Fundraising Effectiveness Project Report Details 2023 Trends

By Amanda L. Cole

Fundraising revenue fizzled in 2022 for reasons that included a struggling economy, record inflation and stock market declines. Despite expectations of a recession that has yet to become reality, nonprofits continue to struggle to raise money for their causes, as sector trends continued to follow a downward trend in 2023.

The Fundraising Effectiveness Project (FEP) from GivingTuesday revealed its quarterly fundraising data and analysis for 2023 on Sunday — the first day of the Association of Fundraising Professionals’ annual AFP ICON conference, held in Toronto this year. The report assessed data from more than 8,100 organizations, which includes 4.8 million donors and $6.5 billion donations. To further delve into the findings, here are four insights into another down year for nonprofit fundraising.

1. Donors and Dollars Continue Their Post-Pandemic Drop

There were 3.4% fewer donors and 2.8% fewer dollars supporting nonprofit causes in 2023. Both of these figures are actually modest year-over-year downswings compared to the past. Last year’s year-over-year data revealed a 10.7% reduction in donors (up from previously reported 10%) and a 1.5% decline in dollars (a slight improvement over the previously reported 1.7% decrease).

For donors, the trendline has been downward since the peak in 2020. However, that changed in October 2023, so year-end giving may have rebounded. On the other hand, dollars, which have been waning since a 2021 peak, had a strong start in 2023 but tailed off in the spring.

There were fewer donors and dollars across all giving amounts, but the largest donors — supersize donors who give more than $50,000 — had the biggest dropoff with a 7.4% decline in donors, while major donors — those who give $5,000 to $50,000 — followed with a decline of 6.3%. This has a significant impact even though this group comprises only 2.6% of donors because it accounts for 76.4% of dollars. When it came to dollars, major donors had the largest falloff with 7.1% and supersize donors followed behind with a 6.8% dip.

"As we continue to face declines in donors and dollars, it is increasingly important for organizations to foster a culture of philanthropy that withstands economic fluctuations,” Mike Geiger, president and CEO of the Association of Fundraising Professionals (AFP) and the AFP Foundation for Philanthropy, said in a statement. “We need to reimagine traditional approaches to donor acquisition and retention, embrace emerging technologies to broaden outreach and engagement, and renew our focus on donor stewardship. In this era of unprecedented volatility, the ability to adapt and innovate will not only be the hallmark of successful fundraising efforts but also the cornerstone of sustained mission-driven impact.”

2. Nonprofits Were Unable to Successfully Steward Newer Donors

Last year may have also started off strong in terms of retention, but FEP found the strong start tapered off in June as the retention rate also lowered 2.5%. The year-over-year slump began in 2020, but has slowed since its 2021 low.

In particular, new retained donors, which FEP categorizes as those who were new to the organization the previous year, dropped about 20% year over year. This means those who gave in 2022 but not in 2023 far outpaced the same pattern from 2021 to 2022. This group is the smallest and continues to shrink, dropping from 7.4% of donors for 2023 from 8.3% through the third quarter.

For 2023, repeat retained donors comprised 37% of total donors — a figure that fell 41.9% since the third quarter. Dollars raised also lessened to 6.3%. This group is vital to overall retention since 62% of dollars fall into this category.

In 2023, donors contributing more than $5,000 accounted for 76.4% of all dollars donated, despite only representing 2.6% of all donors. | Credit: Fundraising Effectiveness Project by GivingTuesday

The only silver lining is organizations are starting to see a spike in new donors acquired (2.3%). New donors and new retained donors account for only 25.4% of the overall dollars, but they also combine for 67.8% of the decrease in revenue. New donor dollars lessened 11.6% while new retained donors gave 14.7% fewer dollars.

The largest group at 41.3%, new donors’ rate rose for the first time since the first quarter of 2021. However, organizations must find ways to engage these donors to give again the following year to become loyal supporters and reverse this trend line.

3. Nonprofits Still Struggle to Convert Donors to Loyal Supporters

Another data point is how frequently donors are giving within each year. One-time donors continue to be the dominant frequency with 70.6% of donors not giving a second gift. One-time donors decreased 3.8% in 2023. Despite one-time donors being a large portion of overall donors, they only contribute 41.8% of overall dollars.

Those giving multiple gifts make up the balance. However, in 2023, donors giving two or more gifts had sharper declines — nearly twice the rate of one-time donors. The largest dip (-10.7%) came from donors giving three to six gifts. The only group to see a rise in giving year over year was donors giving seven or more gifts (2%). Despite only accounting for 16.3% of donors, those giving three or more gifts provide 40.3% of donations, making recurring donors a key metric for nonprofit’s sustainability.

In 2023, one-time donors were the largest donor group, accounting for 70.6% of donors. | Credit: Fundraising Effectiveness Project by GivingTuesday

4. Small Organizations Are Defying Sector Trends

The only organization size to improve its year-over-year fundraising performance was nonprofits that raised less than $100,000. This group’s revenue remained flat, while other group sizes averaged losses that ranged from 3.8% to 7.2%. Despite having fewer resources, smaller organizations also have smaller donor files, which may translate to the ability to create more personalized cultivation tactics.

Though 2023 numbers bring more bad news regarding the state of the sector, a recent Lilly Family School of Philanthropy at Indiana University report predicted better outcomes are ahead. Woodrow Rosenbaum, chief data officer of GivingTuesday, cautioned it takes both the time and effort of nonprofits’ to turn around existing trend lines.

“Our Q4 FEP data shows that significant challenges still remain for potential recovery in the sector,” he said in a statement. “Strengthening the social sector in 2024 will require nonprofits of all sizes to focus on frequent engagement with supporters and with the communities their donors are part of. Americans want to give, in both formal and informal ways, and nonprofits need to reinforce the value of giving and the impact of their work while unlocking new ways for supporters to engage with their causes.”