2018’s Lackluster Fundraising Results Suggest What Charities Should Do Now

As charities examine their 2018 fundraising results, signs point to a lackluster year. December fundraising, in particular, was disappointing for many charities.

The Salvation Army and Doctors Without Borders USA, two big charities that rely primarily on small-dollar donations, both saw dips in giving at the end of the year. Contributions to the Salvation Army from October 1 through December 31 declined by less than 1 percent from 2017 levels, but at Doctors Without Borders, December giving fell about 10 percent below December 2017 levels — undercutting most of the increase in giving during the other 11 months of 2018.

And while these and other charities saw drops in giving, the decreases weren’t all significant, and the full impact of December giving on annual fundraising remains to be seen.

Last December — especially in contrast with the same month in 2017 — was a “big question mark,” said Phil Hills, chief executive of consultancy Marts & Lundy.

A mix of factors probably contributed to this mixed picture, including sharp drops in the stock market throughout the month, signs of a looming economic recession, and financial uncertainty caused by the partial federal government shutdown.

Many charities also noticed giving slow after two consecutive years of record-setting donations prompted in part by donors getting ahead of tax-law changes and charities benefiting from what some fundraisers call the “Trump bump.”

While much of the tax law’s effect remains unknown, many fundraisers expect 2019 giving to be a bellwether for the legislation’s effect on donor behavior.

“When people realize the potential implications when they do their taxes this year, it might affect next year,” said Scot Chisholm, chief executive at online fundraising platform Classy.

What is clear, however, is that the usual December giving bonanza didn’t happen last year, which is one reason year-end totals may be flat or lower in 2018 than they were in the past.

Tallies released in recent weeks show the picture:

• Donations rose 1.6 percent in 2018, according to the Association of Fundraising Professionals and the Urban Institute’s Fundraising Effectiveness Project. That uptick is below the rate of inflation and marks a decrease from the 2 percent growth in giving in 2017.
• Technology company Blackbaud’s year-over-year analysis of more than 9,000 nonprofits found a rise in overall giving of 1.5 percent from 2017 to 2018.
• From Giving Tuesday to December 31 last year, PayPal, the online payment company, processed just over 6 percent more gifts than it did during that period the previous year, and the number of users grew 8 percent.

PayPal also reported fundraising increases over 2017 levels on Giving Tuesday and December 31. The company processed more than $100 million donations on December 31 alone, setting a record for a single day of giving. Over all, however, “the growth during the holidays was more modest,” said Sean Milliken, the company’s head of global social innovation.

Digital fundraising — especially on social media or as a part of an online retail transaction — is prompting many donors to give throughout the year, not just during the holidays, according to Milliken.

Based on trends in the past year, here’s what fundraisers and other experts suggest doing to buoy contributions in 2019:

Appeal for gifts year-round.

Some charities are wondering whether it’s still worth counting on December for as much of a lift as it offered in the past and are considering ways to send more appeals throughout the year.

The PETA Foundation, which supports People for the Ethical Treatment of Animals and other animal-welfare organizations, said its December donations dropped 11 percent from December 2017. That hurt what had otherwise been a banner year: the dive meant PETA ended the year with just a 9 percent rise even though it expected to do much better with the usual December boost.

Derek Mullins, social-media and community fundraising manager at the foundation, said he thought the drop might have been the result of increased competition from other charities.

“With all of us making noise, it’s getting really hard to hear each other individually,” said Mullins. “All of us are doing our own thing and approaching it in different ways. But it’s a very, very crowded field.”

Brian Lauterbach, vice president for programs and collective impact at the technology company Network for Good, said one way to get around the December competition is to campaign aggressively throughout the year.

“The smart nonprofits we see are trying to recreate that magic by leveraging what I call the Hallmark holidays,” said Lauterbach, adding that nonprofits should build fundraising campaigns around holidays that align with their mission.

Make monthly giving easy.

Offering options for donors to give once a month or on another recurring basis could be a useful strategy for attracting midlevel donors, some fundraisers and consultants say.

The average income of the typical recurring giver is $6,100 less than that of a one-time donor, according to Classy. And the popularity of subscription services like Netflix and Spotify shows that people are becoming accustomed to monthly fees.

The Human Rights Campaign, an advocacy group that works to achieve equal rights for LGBTQ people, intentionally built its membership program to attract recurring gifts. Donors who give through the organization’s website, for example, have to opt out of committing to a $20 monthly gift. The focus has worked: About 60 percent of its individual donors give monthly.

“That keeps you pretty stable and steady,” said Dane Grams, director of membership at the organization.

Even though the organization saw December fundraising revenue drop about 7 percent from 2017 levels, the Human Rights Campaign remains headed to increase its overall fundraising revenue by the end of its fiscal year in April.

Monthly giving and a successful fundraising campaign leading up to the midterm elections are both factors in this projected overall increase, according to Grams.

Charlie Mulligan, chief executive of online gift processor GiveGab, however, cautions that recurring gifts are not risk-free.

“The general sense is that, if there’s a recession, people will cut out the recurring giving first,” he said.

But Scot Chisholm of Classy disagrees. Monthly gifts tend to be smaller, which leads him to think they’ll continue even during a recession. “Recurring is just more bulletproof,” he said.

Adjust strategies for this year.

Fundraisers will need to adjust to a new reality this year, one likely to bring more modest gains than those their organizations enjoyed in 2016 and 2017. December 2018 data showed that contribution levels are “trending things back towards where giving normally would be,” according to Lauterbach of Network for Good.

A key way to keep contributions flowing, he said, is for charities to build “some semblance of relationship with every donor at every giving level.” Contacting donors in every medium they use — including direct mail, email, and social media — can help solidify support, especially through monthly giving.

This contact with donors can also help assuage uncertainties about the new tax policy, especially among midlevel donors, who give $10,000 to $100,000. Those supporters are most affected, and charities can lend a hand as they respond to changes in the tax law.

“Make sure you’re helping them understand, through advisers or others, what the tax policy really does say and how it’s going to impact them. And once they’ve filed their 2018 taxes, they’ll have those answers,” said Hills of Marts & Lundy.

Nonprofits can also encourage supporters to raise money from their friends and relatives on social media, for example by asking their friends to donate to a fundraising appeal on Facebook to mark a birthday. Those campaigns, according to PayPal’s Milliken, help donors “give as part of their daily life.”

If anything, the fundraising challenges in 2018 signaled that charities can’t be complacent in the year ahead.

Said GiveGab’s Mulligan:: “Whenever an industry goes through some hardship, usually it makes it better.”