Donations to charities increased 1.6 percent on a year-over-year basis in 2018, down from 2 percent in 2017, 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 a sample of more than forty-five hundred organizations in AFP's Growth in Giving Database found that the increase was driven exclusively by large gifts, while donor retention rates and the overall number of donors fell. According to the 2018 Fourth Quarter Report, revenue from large gifts of at least $1,000 increased 2.6 percent on a year-over-year basis, while revenue from mid-level gifts of between $250 and $999 and from gifts of under $250 dropped by 4 percent and 4.4 percent, respectively.
The report also found that the number of people who gave in 2018 fell 4.5 percent, with the numbers of new donors down 7.3 percent, newly retained donors down 14.9 percent, recaptured donors down 1.6 percent, and repeat retained donors (at least three consecutive years) up marginally (0.2 percent). At the same time, the overall retention rate — the percentage of all donors making a gift to the same organization in 2017 and 2018 — dropped nearly two percentage points, to 45.5 percent, while the retention rate for new donors fell to 20.2 percent, from 24.4 percent in 2017; the repeat retention rate dipped to 61 percent, from 63 percent; and the recapture rate dropped to 4 percent, from 4.57 percent.
According to FEP, a direct comparison of giving in the fourth quarter of 2018 and the fourth quarter of 2017 may show the impact of the Tax Cuts and Jobs Act that passed in December 2017, with giving spiking at all three giving levels at the end of 2017, just before the bill, which doubled the amount of the standard deduction, was signed into law, whereas in 2018 giving at all three levels fell — down 5 percent for large gifts, 12 percent for mid-level gifts, and 15 percent for small gifts.
"I think one of the reasons that we're seeing more larger gifts is that donors had to give more — and have other itemized deductions — in order to exceed the standard deduction threshold," said Jay Love, chief relationship officer and co-founder at Bloomerang, one of the three data providers for the Growth in Giving Database. "What's fascinating is that over a third of donors — 37.4 percent — in the $1,000-plus gift range were new to that category. That's a lot of new donors giving significantly more, which tells me that some of those donors were likely giving larger sums in order to itemize their deductions. Smaller gifts also fell, as those donors couldn't take advantage of the charitable deduction anymore."
"The headline may show an increase in giving, but that increase masks some serious long-term trends that are presenting huge challenges to the sustainability of fundraising and philanthropy," said Elizabeth Boris, chair of AFP's Growth in Giving Initiative. "Giving is increasing because of larger gifts from richer donors. Smaller and mid-level donors are slowly but surely disappearing — across the board, among all organizations. Philanthropy should not and cannot be just the domain of the wealthy, and the entire sector needs to look at how we reach out to and engage these donors."