Fundraising success linked to annual drives

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.

Donor retention

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.

Gift clubs

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.

Annual drives

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.

Retention rates

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.

Membership benefits

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

Continuing rebound in fundraising reported

After two flat years followed by growth in 2012, a slightly bigger share of charities in the U.S. and Canada posted fundraising gains in 2013, a new survey says.

Sixty-two percent of over 500 nonprofits responding to an online survey early in 2014 by the Nonprofit Research Collaborative saw an increase in fundraising receipts in 2013.

That was the biggest share since 2007, the year before the economy crashed, and was up from 58 percent in 2012, 52 percent in 2011 and 43 percent in 2010 that reported fundraising growth.

“While this is an encouraging sign, nonprofit charitable organizations continue to face an uncertain fundraising climate as reports about middle-class income stagnation in the United States and some economic predictions suggest a tough year in 2014,” the survey says.

Nonprofits “continue to face rising demands for services and lower revenues from government grants and fees paid, user fees and other resources,” it says.

While the trend in 2013 was up, the survey says, the share of nonprofits reporting increases in 2013 was not statistically significant.

In comparison, the survey says, the share of nonprofits reporting increases in 2011 and 2010 was statistically significant.

In the U.S., 68 percent of nonprofits reported increases in 2013, compared to 57 percent in Canada — in each country nearly the same share of nonprofits that reported increases in 2012.

Roughly the same share of nonprofits in each of the four regions of the U.S. reported an increase, including 68 percent in the South, 64 percent in the Northeast, and 63 percent each in the Midwest and West.

At least 60 percent of nonprofits reported increases in all fields of interest except the arts and religion, where 52 percent reported increases.

Major gifts grew at 62 percent of responding nonprofits in 2013, compared to 49 percent in 2012 and 42 percent in 2011.

Online gifts, both through email requests and other online fundraising, grew at 62 percent of responding charities, compared with 57 percent in 2012 and 37 percent in 2011.

Proceeds from special events grew at 62 percent of nonprofits, compared with 53 percent in 2012 and 45 percent in 2011.

Board member giving grew at 47 percent of nonprofits, up from 39 percent in 2012 and 42 percent in 2011.

Twenty-one percent of nonprofits saw increases from federated campaigns, and 25 percent saw increases in gifts from congregations, in both cases the same share as in 2012.

Members of the Nonprofit Research Collaborative include the Association of Fundraising Professionals; CFRE International; Campbell Rinker; Giving USA Foundation; The Partnership for Philanthropic Planning; and The National Center for Charitable Statistics at the Urban Institute.

Todd Cohen

Fundraising growth tied to communication, stewardship

Fundraising in the first six months of 2012 generally was flat compared to the same period last year, and those that were most successful improved the rate at which they retain donors, particularly through better communications to recognize donors and report results and through the use of multiple channels to distribute information, a new study says.

Nonprofits generally are sticking with the same fundraising methods they have been using, says the latest Nonprofit Fundraising Study from the Nonprofit Research Collaborative.

The study, which is based on data from over 781 organizations responding to an online survey in August and September, focuses on donor retention, a problem that consultant Penelope Burk found in 2003 was “the most serious problem” in fundraising, the Nonprofit Research Collaborative says.

“In the nearly 10 years since, the problem remains,” the study says.

It cites, for example, a report in August from the Fundraising Effectiveness Project, which reported for 2011 that organizations lost 107 donors for every 100 they gained.

The new study from the Nonprofit Research Collaborative says 46 percent of nonprofits responding to the survey saw increases in their charitable receipts, about the same as the previous year.

In contrast, 60 percent of those that actively recognized donors, reported results, and used multi-channel communication saw gains.

One-fourth of nonprofits surveyed reported giving was flat, and 29 percent said it fell,

Among nonprofits that track retention, 73 percent said over half the donors who gave in 2010 made at least one more gift at some point in 2011.

Sixty-nine percent of those employing retention tactics used donor recognition, which was the most popular method, and 61 percent reported results to donors, the second most popular method.

While more organizations raised roughly the same amount in the first six months of 2012 as they did in the same period last year using 13 fundraising methods, such as giving by text messaging or board contributions, major gifts other than from boards grew 40 percent of responding nonprofits, was flat at 33 percent, and fell at 23 percent.

