Nonprofit revenue fell slightly in the first nine months of 2012 as nonprofits continued to face the erosion in overall donor numbers they have experienced for most of the past five years, fueled mainly by declines in acquisition of new donors, a new report says.
In the face of those declines, median revenue in the first three quarters of 2012 fell a median 2 percent from the same period in 2011, according to the Target Q3 Index of National Fundraising Performance.
The Index is based on the evaluation of transactions from 75 large organizations, mainly focused on direct mail, that had over 37 million donors and over 78 million gifts totaling over $2.3 billion for the 12 months ended in the third quarter of 2012.
Among those organizations, 43 percent had revenue increases for the period, while 57 percent had revenue declines.
Donor numbers fell a median 3.2 percent for the nine-month period in 2012, compared to the same period in 2011, continuing a trend that began the recession, which the National Bureau of Economic Research says began in December 2007 and ended in June 2009, says Target Analytics, a Blackbaud company.
“Donor populations have been shrinking for the past five years,” Target Analytics says. “The index has not experienced positive year-to-year overall growth since the U.S. Gulf Coast hurricanes in the third quarter of 2005.”
New donor acquisition posted widespread growth in the first half of 2012 but continued for only a few sectors for the first nine months of the year, the report says.
“This may indicate that much of the first-half growth was more of a temporary leveling-off or moderation in long-term acquisition declines, rather than real increases in new donor numbers,” it says.
Revenue amounts per donor grew slightly and varied by segment in the first three quarters of 2012, with 61 percent of organizations Target tracks posting positive growth over the period in revenue per donor.
“Revenue per donor shifts ted to be largely influenced by the mix of donors across different loyalty segments, since long-term donors typically contribute larger amounts than new donors,” the report says.
The relief sector, for example, posted the both biggest drop in overall revenue per donor in the third quarter and the biggest growth in new donors compared to the same period a year earlier, the report says.
“Organization strategy may also be impacting overall revenue per donor as organizations work to maximize net revenue by focusing efforts on higher value donors,” it says.
While the relief sector posted declines in most key measures, those declines represent mainly a “return to normal giving patters from phenomenal disaster-related growth in the two previous years, rather than a concerning decline,” the report says.
The societal benefit sector posted “extremely strong” performance in most key areas for the third quarter, especially in new donor acquisition.
The environmental, human services and religion sectors all overcame donor declines as a result of increases in revenue per donor.
Health organization, while posting declining performance in most key measures that continued their pattern of most of the past five years, posted increases in revenue per donor and donor retention and resulting in “slower revenue declines than donor declines,” the report says.
Arts and culture groups had decreases in most key measures in the third quarter after showing some recovery in 2011, with revenue per donor representing the only metric that saw increases in the third quarter.
Nonprofit revenue that Target tracks “has been, in general, weak since the declared end of the recession,” the report says. “Most participating organizations have not yet regained a significant portion of the ground lost over the past four years.”
That trend may not be unexpected, the report says, citing research by the Giving USA Foundation finding that, once a recession is over, “it has taken an average of three to four years for inflation-adjusted charitable giving to rise back up to pre-recession levels.”
The most recent recession, it says, was one of the worst in recent memory and the post-recession recovery has been one of the slowest.
“This implies that the nonprofit industry is likely to continue to struggle for a while yet,” it says.
— Todd Cohen