Blackbaud Index shows continued nonprofit fundraising decline, reasons to remain hopeful

The new Blackbaud nonprofit fundraising index report for February has just been published showing that continued timid and diminishing growth has once again been reported for the rolling three-month period. Overall year to year growth softened to just 0.7% which is the lowest mark seen since August 2012, continuing a slide in growth that has now reached its 4th consecutive month.

Last month I asked whether online fundraising can carry overall fundraising growth in 2014 and now, just 30 days later, it seems that may be exactly what is needed for the months ahead. This despite the fact with February growth that was so marginal, online fundraising remained healthy at +13.8%, a figure on par with results throughout 2013.

Fundamentally online fundraising receipts aren’t currently large enough to carry overall fundraising growth this year if traditional fundraising methods go into a period of decline when measured year over year. Nor is it likely that the balance will change dramatically enough to have online fundraising dominate in the coming years, although the ratio will continue to alter, traditional methods certainly will still dominate the landscape and set the overall tone for the industry. The Blackbaud report carries a lot of weight as it compiles data from nearly 4,000 US-based organizations and the February report makes one ask exactly where 2014 is heading.

Contrasting that is the huge optimism for the year ahead within the industry as recorded via other studies taken in the fundraising sector, recently as noted here on the recent report by the Nonprofit Research Collaborative.

The huge question is whether that optimism is misplaced and the industry is heading into an extended period of flat results or if 2014 has simply started at a slower than normal pace and a rebound can be expected over the next few months? I’m leaning toward the latter for two reasons and I think that the decline in  growth will level off the next few months and recover slowly but surely later in the summer.

Reason 1 – Historical Trends: The last time such an extended slump in growth was recorded on the Blackbaud Index was during 2011/12. Growth in overall giving peaked at 11% in August of 2011 and then fell for five consecutive months and six of seven in total. The recovery was somewhat stuttering in the spring and summer of 2012 but the second half of that year saw things get back on track. Important to note that overall growth didn’t fall into a negative position but did bottom out at 0% – very similar to where things stand today. Economically things aren’t excellent but on the other hand not so fragile that I anticipate an extended decline.

Comparison between the current decline and what was observed in 2011/12. What next for the overall fundraising growth?

The chart above compares the trend witnessed in 2011/12 from August onward (blue line) with the current trend being seen (red line) and I think that the leveling off may be a month or two away yet, but that a similar slow but positive climb can be expected to follow.

Reason 2 – The winter of 2013/2014: Most of North America is finally reaching the end of a winter that was the most brutal seen for many years. Extended extreme cold weather for much of the US and Canada saw numerous states and provinces record their coldest ‘months’ in over a decade and in almost thirty years in many places.

Consumer spending in December, January and February was negatively impacted to huge extent by the weather as spending on many items beyond food and fuel see large decreases, people were less likely to leave the home and less likely to spend money and this could well apply to nonprofit fundraising too as a virtual spending hibernation seemingly took place. For further evidence of that just look back at the December results, a month which normally sees a year-end spike in giving actually saw a large drop in the most recent example.

One other consideration I will write about more in the months ahead is the impact of tax changes which may dilute some of the reasons to be cheerful that I’ve advanced above.

However, on balance, I think that the next 60 days will see at worst further very small drops followed by a staggered recovery from May until the end of the year. Whether we reach the highs of 2012/2013 remains to be seen but I don’t think this year will be as bleak as the first two reports of 2014 project it to be.

What are your thoughts about the year ahead? Have we reached the bottom of the downward trend in overall growth?

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Miratel Solutions is a Toronto call centre, eBusiness, and letter shop mail house specializing in professional fundraising services including telephone fundraising, online fundraising, lottery services, donation caging, donation processing and other donor management services. We are committed to our CSR business values in all contact centre services