The year 2022, for most nonprofit organizations, has been referred to as “regression to the mean.” One of the untold heroes of the pandemic were donors – their response to the pandemic was one of amazing generosity. But that level of generosity couldn’t be sustained forever. The pressure of mounting inflation and economic uncertainty has caused donors to pull-back in 2022.
As we look forward to the year ahead, there are three macroeconomic trends you can expect to continue in 2023.
- Acquiring new donors will be a challenge.
In recessionary periods, donors are less willing to add new philanthropic commitments. It is important to note that this is not a reason to stop acquisition. New donor acquisition is critical to your organization’s future cashflow. Pulling back from new donor acquisition is not a viable option. Instead, know that your organization will likely not achieve the same acquisition results it achieved during the pandemic with the old budget. It will need to spend more.
- Larger gifts will be more challenging to cultivate.
Donors who make large gifts to your organization are more sensitive to market downturns. This doesn’t mean they won’t be giving. Rather, your major gift officers may experience those 6-figure gifts turn to 5-figure gifts, and 5-figure gifts to 4-figure gifts, and so on. It’s not that the MGOs are less effective, it’s just cultivating large gifts is going against an economic headwind.
- Your long-time loyal donors will continue to give.
Your long-time loyal donors – what we call “Multi-Year Donors” – will continue to give often and generously . . . If, and only if, you continue to ask. The most catastrophic decision an organization can make is to “pull-out or reduce” donor cultivation efforts. Donors can’t respond if you don’t ask. Rather, given the first two macro-trends, your organization is going to have to rely more on their Multi-Year Donors – and they are up for it. These donors tend to be older and less affected by economic downturns. Your cultivation plans should leverage this important group of donors.
This isn’t the first time we’ve experienced economic uncertainty. In my career alone, I have seen nonprofit organizations successfully weather the dot.com bust, Y2K, 9-11 and the Great Recession. Together, we will get through this too.
Bill is a Fundraising Economist who has over 25-years of experience studying the economics of donor behavior. The company he founded, Analytical Ones LLC, has developed the tools to help nonprofit organizations know more about their donors’ behavior.
In these challenging times, having Bill and his team on your side is critical so you can leverage your donor insights into actions that maximize your fundraising performance.
It’s time to know more.