And fundraising from special events grew at 45 percent of nonprofits, held steady at 27 percent, and fell at 27 percent.

While the study found no statistically significant differences in the share of respondents seeing growth when analyzed by region of the U.S., it says it echoed earlier studies in finding that charities with annual operating budgets below $1 million reported increases in charitable receipts less often than larger charities.

Partners in the Nonprofit  Research Collaborative are the Association of Fundraising Professionals, Blackbaud, Campbell Rinker, Giving USA Foundation, and the National Center for Charitable Statistics at the Urban Institute.

Todd Cohen

Board role tied to meeting fundraising goals

Nonprofits with boards that actively take part in raising money do a better job meeting their fundraising goals, a new study says.

Among over 1,600 U.S. nonprofits surveyed online in January by the Nonprofit Research Collaborative, 60 percent of those with board members who helped with fundraising met their 2011 fundraising goals, compared to 53 percent of those with board members who were not engaged in fundraising, says the Collaborative’s report, Engaging Board Members in Fundraising.

“Seventy-eight percent of those surveyed ask board members to request contributions to the organization from family and friends,” James D. Yunker, chair of the Giving USA Foundation, a member of the Collaborative, says in a statement.

“That simple step is probably the single most important thing an organization can do to engage board members in fundraising,” he says. “It is associated with meeting fundraising goals for all sizes of organizations, proving again that fundraising is all about relationships.”

The survey asked nonprofits about the size of their board; whether board members were required to give; if they were required to give, whether there was a minimum, and if there was, how much was it; and specific ways board members helped with fundraising.

Among the 17 percent of respondents that did not engage board members in fundraising, 43 percent saw their fundraising results for 2011 increase from 2010, and 53 percent met their, although not all organizations had goals that represented increases over the previous year.

The study says it “debunks a common perception that board members help an organization meet its fundraising goal through their own giving.”

While 57 percent of charities responding to the survey require board member gifts, it says, and 91 percent tell prospective board members about that requirement at the time they are recruited, those gifts represented 10 percent or less of total charities receipts at a majority of  every type of organization studied.

Less than 20 percent of responding charities required a minimum gift amount from board members.

On average, organizations with active fundraising boards used six or seven of 11 different methods studied to engage board members in fundraising.

Methods for engaging board members to assist in fundraising range from providing names or contact information for potential donors, to hosting events in their homes or chairing an event or campaign.

A key feature of successful methods of engaging board members in fundraising is that they expand the nonprofit’s list of prospective donors, the study says, either because board members share their contact lists, make personal introductions, or host sessions to help get to know the donors and help them get to know the charity.

Fifty-five percent of small charities, or those with annual spending under $3 million, that used seven or more of the 11 methods reached their fundraising goal, compared with 44 percent that used less than seven methods.

The number of methods did not make a difference for medium-sized or larger organizations, but the specific methods did vary with the size of an organization’s budget.

Groups with smaller budgets tended to benefit from a broader range of methods for board engagement, while the largest groups, or those with $10 million or more in annual spending, met their fundraising goals when using methods that provided “very personal” contact by board members with donors.

Smaller charities, for example, met their fundraising goals more often when board members helped gain access to prospective donors by sharing names and making introductions.

Big charities met their fundraising goals more often when they asked board members to host an event at home or at a business or let the charity use the boar member’s name in fundraising appeals or a publication.

“Gaining access to prospective donors was not as important in this group as it was fro the smaller organizations,” the study says, “but having a board member make a personal connection did matter.”

Sixty-three percent of charities with a board-level development committee met their fundraising goals for 2011, compared with 52 percent of charities that did not have a board-level development committee.

Charities with board members who ask friends or business associates to make a financial contribution met their 2011 fundraising goals more frequently than charities that did not ask board members to make those requests.

Among charities that require a minimum board member contribution, the median amount is $1,000, while it is $2,000 for arts groups and $2,500 for education nonprofits.

That minimum amount increases with the size of a charity’s budget, with some “very large” organizations asking for minimums of over $100,000, the study says.

Todd Cohen