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Giving Keeping Pace Thanks to Donor Retention

Posted: 11/17/2021

Click here to read on The NonProfitTimes.

Charitable giving has kept pace through the first half of this year with the record fundraising of 2020 thanks to strong donor retention but new data for the second quarter could be a signal that COVID giving trends could be cooling off.

The 2021 Second Quarter Fundraising Report, released today by the Fundraising Effectiveness Project (FEP), compares giving data from the first half of 2021 with figures from the first half of 2020, notably:

  • The estimated number of donors increased by 0.7%
  • The total amount donated has increased by a projected 1.7%
  • The number of newly retained donors increased 22.4%

Total giving (10%) and the number of donors (6%) grew by record rates in the first quarter of 2021 but the growth was much more nominal in the second quarter, according to the report. The second-quarter drop could be a developing trend that leads to flat or decreasing in the third quarter, or the result of abnormally strong first-quarter growth.

"We saw a tremendous level of giving in 2020 because of the pandemic, people giving to social issues and other factors," Mike Geiger, MBA, CPA, president and CEO of the Association of Fundraising Professionals (AFP) said via a statement. "That strong level of giving continued into the first quarter of 2021, and then started to level off. The question is, are we seeing the beginning of the return to normal — that is, pre-pandemic levels and flows of giving, or will the growth in giving continue in the third quarter of 2021 and beyond? That's what the FEP will be watching with great interest," he said.

In a reversal from last year, smaller organizations are experiencing growth in funds raised in 2021 while larger organizations are seeing some contraction. In addition, those causes that experienced sharp decreases in 2021, such as arts and culture, international, and foreign affairs, are now experiencing growth in giving or very small losses. At the same time, human service and sealth organizations are now experiencing declines in giving in 2021 after very strong fundraising results in 2020.

"With these numbers, we're seeing the COVID-giving trends start to reverse," said Nejeed Kassam, CEO of Keela. "As pandemic relief efforts dominated the charitable giving landscape in 2020, it was larger charities focused on health and human services that received a significantly larger amount of funds than in typical years. Now we're seeing other non-COVID-related causes begin to see increased giving. It's not that people aren't giving to health and human service organizations — they're not just giving at the same extraordinary levels from last year, and those growth rates are falling."

Once all data from the second quarter 2020 has been collected, the FEP estimates that overall donor retention — the percentage of donors who gave in 2020 and have already given in 2021 — will have decreased by 7.2%. The decrease is expected, as retention tends to decline over the year as repeat and recurring donors are accounted for in the first quarter of any year.

As nonprofits look to what are traditionally the biggest giving days of the year in Q4, the latest FEP report shows opportunities that charities can leverage to inspire more giving in 2021 while mitigating risk in a continued period of uncertainty

"It's difficult to predict how this end-of-year fundraising will compare, but there are reasons to be encouraged," said Woodrow Rosenbaum, chief data officer of GivingTuesday. "Based on the data, we are seeing that people are still highly motivated to give. Organizations can use these last few weeks of 2021 to tap into this desire to help and connect with community to finish the year on a strong note."

The FEP is a collaboration among fundraising data providers, researchers, analysts, associations, and consultants to empower the sector to track and evaluate trends in giving. The FEP is administered by the AFP Foundation for Philanthropy in collaboration with GivingTuesday.

The quarterly findings on giving trends are available both via downloadable reports at http://afpglobal.org/fep and in a free online dashboard at http://data.givingtuesday.org/fep-report

Data analysis includes giving details from 9,618 nonprofits based in the U.S. as a subset of the FEP. The database is made up of organizations that raise between $5,000 and $25 million.

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