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May 31, 2021

The Regression to the Mean has Begun

A year ago, all of us in the business of fundraising were nervous. Lockdowns were taking place across the world, there were shortages of toilet paper and no one was sure how donors would respond.

No one could have predicted that donors would respond in a such an overwhelming positive manner. Starting in April 2020, donors to those organizations who were on the front lines of the pandemic response gave at an unprecedented level – and they continued giving big-heartedly month after month.

While the top story of 2020 will of course be the pandemic, for us in fundraising, we will also remember the extreme generosity of donors who made 2020 one of the best fundraising years on record. Revenue, retention, reactivation and new donor acquisition were at high marks for many organizations.

But, as the pandemic recedes from our daily lives – at least here in the United States – we can also expect that donor performance will, as us analysts like to say, “regress to the mean.” In fact, our first views of April results show that this is already starting.

For those organizations that had record years in 2020, we forecast that revenue, retention, reactivation and new donor acquisition performance will return to their pre-pandemic levels in the coming year.

We all knew this would eventually happen.

Of course, this is going to make budgeting and forecasting for the coming year really tricky. So, please be careful. If you need some help with forecasting your budgets for the coming year, let’s have a conversation. We have some very reliable forecasting tools that can estimate different scenarios on where your revenues will land in the coming year.

And while revenue reductions are never pleasant, we all need to take a step back and remember the extraordinary way donors stepped it up during the pandemic. We have a lot to be grateful about.

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