This past couple of months, several annual fundraising benchmark studies have been released for nonprofit fundraising through 2022, and the picture is gloomy.

Online revenue is down, according to M+R

The long-running M+R Online Benchmarks 2023 study reported that overall online fundraising was down in 2022 by 4% - the first reported decline in online fundraising revenue in the entire history of the report, which has been running for more than a decade.

Donors, revenue, and retention declined, per Fundraising Effectiveness Project

The Fundraising Effectiveness Project Q4 2022 report highlighted declines in donors, revenue, and donor retention in 2022.

Coverage of the reports has been similarly bleak:

2022 Fundraising Showed Substantial Weakness Through Q4 (AFP Global)

If you’ve watched fundraising over the past few years, many would say this is a course correction back down to “normal” after the bump many charities saw during the pandemic.

But convincing your board that a downturn in results is okay can be difficult. What boards care about, according to Bobb Biehl (long-time board member and author of Boardroom Confidence), are that A) leadership knows what is going on, and B) has a plan to do something about it.

So, what should leaders like you and I do when facing a sector-wide downturn like this?

What to do when things are hard.

One of my favorite books is Switch, by brothers Dan and Chip Heath. The subtitle still grabs my attention: How to Change Things When Change is Hard.

In the book, the Heath brothers bring together decades of counterintuitive research in psychology, sociology, and other fields to shed new light on how we can effect transformative change. They showed that successful changes follow patterns that can be used to make the changes that matter.

One lesson from the book has stuck with me more than anything, and I’ve applied it many times throughout my career, and that is to look for the bright spots.

Looking for bright spots.

In any difficult situation, when surrounded by a sea of discouraging data, when it feels like things are not going well, look for the bright spots – those pockets of light that break through the clouds. These are often small things initially, but those small things represent small wins that are often clues to significant growth opportunities if cultivated and leveraged.

By looking for the bright spots, you identify the areas in the system that are promising. The next step is to focus on ways to expand those bright spots.

Let’s put this into practice, examine those discouraging 2022 fundraising reports, and look for bright spots.

Bright spots amidst the clouds.

Circling back to the M+R Benchmarks, while overall online revenue saw its first-ever decline, let’s look closer.

When we look under the surface, it doesn’t take long to see the brightest bright spot in the report – while online giving of one-time gifts was down 12%, monthly giving was up 11%.

If overall giving is down 4%, the reality is that monthly giving is the bright spot holding up overall giving from being down even further. And, monthly giving represented 28% of all online giving in 2022, so it’s a substantial amount. That’s a bright spot!

Now let’s dive into the Fundraising Effectiveness Project (FEP) data.

When we drill down a level, while the FEP study reports donor retention slipping across all categories of donors, retention for regular givers (7+ gifts/yr) is much stronger than for one-time, periodic givers. Retention for donors giving 1-2 gifts a year was down twice that of their regular giving counterparts (down 2.4% vs. 1.2% for regular givers).

On top of a lower decline in retention, the overall retention of those regular givers was a solid 89.6%. By contrast, retention for single gift donors sits at 31.7%. I’d take an 89.6% retention rate any day!

Subscription giving is a bright spot.

I’ve been a champion of monthly recurring giving for years. The growth of monthly giving in the subscription economy is not a new trend, but amidst the cloud that was 2022 in one-time giving, recurring giving shines through as a bright spot.

Let’s look at one more study that came out recently – Blackbaud’s donorCentrics Sustainer Summit Benchmarking Report. The donorCentrics report, comprised of organizations heavily invested in monthly giving, found that in 2022 the median number of recurring donors was up 7%, and fully 86% of the organizations in the data set saw growth in monthly giving revenue.

*Above: Blackbaud’s donorCentrics sustainer study found that 86% of participating organizations saw increases in recurring revenue in 2022.*

I want to give a special shoutout to Erica Waasdorp at A Direct Solution for collecting reports like this and other helpful sustainer giving data at her website. I highly recommend checking it out. Thank you, Erica!

The next step with a bright spot – leverage it

Once you identify a bright spot, the next step is to focus on magnifying it and growing the opportunity it represents.

Bobb Biehl puts it this way: “Last year’s unexpected success is next year’s opportunity.”

💡 Takeaway: What was last year’s unexpected success for you? What surprised you last year at how well it worked? How can you 10X that bright spot this year?

Magnifying subscription giving in 2023

The subscription economy is here, and it’s transformed donor behavior leading to a rise in recurring giving.

Nonprofits that have historically been unable to tap into significant sustainer giving can now build thriving recurring giving programs that were never before possible.

Here are three steps you can take today to bolster your monthly giving program:

Take stock of what you have. How many recurring donors do you have? How much did they give last year? Is this area growing or declining?
Make sure you have the right program. The product is paramount in the subscription economy, and your “product” is your monthly giving program. You will inhibit growth if you don’t have a strong sustainer giving product. You may need to create a new program or renew an existing one to be compelling to prospective donors.
Recruit and cultivate. The best nonprofits constantly communicate about their program, recruiting new and existing donors. But they don’t stop with recruitment – they recognize that subscriptions are worthless without retention, and the quality of the ongoing experience drives retention, so they invest in cultivating, retaining, and upgrading recurring donors.

If you aren’t sure whether you have the right sustainer “product,” whether you are focused on the right recruitment or cultivation efforts, or just want to ask a question, let me know. If I can help answer any questions, I would be happy to.

Until next time… Surfs Up! 🌊

- Dave

About the Author | Dave Raley

Consultant, speaker, and writer Dave Raley is the founder of Imago Consulting, a firm that helps non-profits and businesses create profitable growth through sustainable innovation. He’s the author of a weekly trendspotting report called The Wave Report, and the co-founder of the Purpose & Profit Podcast — a show about the ideas at the intersection of nonprofit causes and for-profit brands.

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2022 Fundraising Trends and Finding Bright Spots 🌟