Blackbaud Institute Reveals Key Factors Dramatically Transforming the Donor Marketplace

Fewer donors are giving to fewer organizations, and new in-depth analysis from the Blackbaud Institute for Philanthropic Impact examines the drivers behind this shift.

The new report, "Vital Signs: Monitoring Giving Patterns in the Donor Marketplace," also examined what is influencing sector growth and how charities can best respond to an ever-changing donor marketplace, including the importance of a donor-centered approaching to fundraising.

Over the last 10 years, several factors have dramatically affected the sector's overall endurance, forcing awareness of the external factors at play and the value of retaining an organization's best donors. Taking into account significant disruptors like the Great Recession of 2007-2009, the Blackbaud Institute's report focuses on what factors have influenced the trajectory of sector growth and how organizations can respond accordingly to the dramatically changing market.

"Vital Signs focuses on the changing behavior of donors and explains why these behavioral changes should, in turn, guide changes in our fundraising strategies and priorities," said Roger Craver, author of the report's foreword and editor-in-chief of The Agitator. "With the study's major finding being that fewer households are supporting organizations, but are giving larger gifts, it is essential that organizations focus on retaining the active support of donors."

Key Findings

• During 2010-2015, the total number of donor households making charitable gifts declined, with fewer households giving larger annual gifts.
• The incidence of donor households adding new organizations to their giving portfolios declined as well. This signals an inevitable decline in available donor market if fundraising strategies do not improve.
• Donors are more valuable to nonprofit organizations than the organizations are to donors. Donor retention is now the most important individual giving strategy to combat the competitive donor marketplace.

"It has long been believed that the health of the philanthropic sector is directly linked to the passion people have for organizations and their missions; to that end, there has been a great focus on communication and stewardship of donors to further increase giving," said Chuck Longfield, author of the report and Blackbaud's chief scientist. "Our findings cause us to look at the donor marketplace in new ways that have consequences for fundraising and organizational strategy, and present new hypotheses that we plan to further research and test."

Implications for Practices

From the research, the study recommends charities move forward in the following ways:

1. Fundraising programs should focus on retaining the continuing support of current donors. With the research finding that fewer households are supporting organizations with more money, it is essential that organizations focus on retaining donors.
2. Organizations should try to find new donors who will retain their support. With donor retention levels barely moving, fundraisers prospecting for new donors would be better served by having a measure of how well prospects have been retained by the organizations they support, especially organizations in similar subsectors.
3. Work to better understand your donors, and change fundraising courses accordingly. It is essential to learn precisely what distinguishes the demographic profile of those supporters most passionate about an organization’s unique mission and program.
4. Increase investment and effort to achieve the 80:20 constituent rule. The data presented here validates that organizations are achieving over 80% of annual revenue from 20% of donors. Organizations should maximize giving from top donors to realize the greatest returns.
5. Focus on what works today and not what worked yesterday. When nonprofit professionals use outdated techniques, even the best intentions will not move the needle. Baby boomers are challenging the status quo. Make sure you are in touch with the preferences of your most generous donors.
6. Promote sustained giving at every turn. Sustained giving programs can help maximize revenue from all donor groups. Follow the lead of the public broadcast subsector, and continually reinforce the value of sustained giving to your donors.

Download the full report at www.blackbaudinstitute.com/vitalsigns.