Fundraising Outlook for 2023

Results are in from 2022 year-end fundraising. While many clients ended December down from 2021, most clients raised more in December 2022 than in December 2019. We call this a return to normal. The pandemic created a huge surge in giving, especially among Christians. We now see that this did not become a new normal. We are regressing toward the pre-pandemic normal, though we are still ahead of 2019.

Another consolation when considering the softness of December’s income is that it was mostly due to fewer new donors and fewer reactivated lapsed donors. Multi-year donors in December 2022 gave 98% of what they gave in 2021. It’s always been the case in economic uncertainty that it’s harder to acquire new donors. The continuing donors are still loyal and still giving at levels similar to the previous year. That’s encouraging.

The contributions from those loyal donors could indicate that 2023 won’t see another decline unless the economy really suffers. (As I write this, there is no clear indication that we are in a recession or will be soon. The stock market is volatile but mostly sideways. Inflation is abating. Perhaps the economy won’t be too bad this year.) As of today, we are cautiously optimistic for 2023, except when we read the news. News garners attention and makes money when it scares you, so don’t let it do so. Despite all the headlines about another company laying off thousands of workers, the job market remains robust, with unemployment at historically low levels. The Wall Street Journal had a story this morning about how small businesses are adding far more jobs than large companies are cutting.

Most clients reduced direct mail donor acquisition in 2022, and that was the right call. With response down and costs way up, direct mail may be headed to a sunset. But it’s not going off a cliff. If you have an established donor file built largely through direct mail, it is still essential to continue using direct mail to cultivate those donors. Direct mail cultivation still accounts for most of their income. Continued advances in applying technology to direct mail also make it a viable acquisition channel for those who have been in this market for some time. It is definitely not time to pull the plug on direct mail — just manage your investment and apply more to digital marketing.

Digital is coming on strong. Most clients are now acquiring more new donors online than through direct mail. Digital media is generating similar results through 2022 as in corresponding months in 2021, without the falloff we saw in direct mail in 2022. Email continues to work well. Text strategies are working well for online-acquired donors. We’re seeing promising results in targeted connected TV. 

We are also gaining efficiencies in cultivating online-acquired donors. We have definitively proven through testing that sending all your direct mail to those donors is a waste of money. They don’t give through the mail. The whole idea that many of us believed a few years ago of multichannel marketing has been disproven. Only 1% of donors give an online gift and a direct mail gift in the same year. You can save money by cutting out most direct mail appeals and some of your newsletters for the online-acquired donors.

Don’t panic and reduce your asking. Just move some money from direct mail acquisition to digital fundraising. If you take into account the lower cost of cultivating online-acquired donors, you can spend more on digital marketing than the amount you cut from direct mail acquisition.

Invest in getting occasional donors to become monthly donors. Keep close to major donors to understand whether they want a personal touch and especially to find out if they are unable to give at past levels. Express appreciation for past giving and patience for their situation.

Let me know if there’s anything I can do to help.

God bless,