Efficiency of fundraising services more than just statistics (part 1)

Fundraising Services for nonprofits have been under a great deal of media scrutiny recently and while weeding out any unethical  or poor fiscal practices is in the best interests of everyone, the doom and gloom merchants are on a quite a roll at the moment portraying the industry in a negative light. A recent post by Blackbaud looked at ‘five worrying statistics for nonprofits’. Before I had a chance to dig into them I also found this wonderful counter article written by Pamela Grow on her informative grantwriting blog. As with all things statistical you have to look a little deeper to interpret the numbers and as Pamela explained on her blog some of the numbers don’t always add up or that further insight is required. Even when studied they they with extra analysis also provide solutions for nonprofits which is what I wanted to expand upon today and finish later this week in a two part post. First of all below are the the series of five statements and the sources from where they were gathered.

1. First Year Donor Retention is 29.3%:  The Target Analytics donorCentrics Index of National Fundraising Performance for 2009 reported this trend Q4 2009

2. Fundraising Email Response Rate is 0.13%:  The 2010 eNonprofit Benchmarks Study

3. 67% of donors plan to eliminate or reduce support to nonprofits that over‐solicit: 2010 Cygnus Donor Survey

4. Only 26% of Nonprofits Rated their Websites Very Effective:  2010 State of the Nonprofit Industry Survey

5. Recurring Gift Donors only accounted for 10% of all US Donors:  2009 donorCentrics U.S. Recurring Giving Benchmarking Analysis

That’s an awful lot of numbers and reports to be digested of course and much like any other industry you’ll find fairly extreme variations on the data reported out elsewhere but it presents an industry that is out of touch and inefficient. I don’t know what could be further from the truth. The nonprofit fundraising industry has led the migration to social media more rapidly and more efficiently than any other single industry. At a time when donor contact and donor relations are as integral as ever most nonprofits have made themselves more accountable and more accessible than at any point in history and that is exactly as it should be. Moreover some of the data doesn’t really make sense and would not result in the overall trends in fundraising being reported year over year, which with the exception of some economic impacts has essentially shown growth and of course diversification.

Each topic merits some extra analysis and I’d guide you to also read the response by Pamela Grow who states numbers alone perhaps do not measure, a very integral part of fundraising which is relationships and relationship management. For the first statistic I feel too much emphasis is placed on retention programs where the reality is many people diversify the charities they support and do not automatically renew year in year out. Most nonprofits assign as much attention to building new donor bases accordingly as maintaining existing donor commitments. Moreover industry analysis suggests that overall retention rate of historical retention (which is estimated to be much closer to 50% and as high as 65% in some cases) is far more significant than measuring first year renewals where the rotation is far more pronounced. Many donors make a one time commitment due to their financial situation or evaluate there lasting relationship with a non profit for personal reasons just as often the relationship built by the non profit.

The email response rate just doesn’t make sense and would suggest a nonprofit would need to circulate 769,000 emails to receive 1,000 commitments. Those results would signify the ‘average’ with many performing less effectively which leads to doubt on my part. If the source of the data involves cold emails to non-verified email accounts then I suppose the data could be partially correct, but just what percentage of people/potential donors don’t have a spam filter or change their email address in a given 12 month period. Again the key is that any email campaign would rely more on existing relationships and targeted messages that speak specifically to the recipient. Moreover blanket emails from random lists is not a useful fundraising tactics, but as this article illustrates if your audience is appropriate (interpret as subscribed or showing interest) then the results can be very successful. I’ll look more at the remaining data later this week but would also welcome your thoughts.