You broke my heart 💔, Year-end

In nonprofit fundraising, there’s nothing quite so important as calendar year-end giving.

Most organizations earn a significant portion of their revenue in the last few weeks of the year. So it’s important to have a solid strategy in place to maximize giving.

Shortly after ringing in the new year, reports of soft online revenue in December began pouring in across the industry. We did an initial analysis, which gave us evidence that the declines in December might be a temporary blip — an aberration concentrated in just a few critical weeks. We’ve taken the time to analyze the data, including January trends in online giving, and want to share the results of our analysis here.

The facts

Overall revenue performance was a mixed bag. There was no clear trend across all nonprofits — on average, as many organizations were up in overall revenue as were down.
Online revenue was down in December, on average. In our data set, 60% of the organizations experienced year over year declines in online revenue.
While December online giving was down for many, over 80% of the organizations saw increases in online revenue in October, and over 70% in November year over year.
Specifically, the December online revenue declines were focused on the last few weeks of 2018, with an uptick at the very end of the year.

3 key observations

Of the organizations that saw December online revenue declines, 70% of them also entered the year with fewer active donors to support fundraising. That means only a small handful of organizations who saw online revenue decline in December, did so despite having grown their donor file in the past year. Additionally, two out of five clients still experienced online revenue growth, bucking the overall trend.
On average, active donors with a $10K+ largest lifetime gift actually increased their December giving compared to last year. This leaves the decline we’re seeing concentrated among the active general and mid-level file segments and the most severe declines concentrated among new donors.

Only one-quarter of the organizations saw a year-over-year increase in new online donor revenue in December. Interestingly, all but one of these organizations that saw growth had increased their digital media spend by 250% or more, compared with last year. So they were making a significant increase in the use of digital media to support online fundraising.

Did a strong Giving Tuesday impact year-end?

The short answer — our data says no.

According to Philanthropy News Digest, all Giving Tuesday revenues actually grew twice as much in 2017 (a 50% increase over 2016) than we saw in 2018 (a 27% increase over 2017).

Some have suggested that the largest Giving Tuesday returns ever seen could have been responsible for pulling revenue forward. The thinking goes, Did people just give their year-end gift at Giving Tuesday instead of in late December?

To test this hypothesis, we looked at all donors who gave a donation over the last several years from December 15 through 31. It turns out, from 2017 to 2018, the percentage of people who gave at year-end increased, even more than in previous years. If anything, MORE donors are repeating year-end gifts in mid-December or after. This means it’s unlikely that Giving Tuesday pulled giving earlier.

But this prompts a question: If it’s not Giving Tuesday, then why would so many nonprofits have seen declines in online revenue in December?

So, why was online revenue down for many nonprofits?

While we can speculate about the cause of this revenue decline, we’ve uncovered a few clues that indicate the December 2018 online revenue decline was an isolated event, largely influenced by external factors.

Looking at the median YOY weekly revenue change across all organizations, online revenues were growing consistently through most weeks in early Q4. Declines were focused around three specific weeks in December and then picked up in the very last week of the year.

So why the unusual dip in December? Well, if you’ll remember, December was an unusually uncertain and rocky month for the economy. The stock market had its worst December since the Great Depression. A recent Washington Post article outlined a few of the notable events that could have eroded consumer confidence, and made donors worried about opening their wallets at year-end.

Dec 4: Markets tumbled over the growing threat of a trade-war truce with China.
Dec 19: The Federal Reserve announced an interest rate increase, the fourth increase this year.
Dec 24: The S&P 500 logged its worst Christmas Eve performance on record.
Dec 26: In a dramatic upward swing, markets received the largest post-Christmas bump ever after reports of strong holiday sales from retailers.

In addition to the stock market scaring donors about their retirement money, a divided nation surrounding the federal government shutdown of 2018-2019 may have also fueled additional worry instead of inspiring generosity for year-end giving.

It’s not often that we see broader economic events that explain nonprofit giving trends, but our analysis points to this having an unusual large effect on giving at the end of the year, particularly online.

The question we had then was, If December declines were truly an aberration, would we see an uptick in January online giving? Turns out, that’s exactly what has happened.

January is trending back up

Despite a big slowdown in online giving during December for a number of organizations, most are returning to growth in January, similar to the trends we saw before year-end. This is just one more sign that December’s downturn in online giving is likely short-lived.

There you have it. While December may have been a painful month for many nonprofits, signs indicate that we are not seeing larger loss-in-steam for online fundraising.

That said, there are some things that we saw regarding nonprofits who bucked the trend in December. What can we learn from those organizations?

3 steps you can take now to protect your ministry from uncontrollable events like year-end 2018:

While no nonprofit can control external factors, as we’ve seen, doing some things can help your organization better weather the inevitable storms to come. Here are three things to do right now to help protect your ministry from the next storm.

Keep working hard to attract new donors! Use new strategies like digital media, which demonstrate high average gifts, high donor engagement and high ROI.
Don’t forget about mid-level donors. While it’s easy to focus your efforts on major donors at year-end, strategies that move mid-major donors up the giving pyramid in the last quarter are likely to pay off — not only in December, but year-round.
Get serious about your digital fundraising presence and use of digital media. In our data set, despite the trend, 40% of organizations still saw growth in online revenue. And of those, three-quarters were investing heavily in digital fundraising and in particular, digital media. It just goes to show that it is possible to buck macro trends with investment and great digital strategy.

How did your organization fare in December? I’d love to hear about what you learned. Email me at scaldwell@masterworks.agency.