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Archive for the ‘Statistics’ Category

Insights into a large class of elite donors

Posted by Christopher Dann
Monday June 24, 2013
Categories: Demographics, Fundraising, Research, Statistics, Uncategorized
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…are the major contributions to our understanding of giving found in the Fidelity Charitable Giving Report, 2013 edition recently published through Fidelity’s website.

Fidelity sampled their 94,000 donors connected to nearly 58,000 giving accounts to produce multiple perspectives on who these donors are and how they give.

Their profile underscores a point we have had occasion to make repeatedly, that the prime time age range of giving begins at 55 when household discretionary income tends to have its growth spurt. While the average age of the Fidelity Charitable donor is 62, the average age at which funds are established is 54.

In all the age profile looks very much like that of most donor files we have researched:

Chart1

While the age profile of Fidelity donors varies little or not at all from that of the general donor population, patterns of their giving do vary.  In contrast to the approximate $3,500 the average itemizing tax filing household gives, the Fidelity donor’s average grant was $3,773 in 2012 and they gave an average 7.1 grants.

Here are the variances from norm of the distributions of Fidelity donor grants:

Chart2

*note, giving in response to Sandy increased Human Services sub-sector giving an estimated 1% in 2012

Donor-advised funds such as Fidelity Charitable have become an important sub-sector on their own. While overall individual giving, adjusted for inflation, dropped 11.3% from 2007 to 2012 (despite Sandy), gifts to donor-advised fund accounts grew 17%. While the former is clearly an effect of what’s happened to the economy, the latter seems to be because of economic uncertainly. Donor-advised funds have become a means of a new form of planned giving.

What Are Our Best Prospects Worried About?

Posted by Christopher Dann
Thursday May 30, 2013
Categories: Fundraising, Gallup, Statistics
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We have frequently advanced the thesis that the bull’s eye of fundraising’s target market is people from the ages of 45 to 64, more precisely those between 50 and 64. These are the ages in which people have the most money at their discretion; and since all giving is voluntary it depends on discretionary income.

When we look at fundraising performance, and it’s not what we expected it to be, it helps to know what’s on our donors’ minds. We often reference the Consumer Confidence Index as a reliable barometer of donor disposition. Earlier this month the Gallup organization released findings from their annual Economy and Personal Finance Survey that adds valuable perspective.

Table1As part of their survey, Gallup asked their national probability sample how much they worry about eight different personal financial matters. In general, those most worried about most of the eight topics were people age 50 to 64.  At right are the percentages for very and moderately worried, by age range, for the eight personal financial matters.

Gallup’s data helps us narrow this perspective by looking at the same financial matters from the standpoint of household income.  They reported five ranges, but since discretionary income is most likely to be found in the top three of the five, we’ll just show those here:

Table2Think of these percentages as magnitude of wind in our faces. It takes a lot more skill and finesse to sail into the wind than is does to sail with the wind behind you.

Trends in Public Support

Posted by Christopher Dann
Thursday January 3, 2013
Categories: Fundraising, Statistics, Trends, Uncategorized
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In a November posting Fiscal Chasm we reported and commented on data from the Urban Institute Press Nonprofit Almanac 2012 showing, across a selection of sub-sectors, the disparities between increases in the numbers of organizations from 2000 to 2010 and increases in income.

We referenced total income in that posting. That is useful for CEOs. For CDOs it’s more useful to look just at income that comes from fundraising. The Urban Institute combines private contributions and government grants into data labeled public support. If we look at the disparity between sub-sector growth and percentage change in public support, we see a different picture. Then, if we add reference to each sub-sectors share of overall public support, we get an assessment of the fundraising competition for each sub-sector.

Changes in numbers of orgs Jan 3 2013

That is what is shown in the table for a selection of sub-sectors. The data pertain to those 366,086 organizations in 2010 classified as reporting public charities. These are nonprofit organizations with charitable purpose that had $50,000 or more in gross receipts in 2010, were required to and did file 990s. While we can’t ignore the 613,815 additional public charities that were registered with the IRS in 2010, focusing on reporting public charities gives us more solid analytical standing.

Figures here showing shares of public support are different than what one regularly sees in GivingUSA annual reports. The data here are based strictly on IRS filings of reporting organizations while GivingUSA data are based on tabulations of tax data as well as econometric analyses of data and information from a variety of sources. Urban Institute data reflect only reporting religion-related nonprofits, substantially understating religious giving, which GivingUSA addresses through special (unpublished) methods.

There are only three sub-sectors where change in public support between 2000 and 2010 exceeded growth in the number of reporting organizations.

  • The extraordinary 190.2% increase in public support in the Human Services/Public Safety & Disaster sub-sector reflects the Haiti earthquake in 2010 and the lack of a major, high-profile disaster in 2000.  It’s an anomaly.
  • The 101.7% increase in International & Foreign Affairs is likely also reflecting response to Haiti channeled through organizations not classified as public safety and disaster responders. But we should also be mindful of the growing emphasis on impact investing and other forms of human health and welfare giving in the developing world, particularly by online charity facilitators such as GiveWell and GlobalGiving.
  • And in the Education sub-sector, it’s worth a contemplative pause to think about what’s happened in elementary and secondary education where public support increased 84.1%. Undoubtedly we are seeing evidence of both increasing numbers of charter schools as well as public schools’ increasing dependence on charity to supplement tax-based funding.

