After a disappointing first half of the year, several charitable giving metrics rebounded in the third quarter, but major gifts and other key indicators remain below 2018 levels, a report from the Fundraising Effectiveness Project finds.
Conducted by the Association of Fundraising Professionals and the Center on Nonprofits and Philanthropy at the Urban Institute, the analysis of donation transactions for nearly forty-five hundred nonprofits in AFP's Growth in Giving Database found that while every metric lagged 2018's performance during the first half of 2019, by the end of the third quarter revenue from gifts of under $250 was up 0.4 percent, overall donor retention was up 0.7 percent, and the recaptured donor number was up 1.8 percent. But while other key indicators were tracking better than they had at the end of the second quarter, they were still down, including total revenue from gifts (-4.6 percent, though up from -7.3 percent at the end of Q2); number of donors (-3.6 percent, though an improvement from -5.8 percent), mid-level gifts of between $250 and $999 (-1.7 percent, though up from -3.5 percent), and, most critically, major gifts (-5.2 percent, though an improvement from -8.2 percent).
Tax law changes that took effect at the beginning of 2018 doubled the standard deduction, making it easier for most donors to not itemize their returns and take a charitable deduction. According to Giving USA 2019, the number of households that itemize their deductions may have dropped from more than 45 million in 2016 to between 16 million and 20 million in 2018.
"There are, of course, lots of factors that can affect giving, such as the stock market, public confidence, natural disasters, and other external events, so tax incentives are not the only reason that giving may go up or down," said Jon Durnford, president of DataLake Nonprofit Research, which manages the Growth in Giving Database. "However, it often takes donors a year or so to get used to tax changes, so 2019 is the first year we'll get to see if donor behavior has changed significantly because of the new tax laws. Charities may need to get used to a 'new normal' that involves focusing on donor retention and finding new ways to inspire donors to continue giving."