Charities in the U.S. and Canada with formal annual fundraising drives are more likely to hit their fundraising goals than those without formal annual drives, a new study says.
And among larger charities, those with gift clubs that recognize different gift amounts are most likely to meet fundraising goals, says the “Nonprofit Fundraising Survey — Special Report about Annual Funds” from the Nonprofit Research Collaborative.
Annual funds’ impact
Among 945 charities that responded to an online survey in August and September about fundraising results from the first half of 2013 compared with 2012, and about annual fund drives, 70 percent have an annual fund, and 77 percent of those are meeting goals, compared with 57 percent of those without an annual fund, regardless of the size of the organization.
“This finding suggests that organizations focusing primarily on major gifts, without also having an annual fund campaign, might be at risk of missing their fundraising goals in the long run,” Eva Aldrich, president and CEO of CFRE International, which awards the Certified Fund Raising Executive credential, or CRFE, says in a statement.
Charities that retain half or more of their donors from the previous year are more likely to meet their fundraising goals and more likely to raise more than they did the previous year, the study says.
And charities to which more than 5 percent of donors give a higher amount than they did the previous year are more likely to meet fundraising goals and more likely to raise more this year than last year in their annual fund, the study says.
Among charities with annual budgets of $1 million or more that have named gift clubs that recognized gift amounts, 79 percent are meeting fundraising goals, compared to 65 percent without gifts clubs.
But gift club benefits, when offered, make little difference in meeting fundraising goals.
Fifty-eight percent of charities responding to the survey increased funds raised in the first half of 2013, compared with a year earlier.
While 70 percent of respondents have an annual fund drive, annual funds are more common as the annual budget increases up to $10 million or more.
And having an annual fund is associated with being “on track to meet the current year’s fundraising goals,” the study says, it is likely there also is a relationship between planning for fundraising and having an annual fund.
It says a previous study by the Nonprofit Research Collaborative found a connection between having a board-developed fundraising plan and meeting fundraising goals.
And while annual funds are more common as the size of an organization’s budget increases, the likelihood of having an annual fund varies by subsector.
More than 80 percent of arts and religious organizations have annual fund campaigns, compared with 52 percent of organizations in the public-society benefit sector, which includes United Ways, community foundations and freestanding sponsors of donor advised funds such as Fidelity Charitable or the National Philanthropic Trust.
The Fundraising Effectiveness Project, separate research by the the Association of Fundraising Professionals and the Urban Institute, shows declining renewal rates among all donors, including those to annual funds, in 2,840 organizations participating through 2012, the study says.
In the Nonprofit Research Collaborative survey, in contrast, among 88 percent of those with an annual fund that reported tracking renewal rates, 12 percent reported renewals of less than 50 percent, 13 percent reported renewals of 50 percent to 60 percent, and 63 percent said 60 percent or more of their donors renewed their annual fund gift in the most recent year.
The big differences in renewal rates in the Nonprofit Research Collaborative survey with those in the Fundraising Effectiveness Project, suggest that charities that participated in the two studies differ in material ways.
High renewal rates are associated with increased contributions to the annual fund overall, the study says, and organizations with a renewal rate of less than 50 percent of the previous year’s donors have a markedly lower probability of seeing increased funds raised in the current year.
Annual fund upgrades
Among 78 percent of respondents with an annual fund that track “upgrades,” or gifts in the current year that were higher than the amount the same donor gave the previous year, the biggest share, or 36 percent, reported that 5 percent to 10 percent of their donors upgraded gifts the previous year.
For those with upgrade rates of 5.1 percent or more, over half the organizations saw growth in the amounts received while organizations with upgrades by 5 percent or fewer donors were less likely to report an increase in annual fund receipts.
Yet, when the share of donors increasing their annual fund gift grows by even a few percentage points, the organization is more likely to be on track to meet its fundraising goals, with 5 percent serving as the “breakpoint.”
Gift clubs’ impact
Sixty-five percent of charities responding to the survey reported having different donors levels or named gift clubs, which seem to be associated with greater probability of being on track to meet fundraising goals this fiscal year, the study says.
Charities with larger budgets are more likely to have annual funds, more likely to have gift clubs and, if they have both, more likely to be on track to meet goals.
While 36 percent of charities with annual budgets of less than $1 million that have an annual fund also have gift clubs, or 20 percent of all small charities, the study says, there is no statistically significant difference in reaching their goal with our without gift clubs or giving levels, the study says.
In meeting fundraising goals, it says, smaller organizations may face other challenges, such as to few paid fundraising staff; less engagement by board members; staff members who are newer to fundraising; or a disproportionately high share of funding from government, foundation grants or other sources not connected to individual fund drives.
Gift level benefits
Forty-two percent of respondents with annual funds offer donor benefits based on giving level.
Among respondents with annual funds that offer donor benefit, 56 percent offer special events organized exclusively for donors, often those above a specific giving level, while 24 percent offered exclusive or privileged access to the organization’s leadership or personnel.
In addition to gift clubs, the study says, some charities offer memberships.
Twenty-four percent of respondents with an annual fund also offered memberships with benefits. That group included 57 percent of arts organizations with an annual fund, and 54 percent of environmental organizations with an annual fund.
And among 251 charities offering gift club benefits, 54 also offered membership levels.
Arts organizations have the largest share, with both memberships and giving clubs.
The study finds no clear relationship between offering membership benefits and being more or less likely to meet fundraising goals.
Among all organizations offering memberships, 65 percent offering member benefits were meeting fundraising goals, compared to 60 percent of those with no benefits tied to membership.
“Offering membership benefits may help attract more members,” the study says, “but it is not linked here with fundraising results, whether meeting goals, raising more money, donor retention, or donor upgrades.”
Good stewardship practices, it says, “may be as important, or even more important, in supporting annual fund results than are tangible items or even experiential benefits such as donor-only events.”
— Todd Cohen