In all other cases, expansion of the sub-sector over the decade exceeded expansion of its public support. More organizations are competing for fewer dollars in grants and the contributions of individual donors. One or more of three things is likely happening to organizations as a consequence of these trends: they are reducing their program expenditures; they are financing deficits from endowments or reserves; or they are building sources of non-charitable funding.

The best course for building sources of non-charitable funding is in fees for services that are program related. Developing program-related service revenue not only avoids unrelated business income tax but takes advantage of skills and resources organizations already employ. It also often opens opportunities for beginning relationships with customers (or subscribers or patrons) that can later be expanded to charitable donor relationships. As smart as this course is it needs to be pursued with very careful attention to integrating strategies between the two areas of income development and between the marketing efforts for each of them. Because, as this blog often reiterates, all giving is voluntary, the downside of uncoordinated strategy is far greater for charitable support than it is for program service income.

Fiscal Chasms

Posted by Christopher Dann
Monday November 26, 2012
Categories: Fundraising, Statistics, Uncategorized
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For all concerned with piloting nonprofit organizations through the cross-currents immediately ahead of us, the new edition of the Urban Institute Press Nonprofit Almanac 2102 has arrived just in time. It’s been four turbulent years since the last edition, and we are in bad need of new points of reckoning.

The Urban Institute smartly focuses its attention on “reporting public charities,” 501(c)(3) organizations that file 990s with the IRS, not including religious organizations and congregations or those with income less than $50,000 in 2010 ($25,000 in prior years).  These criteria allow us to focus on organizations vying for financial support through service fees or charity.

One thing we looked forward to the new report enabling us to do was checking on donor market competition. Both fundraising performance data and the anecdotal experiences of clients indicate competition has been intensifying. The data show long-term erosion of donor retention rates, and the most troubling anecdotal experience is increasing incidence of donor complaints in response to solicitations which we believe have a lot to do with marketplace din.

The Urban Institute’s data certainly explain these observations. But, more importantly, they call attention to the need to do forward resource development planning beyond the bounds of fundraising strategy. That’s because there is no exception to the observation that the expansion of the nonprofit sector, sub-sector by sub-sector, has been exceeding the expansion of revenue in general, and giving in particular. And while we are these days staring like head-lighted deer at sundry propositions for changing charitable deductions, we need to think about how competition could get worse.

While giving through bequests and from foundations and corporations increased from 2000 to 2010, individual giving — apart from bequests — declined. The overall decline was 4% and the per capita decline was 12%. And while individual giving – again apart from bequests – accounted for 76% of all giving in 2000 and a lesser 73% in 2010, it remains dominant. It is also the most complex and expensive source to develop.

The sub-sectors vary in their appeals to and their calls on the donor marketplace. Of those selected to list below, higher education and disease-specific health organizations depend to far lesser degrees on individual charitable support than do environment and human services organizations. Yet whenever there is pressure on total revenue, it is certain there will be pressure on fundraising. We have heard and read a lot over the past few months, for example, about the tensions in the business models of both private and public universities with expenses outstripping revenue capacities of tuition and fees, government funding of public universities and endowment funding of private universities (to say nothing of athletics where that has become a big business).

The data for animal-related nonprofit organizations offer a preview of what we believe is most likely to befall human services organizations in the years immediately ahead. Community animal welfare has been dominated by a tax-supported business model, as the vast majority of animal welfare organizations have been operating under government contract to conduct what are called animal control services. As municipal budgets have become increasingly strained (they must balance their budgets), that funding has been reduced and the services provided have become increasingly limited. The result has been an explosion in nonprofit organizations such as breed-specific rescue groups to take up the slack.

While the Urban Institute keeps tabs as no other entity does on the nonprofit sector community by community, their Nonprofit Almanacs do not offer data more refined than by states. It is pretty clear, anyway, that the expansion of the nonprofit sector has been predominantly with community-based organizations. This means, in part, that increased competition for income is having greatest impact on organizations that have least opportunity to respond because their markets are limited.

When we take such information into account, as well as what will soon come our way out of successful or failed negotiations in Washington, we can imagine a nonprofit sector at 2020 that looks an awful lot different than what it looked like in 2000 and 2010. When we consider how fast the last ten years flew by and – being honest about it – how few business model changes organizations made, we realize how urgently we must attend to necessary change. We can anticipate:

  • Mergers of organizations within sub-sectors, especially in large metro areas, and by state in rural-dominant areas
  • Regional or national collaborations in program services, financial asset management, and in fundraising and supporting services
  • Increased incidence of national raider organizations consuming the lunches of community organizations, especially through electronic media
  • A mass of organizations in one phase or another of failure

More about donors and spending

Posted by Christopher Dann
Tuesday March 20, 2012
Categories: Fundraising, Statistics
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New Strategist Publications’ Best Customers, mentioned in our last post, offers insight for nonprofit managers beyond its data on cash contributions.

