Research into individual donors shows big advantages of fundraising plans

• DOI: http://doi.org/10.1002/nba.30240
• Published date: 01 October 2016
• Date: 01 October 2016

6

OCTOBER 2016NONPROFIT BUSINESS ADVISOR

© 2016 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

(See RESEARCH on page 8)

Fundraising

Research into individual donors

shows big advantages of fundraising plans

New research conducted by fundraising consul-

tancy Third Space Studio shows that donations from

individual donors make up about a third of revenue

for smaller nonprot organizations—those with total

revenues of $2 million or less. However, organizations

with formal fundraising plans in place manage much

higher amounts, conrming yet again the importance

of crafting—and implementing—a strategic plan for

fundraising.

According to Heather Yandow of Third Space,

cultivating an individual donor program is critical

for these smaller charities.

“Overall, individuals are a great source of fund-

ing. They account for a lot of philanthropic dollars,

and they tend to be more stable than other sources

of funding,” Yandow said.

Government funding can uctuate depending on

which political party is in power and what policy

priorities garner the most attention and dollars.

And while grantmaking foundations might see

their giving budgets swing back and forth, depending

on the returns their endowments are earning in the

stock market, the individual donor segment gives out

of pocket, and those funds aren’t as closely linked to

the nancial markets, she said.

The Third Space study broke down data from an

in-depth survey of about 120 nonprots, looking at

fundraising levels based on revenue bracket, issue

area, organizational strategy and more. Some key

ndings include:

• Organizations in the survey raised 34 percent of

their revenue from individuals in 2015, down slightly

from 36 percent the year before.

• The average organization reported 599 indi-

vidual donors, with average gifts amounting to $533.

• About half of individual donor revenue comes

from donors giving less than $1,000.

• One out of every ve individual donor dollars

is raised online.

• Organizations retain about 60 percent of indi-

vidual donors from year to year.

These averages, though, mask one of the biggest

takeaways from the report: Organizations that have

and follow a fundraising plan fare much better than

those that don’t. For example:

• They have almost twice as many individual do-

nors, on average (712 versus 380).

• Their average gift sizes are higher, at $587 versus

$482.

• Their active board members are more successful

in fundraising.

• They see much higher return on investment when

it comes to fundraiser salaries and dedicated staff.

Despite such clear advantages to implementing

a fundraising plan, nearly 30 percent of organiza-

tions polled for the report said they had no plan in

place. According to Yandow, the causes for this are

numerous.

According to Third Space Studio’s Individual

Donor Benchmark Report, membership-oriented

nonprot organizations have a mixed bag when it

comes to individual donors. The data show that

groups with memberships tend to have greater

numbers of individual donors, but their average gift

amounts are usually lower—possibly because some

groups have relatively low entry-level membership

dues and large membership numbers, according to

Heather Yandow of Third Space.

“A lot of groups have plenty of what I call

‘members-in-name-only’ that maybe signed up

with a small donation and haven’t really done much

else,” she said.

But interestingly, membership groups that

engage in a lot of organizing, like hosting com-

munity meetings, rallies and activities in support

of direct action campaigns, saw signicantly higher

numbers of both individual donors and average

gift sizes. According to Yandow, that reects the

deeper level of engagement these activities engen-

der, which translates into more nancial support

from members. ■

Impact of Membership