Boomers at top in charitable giving

Baby Boomers, the generation born from 1946 to 1964, account for 43 percent of charitable giving in the U.S., more than that of any other generation, and will dominate charitable giving for the foreseeable future, a new study says.

Seventy-two percent of Boomers, or 51 million donors ages 49 to 67 in 2013, give to charity, supporting 4.5 charities on average and making an annual gift that averages $1,212, says the study, Next Generation of American Giving.

The study, commissioned by Blackbaud and based on an online survey of 1,014 U.S. donors conducted by Edge Research, also found that while most Americans give, overall giving remains flat.

Eighty-eight percent of “Matures,” or those age 68 or older this year, and 60 percent of “Gen X” and “Gen Y”, or those age 33 to 48, and 18 to 32, respectively, give to charity, the study says.

But 59 percent of donors say the amount they give, and 70 percent of donors say the number of charities they give to, will remain the same in the future.

Nearly 60 percent of Gen Y identified the ability to directly see the impact of their donation as a critical part of their decision process, the survey says, a concern that declines with each older generation, the survey says.

The biggest share of donors across all generations supports social service charities, houses of worship, and health organizations, the survey says.

Gen Y is least likely to support local social services, it says, while Gen X and Gen Y are more likely to support children’s charities; Boomers and Matures are more likely to support veterans’ causes; Gen Y is less likely to support environmental causes; and Gen X and Gen Y are more likely to support human rights and international causes.

Nearly half of Boomers and Matures but only 36 of Gen X and 25 percent of Gen Y believe monetary donations make the biggest difference.

Online giving continues to grow in importance and prominence, with 42 percent of Boomers reporting they give online as their primary method and 40 percent preferring to give through direct mail.

“For the first time, we are seeing a different generation emerge as the torchbearer of giving,” Dennis McCarthy, vice president of strategy for Target Analytics, a division of Blackbaud, says in a statement. “This really signals a strong shift is needed in the way nonprofits think about supporter engagement.”

— Todd Cohen

Fundraising, Part 3: Human services groups focus on direct response marketing

By Todd Cohen

[Note: This article is from a report written for Blackbaud, which asked me to look at fundraising strategies that nonprofits have found to be effective.]

Fundraising generally has been tough, particularly in the last five years, with the acquisition of new donors growing more competitive across all fields of interest in the nonprofit sector as a result of the weak economy, and fewer names of prospective donors being available, says Lynn Edmonds, president of L.W. Robbins, a fundraising consulting firm in Holliston, Mass.

A report in January by Target Analytics, a Blackbaud company, found that, for the most of the past five years, “declines in overall donor numbers have been driven primarily by declines in new donor acquisition.”

To address those declines, L.W. Robbins has encouraged its clients to put more emphasis on best practices, specifically by more testing of direct-response marketing strategies to acquire new donors and renew existing donors, Edmonds says.

That is important, she says, because seven of 10 first-time donors to nonprofits typically do not make a second gift.

Still, many nonprofits are reluctant to invest in testing direct-response marketing for acquisition and renewal of donors because testing is expensive, including the continually rising cost of postage, she says.

“It will probably take two-and-a-half years before new donors acquired actually will return net income, and that’s working with a professional firm that writes the copy, designs everything, and is the strategist behind it,” Edmonds says.

“What nonprofits really need to do,” she says, “is open their minds to the fact that it’s not going to get better unless you invest in testing and come up with additional ways of attracting new donors and renewing existing donors.”

The key, she says, is to “look carefully at what has worked in the past, and then test against elements of that.”

One sector that has shown success with testing direct-response marketing strategies is food banks, she says.

For 35 Feeding America food banks that are its clients, L.W. Robbins has tested variations of several direct-response “control packages” that have proved effective in acquiring new donors, she says.

Direct-response fundraising is important to food banks, she says, because it represents an important part of their fundraising revenue.

In one test, the bulk of the local prospects that the food banks were targeting in their mailings received a “control” package that included an envelope with a standard-size letter and a reply slip. A smaller test group received a mini-greeting card that was customized to each food bank’s local prospects.

That test proved more effect than the control package and now has replaced it, so future testing will try new approaches to see if they prove more effective than the new control package.

“We’re always continuing to test against the controls in all of our accounts,” Edmonds says.

Also key in direct-response fundraising is working with a list broker with experience with nonprofits, and mailing enough pieces so the test is statistically sound.

“The key is to get that first gift from acquisition,” she says. “The next challenge is making sure you’re using best practices in your renewal program to get the second gift by listening to your donors, checking comment mail, and making sure you acknowledge them immediately.”

Next: Arts and culture groups aim to diversify donor base

The series:

Fundraising, Part 1: Basics key as economy starts to recover

Fundraising, Part 2: Health care groups invest in development capacity

Fundraising, Part 3: Human services groups focus on direct response marketing

Fundraising, Part 4: Museums aim to diversify donor base

Fundraising, Part 5: Major gifts a focus of environmental group

Fundraising, Part 6: Direct marketing a key for public society benefit group

Fundraising, Part 7: International affairs group aims to show

Fundraising, Part 8: Faith-based groups count on direct mail

Fundraising, Part 9: Independent school partners with parent volunteers

Nonprofit revenue, donor numbers drop

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