Economy Slows Charitable Giving, Fundraising in 2007
 
While almost two-thirds of charities raised more money during 2007 than they did in 2006, the size of those gain dropped dramatically, according to figures released by the Association of Fundraising Professionals (AFP) at its 45th International Conference on Fundraising in San Diego, Calif.

For the seventh consecutive year, AFP’s State of Fundraising Survey asked charities to compare their fundraising totals in one year (2007) to the previous year (2006). Overall, 65 percent of organization claimed to have raised more funds during 2007 compared to 2006, with 24 percent of respondents raising less, and 11 percent raising about the same amount.

The 65 percent figure represents a four-percent drop from the previous year (69 percent), which was the largest ever in the survey’s history, but is very similar to success rates seen during 2005 and 2004.

The key difference was in the amounts of money raised. In 2006, almost a quarter of respondents (23 percent) saw fundraising revenue increase by more than 50 percent. In stark contrast, just 9 percent of charities experienced similar increases in 2007. Fundraising increases were more modest, with 41 percent of charities reporting increases of between one and 19 percent, a trend that was seen in both 2004 and 2005.

“2007 seemed to be a typical year for fundraising until the environment changed dramatically at the end of the year” because of the mortgage-backed securities problem, said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “The impact was very uneven, as we saw decreases in fundraising in numerous areas, while at the same time, respondents cited many positive stories,” she said. “The million-dollar question is, do these deceases represent a return to normalcy from the very strong year we saw in 2006, or the beginning of a much bigger slide in fundraising and giving?”

Every fundraising technique measured in the survey (direct mail, telemarketing, major gifts, online fundraising and special events) saw significant decreases in compared to 2006, except for planned giving. The percentage of organizations raising more money during 2007 using direct mail compared to 2006 dropped by 14 percentage points, major gifts by 13 percentage points and special events by 17 percentage points. Planned giving grew by 2 percentage points, according to the AFP survey.

However, not every type of organization was affected in the same way. Larger organizations fared much better than smaller ones, with 70 percent of charities with budgets of $5 million or greater raising more money during 2007 than in 2006. By contrast, just half of organizations with budgets of $500,000 or less raised more money in 2007 than in 2006.

Participants cited the economy as the biggest challenge to their fundraising in 2007. Some 55 percent of respondents ranked the economy as one of the top challenges in 2007, and 30 percent of respondents chose it as the most critical issue. Other challenges cited by participants included increasing competition for the charitable dollar and staffing issues in the development office.

Looking ahead to the rest of 2008, just 58 percent of fundraisers believe their organizations will raise more money this year than in 2007. That level of optimism is nine percentage points lower than last year and is the lowest since 2002 in the wake of the September 11 terror attacks.

“It looks like 2008 could be one of the most challenging years charities have seen in some time,” said Timothy R. Burcham, CFRE, vice president of advancement for the Kentucky Community and Technical College System and chair of AFP.

“But we have to remember two things. One, charities have been through this sort of environment before recently, and many have prospered. Charities don’t need to panic but need to retool their strategies and focus more than ever on donor cultivation and stewardship,” said Burcham. “Second, we’re still very early in 2008, and studies show that a significant amount of giving -- anywhere between one-third and one-half of all fundraising, depending upon the organization -- takes places during the last quarter of the year. So while the situation is not great right now, it certainly could change.”

For more information regarding the survey, visit www.afpnet.org