We’ve often said that since all giving is voluntary it comes from discretionary money. So when we are prognosticating at budgeting time about what the future holds for giving, we pay attention to what is happening in discretionary spending for consumer products and services. Discretionary income has been down for a long time, so paying attention to competition for discretionary dollars is important.

Here from the Bureau of Labor Statistics 2009 Consumer Spending Survey are some telltale categories:

The impact of depressed discretionary income had varying impact on giving, as other research has shown. The Bureau of Labor Statistics Consumer Expenditure Survey reports that while general cash contributions (excluding giving to education, religion, and politics) increased an annual average of 3% from 2000 to 2009, that rate slowed to less than 1% between 2006 and 2009.  They report that gifts to educational institutions dropped 75% and gifts to religious institutions dropped 10% across those years.

The question we keep asking ourselves is whether the pent up desire for some of those things on which people have not been spending their discretionary income is going to have greater impact on giving as economic recovery progresses.

Interpreting Giving USA

Posted by Christopher Dann
Friday August 19, 2011
Categories: Fundraising, Giving USA, Statistics
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The annual Giving USA Foundation’s report was later than usual this year, expressing its customary “Let’s give it up for philanthropy!” cheerleading with the perennial expression of awe about just how much money Americans and our institutions give away and a whistling-past-the-graveyard note that 2010’s numbers might presage recovery.

We have been perennially prompted to counter their cheerfulness about overall giving by noting that the expansion of the nonprofit sector has to be weighed against the expansion – or in recent years’ contraction – of giving.  From 2008 to 2010, while overall giving declined 4.2%, the number of nonprofits registered with the IRS expanded 7.9%.  While the IRS this year booted some 275,000 organizations off its rolls for failure to file, reducing the census by some 14%, still the point is new organizations are coming into the charity marketplace faster that the marketplace seems able to accommodate them.

This sobering fact was noted in the report: the 8% decline in giving registered in 2008 was the steepest decline ever recorded in their 56 years of reporting. And the report usefully provides 2008 to 2010 comparable data.

Individual giving (which, remember, accounts for 73% of all giving, not including bequests) dropped 11.6% (inflation-adjusted) in 2008, dropped another 3.3% in 2009, and then rose 1.1% in 2010. The 3-year overall change amounted to minus 2.3%.

Here are the “recession” and “recovery” data for the sub-sectors, inflation-adjusted, along with data reminding us of each sub-sector’s market share:

Sub-sector

Mkt Share

‘08 to ‘10 change

‘09 to ‘10 change

Arts and culture

13%

+2.5%

+4.1%

Human services

9%

+1.0%

–1.5%

Animals & environment

2%

–0.1%

–2.3%

Health

8%

+4.1%

–1.5%

Education

14%

–2.0%

+3.5%

Religion

35%

–2.1%

–0.8%

What use are these data? They are useful in helping organizations assess their situations relative to their sub-sectors and in reminding management and boards that how the giving market behaves has almost nothing to do with how much money an organization needs or wants.

 

Question Authority

Posted by Christopher Dann
Tuesday May 3, 2011
Categories: Fundraising, Statistics
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One longstanding and respected authority on American charity fell from grace last week while a newcomer with highly questionable data drew a pass from the trade press.

New IRS data tells us that the recession did greater damage in 2008 and 2009 than GivingUSA reported. It may be that the percentage drop in individual giving in 2008 was 5 times worse than GivingUSA reported and will end up being something between 8 and 14 times worse in 2009.

We hope the trade reporters stay on this story for two reasons. One is that GivingUSA’s authors and modelers, acknowledging the errors, promise to fix the model they use to make their projections. The second – and I think more important – reason is that if the recession dealt such a blow to individual giving, recovery from the recession is going to take longer. That great majority of nonprofit organizations already well into budgeting for fiscal years that begin July 1 need more reliable information.

Almost simultaneously last week the nonprofit sector’s trade press gave welcome and a free pass – as, regrettably they are wont to do – to a study from Johnson Grossnickle Associates and Achieve on “millennial” donors, those between the age of 20 and 35.  The authors welcomed comment, and we did.  The main problem with the report is that is based on an online study that, because participation is voluntary, is fraught with both non-response and response error. The second biggest problem with it is that it is available for free and will therefore be used by many unsuspecting people.

While the authors noted they had “normalized” their sample to the general population, there are at least two data points that show otherwise.  One is age, and since age is the reliable demographic predictor of giving, it’s a significant one.  The data appended to the report showed that 94% of the respondents had completed Bachelors or higher degrees.  But something fewer than 30% of the general population has attained Bachelors or higher degrees. The other data point – also a predictor of inclination to give – was the 79% saying they had volunteered in 2010.  The Urban Institute, with sounder research methodology, reported in 2005 that 23.1% of adults 25 to 34 volunteer.  While it is possible that recession-caused unemployment has resulted in more volunteering in 2010 among millennials than was the case five years earlier, it’s doubtful the percent increased more than three times.

In this case, we hope the reporters rediscover their reporting skills and question the press releases they get.

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.