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The Nonprofit Strategist

2.6% Increase in Giving Masks Accelerating Small $ Donor Slide

Recent trade press headlines about the most recent Fundraising Effectiveness Report are mixed. The good news is that giving has increased by 2.6% so far this year, driven primarily by wealthy donors.

The bad? So far, the number of US donors has declined by 4.3% through September 30th. The overall donor retention rate is down by 5.6%. In particular, new donor retention and lapsed donor recovery rates are down. These negative trends have now continued for several years, and in fact appear to have accelerated.

We understand the power of large gifts. We like them because of their potential and power to transform how we meet our missions, although they can have pernicious side effects. In addition, small and mid-sized organizations are often not equipped or scaled to attract them, unless they are get lucky.

The fact is our front-line social justice and social service organizations are at serious risk as these “small dollar donor” trends continue. In effect, the richer nonprofits get richer, while the poorer ones with less access suffer.

The macroeconomic reasons for this trend are both obvious and less so: declining incomes and the secularization of society—specifically, the negative correlation it has with reduced giving rates. From a public policy perspective, it is too early to draw conclusions, but it appears likely the recent changes to the nation’s tax law have contributed to both the increase in giving by the wealthy and the decline in giving by everyone else.

It’s clear to us that we need a substantial change in the direction of our public policy, whatever form that may take (more about that in future posts). For now, let us simply say:

We need a rising tide that lifts all boats, rather than our present ebbing tide, which portends their eventual stranding.