly that "industry-wide emails grew at a modest 2.9%."

Bear with me for a moment ...

I've been paying attention to these reports for a while. The report from nine years ago is a reflection of 30 Convio customers who agreed to share data, so that's not really a fair comparison. Let's just go back just five years, to the 2010 report.

That data was based on 499 organizations (compared to 685 this year) that sent 12,287 fundraising messages (compared to 425,575 appeals this year). Consider – from 24.6 appeals per organization per year to 621. That's a 25-fold increase.

While we have more people receiving email, they're also connected to multiple organizations. Which compounds that "modest growth" substantially. 

Look at how some of the key metrics compare across that five year period. Open rates are down. Click-through rates are down. And, as more organizations seek to build involvement through advocacy, the percent of advocates who donate is falling as well.

Yes, online revenue is growing, and will continue to do so. Still, I think we have an industry issue, but I'm not hearing anyone step forward to address it. It's called clutter. And it's an easy trap to fall into.

It's not hard to calculate how much additional revenue one more email in the Year End stream might add. It's only a little more difficult to project additional opt outs. It's almost impossible to know how many people will simply stop opening our messages. Or clicking through. But it's not hard to imagine that may suppress future response.

And that may be well worth considering!

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.

What Do Industry Benchmarks Say About You?

For the past several years, by late February or early March I've begun looking forward to the release of the Convio Benchmark Report (or, the "Online Marketing Benchmark Study for Nonprofits" as it was officially labeled).

In 2012, publication slipped to April. In 2013 to May. Now, after months of watching, the "2014 Luminate Online Benchmark Report" was published in October. Released at the annual BBCon Conference. (In all fairness, it should also be noted that the period surveyed changed from calendar year to fiscal year, so the perspective is still about as recent as ever.)

The report is a little leaner (more compact and direct, mostly), but still packs quite a wallop. After all, how often do you get the chance to compare your organization's online fundraising performance to that of some 800 nonprofits across the country? Or see how you compare on a segment-specific basis?

I encourage you to download it and spend some time comparing your own trends.

In the meantime, here's what jumps out at me:

  • Most housefiles are growing (up 8%).
  • There's a lot more clutter out there (66% greater volume of messages to 72% more individuals).
  • In spite of that, open rates are holding steady (even up slightly).
  • While click rates are falling, the drop isn't as dramatic as last year's. 
  • The number of gifts, average gift and total revenue are all up.

But it's no longer a matter of simply "build it and they will come."

  • While there was an increase of more than 60% in email volume, the corresponding (consequent?) growth in total revenue was just over 8%. 
  • While there was also an 8% increase in file size,  the median value of an email address dropped more than 10% (from $13.90 last year to $12.26 this year). In addition, the number of first time donations fell more than 5%. 

That should be a red flag to anyone who has been relying on the 'rising tide to lift all boats.'

I think the amount of email clutter is a concern and will become increasingly so. According to this report, the median number of emails sent per year is 144. That's the midpoint … half of the organizations out there send more! Granted, not all messages go to all constituents and one of the bright spots mentioned is that there are also more tailored messages being sent.

My take: the bar in this business continues to rise. If you want to improve your performance, you'll have to raise your expectations as well.

The payoff can be there. The report showed a 16.8% growth in sustainer growth and an 18.99% increase in repeat donations.  Donors appear willing to become - and stay - engaged. It's up to you to nurture that involvement.