Nonprofit fundraising showing signs of plateau per Blackbaud Index

The new Blackbaud nonprofit fundraising index report for March has just been published and as I wrote last month the trend for continued diminishing growth has once again been reported for the rolling three-month period. Overall year-to-year growth softened into negative territory for the first time in three years with a decrease of -0.7% being reported for the period that ended in March.

I speculated last month that it may in part be a late winter/early spring phenomenon as it is worth nothing that the last time figures fell into any negative reporting range also occurred in March, although that was back in 2011. I also forecast last month that March was likely to see a further drop and it happened right on time, I also felt that May-July would see things gradually begin to recover into more positive growth. Let’s hope I’m right about that also.

Don’t forget that we are looking at very significant data with the Blackbaud report compiling figures data from nearly 4,000 US-based organizations that represent all sizes and sectors of the fundraising industry. One quarter of the way into 2014 it seems logical to say that the amazing results of 2013 won’t be repeated but it is also a good time to ask just what to expect over the next six to nine months. Today I wanted to see if there were any clues in the consistency of the fall in receipts dependent on the size of the nonprofit to determine if the malaise which has now reached five consecutive months of contraction is set to continue. I feel obliged to update and share my ‘trend comparison’ report below which illustrates just how closely the current contraction is mirroring the one seen in 2011/12.

It’s beginning to look like  zero percent growth – simply managing to equal the fundraising gains of last year – would signify a very good 2014. Whether that is too cautious of a prediction remains to be seen but it wouldn’t represent a disaster for the industry as a whole. 2013 was such a strong year for growth that maintaining those levels would clearly be a positive accomplishment. It is worth noting that following the last year of large gains – 2011 which ended at +5.6%  in overall fundraising growth for the year,  2012 data indicated growth had slowed to 2.1% so while healthy it couldn’t compare with the year prior.

Growth in 2013 was very similar to 2011 at 5.5% so perhaps a modest increase this year of between 1.0%-2.0% is a realistic expectation. At this stage I think that looks likely and reasonable all things considered.

Success then this year might be measured in reaching the same heights of 2013 and it seems that the economy is positioned to make this a viable aim. While not in a huge expansion mode unemployment levels are at their lowest in many years and consumer confidence has been gradually returning, both factors which make a large impact to fundraising from both the public and the private sectors. I still wonder how much impact changes to tax code have made, a topic which I will be returning to.

As for the downward trends by size and sector, the chart above illustrates the performance of each nonprofit size sub-category versus the baseline trend. As you’ll see there has been some notable inconsistency by size but it is apparent that medium sized nonprofits (those with annual receipts between $1m-$10m) have had the most difficult results in recent months. The blue line represents the overall industry results whereas the green shows the medium sized nonprofits. What is also apparent is that March may have been the most alarming set of results with all three sub-sectors showing a significant drop. It would seem all three need to level out although small nonprofits were still showing year-over-year growth of 3.5% in March.

Next month will provide a very important set of data to be reviewed, all eyes will be on the year-over-year numbers leveling out right around the +/- zero percent level and I think that’s exactly what we’ll see.

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