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Donors Continue To Drop, Despite Growth
In Dollars Raised

The first quarter of this year is the first in almost two years in which year-over-year index revenue growth was almost entirely unaffected by major disaster giving. Indications are that giving has now stabilized at relatively typical pre-disaster levels of growth and that cumulative long-term growth since 2004 is stabilizing at a level where it likely would have been expected had there been no disasters in the intervening period.

What isn't stable is the number of donors, which continues to decline, according to the latest data from by Target Analysis Group, a subsidiary of Blackbaud. Target tracks the fundraising data of 70 national charities to develop its report.

The Indian Ocean tsunami of December 2004 and the U.S. Gulf Coast hurricanes in the fall of 2005 generated unprecedented charitable giving.

According to the latest data compiled from XX national charities by Target Analysis Group, a subsidiary of Blackbaud, donors directed most of their tsunami-related giving to international relief organizations and most of their hurricane-related giving to animal welfare and human services organizations. The increase in giving related to both disasters was large enough to create a noticeable lift in median revenue for the entire national index in 2005.

Most disaster giving was essentially over by the first quarter of 2006. Throughout 2006, index revenue and donor numbers declined as organizations experienced a correction from the disaster-related spike back to more typical giving levels. For the full calendar year of 2006, median index revenue growth was slightly positive, growing a median 0.7 percent compared to 2005.

Revenue in for the first quarter of this year moved back towards the pre-disaster norm, growing 2 percent compared to the first quarter of 2006. Since the first quarter of 2006 and 2007 both contain relatively little disaster-related giving, growth between these time periods might give a fairly accurate picture of sustainable non-event-driven giving levels.

A longer-term trend that causes concern, however, is a general decline in donor populations during the past five years, which has continued in the current quarter, according to Target Analysis. Donors declined a median 0.9 percent from the first quarter of 2006 to the same period this year. Most of the declines in donor numbers are due to steep declines in new donor acquisitions across most of the organizations in the index. New donors were down 4.1 percent compared to that same period. Only 43 percent of the 70 organizations participating in the index this quarter had increases in new donor acquisition during the period.

The one notable exception to this pattern is in the animal welfare sector, according to Target Analysis Group. Organizations have generally been able to compensate for these donor declines with increases in revenue per donor. Revenue per donor increased a median 3.4 percent from the first quarter of 2006 to the first quarter of 2007. Overriding the 0.9 percent donor declines in the same period, these increases in donor value accounted for the 2 percent revenue increase during the first quarter of this year..

If these trends continue, eventually organizations are likely to reach a point when the increases in revenue per donor no longer make up for the declining donor populations, and net revenue growth will suffer as a result, according to Target Analysis. If, as the index data indicates, nonprofits are now in a period of relatively normal revenue growth, it will still be important to monitor donor growth rates as further declines could jeopardize revenue over the long term.

Examining median rolling 12-month revenue growth from one quarter to another provides information about what has happened in recent quarters and how those trends fit into a longer-term context. A rolling 12-month analysis compares the 12 months of revenue ending in a quarter to the 12 months of revenue ending in the previous quarter. This smoothes out seasonal differences and allows us to see continuous relative movement in revenue from one quarter to the next, instead of simply from one full year to the next full year.

The rolling quarterly approach shows that throughout most of 2002, 2003, and 2004, index revenue grew at an average 1 percent per quarter. Beginning in the fourth quarter of 2004, there was unusually strong revenue growth for four quarters, and then essentially flat revenue for about the same length of time. In the fourth quarter of 2006, revenue once more began to grow at a rate similar to that of pre-tsunami giving.

And as of the first quarter of this year, revenue has continued to grow at typical pre-disaster rates. The 12-month rolling revenue has grown a cumulative median 2.2 percent compared to the past two quarters from the third quarter of 2006 to the first quarter of 2007, an average of 1.1 percent per quarter. It has grown a cumulative median 17.6 percent during the past five years (from Q1 2002 to Q1 2007).

To read the complete study, go to www.targetanalysis.com