A new survey reveals that for many charities, especially smaller ones, fundraising is simply a leaky bucket.
The 2012 Fundraising Effectiveness Project, produced by the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute, summarized data from more than 3000 nonprofit organizations. The results?
- Fundraising was a wash. Every $100 gained for 2011 was matched by $100 in losses through attrition. Donors simply gave less or stopped giving altogether.
- There was negative growth in the number of donors. For every 100 donors gained in 2011, 107 were lost through attrition.
- Large organizations fared better than small ones. On average, charities that raised more than $500,000 lost $90 for every $100 raised. Those raising between $100,000 and $500,000 lost as much as they gained. And organizations raising $100,000 or less lost $110 for every $100 raised.
Basically, fundraising for 2011 was a wash, although that is better than during the years of the Great Recession. Still, the margins for fundraising are devilishly narrow, and it is hard to increase giving and the number of donors.
The report points out that nonprofits must look at both gains and losses to get a true picture of their fundraising effectiveness, and that retention of existing donors is the most important element of a fundraising program.
Retaining a donor is far less expensive than acquiring a new one. As the report says:
"It usually costs less to retain and motivate an existing donor than to attract a new one. For most organizations--and especially those that are sustaining losses or achieving only modest net gains in gifts and donors--taking positive steps to reduce gift and donor losses is the least expensive strategy for increasing net fundraising gains."
What can small nonprofits do to improve their net giving? Here are some things to think about:
- Get the board involved in fundraising.
- Hire a development person whose sole job is fundraising and retaining donors.
- Reexamine every special event. Is it worth the work? Is there something else that would pay off better?
- Establish a monthly giving program (high retention and more money)
- Treat current donors well by thanking them frequently and getting them involved.
- Work all of your communications channels with the goal of raising more money.
How does your net giving measure up to industry benchmarks? How are you addressing retention and donor stewardship? What would you add to this list of strategies for small nonprofits?
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