Drakes Bay Fundraising
A Next Generation Fundraising Company

Understanding Year-End Giving

Posted by Christopher Dann
Wednesday October 15, 2014
Categories: Fundraising

At this time of year, it’s worthwhile comparing the business of managing individual giving to the business of managing holiday retailing. There are two reasons. One is that holiday gift-giving, like year-end charitable giving, is fundamentally voluntary and depends upon availability of discretionary income and willingness to spend or give it.  The other reason is that we can learn a lot by studying how retailers prepare for the season.

What nonprofit managers don’t know about people who give money may not hurt them but it surely complicates and confuses their work. The wisest of managers each fiscal year hedge their expectations of individual financial support by planning marginal shortfalls based on their own donor base histories. If the shortfalls occur, their budgets are safe; if they do not, they have money to spend or put in reserve.  But if everyone understands why this is a good idea, few know how to get it done.

Almost all retailers have one significant advantage over almost all nonprofit organizations as the giving season approaches: they invest in research and analyses that tell them who their customers are, how they behave, where to find more of them, how to deal with their varied dispositions toward spending, and generally what they need to do in any given year to adjust to market conditions.

The business press has begun to note that the broad-stroke appraisals of consumer attitude and available discretionary income have prompted cautionary tones from retailers as they look toward the holiday season. But while there’s a general acceptance that holiday spending will most likely be curbed, press coverage also reveals the diversity of response one would expect from the diversity of the sector, from hunkering down, price-cutting, and planning on tighter margins to aggressive marketing and pricing in situations where the market seems to be favorable to one’s specific offerings (the iPhone 6 being the very best example this year).

It’s an obvious point, but the fact is most retailers do not generalize about the consumer marketplace when it comes to their own business plans, and most nonprofit organizations, if they study the donor marketplace at all, do little more than reference broad-stroke generalizations.

But the nonprofit sector is every bit as diverse as retailing. We have done multiple studies over a couple decades that have documented very specific distinctions among donor constituencies of organizations across an array of nonprofit sub-sectors. And while it is very difficult for most organizations to find the money to do such research on an annual basis, it is easy to justify a regimen of annual donor base trend analytics combined with biennial quantitative research.

Typically, the justification for budgeting research and analytics has three dimensions: net income gain combined with fundraising cost efficiency, fiscal stability, and donor base value enhancement.  While it’s too late to prepare for Q4 this year, it is exactly the right time to consider commissioning analysis of one’s donor base’s trends as soon as year-end giving has been accounted for and to plan for surveying donors next year in time to better plan for next year’s year-end fundraising.

Incidentally, Macy’s has already announced plans to open their stores at 6 pm on Thanksgiving Day. They won’t be alone. In the parallel universe of fundraising, with the same competitive crunch, the mail, the air, and the Internet are already crowded with year-end solicitations.  The supply of discretionary income just doesn’t come close to the demand of retailers and nonprofit organizations.

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Next Generation Fundraising and Drakes Bay Fundraising merged in the fall of 2013, bringing the longstanding professional acquaintances of their four principals – Tim Oleary, Carol Leister, Cindy Germain, and Christopher Dann – into a single company and combining the special resources and experiences of each to provide clients greater breadth and depth of service.

For more information about Next Generation Fundraising, click here.