Thursday, July 12

Target publishes Q1 numbers

The folks up in Boston have published some findings for the first quarter of 2007 for nonprofit clients and there seem to be two points of focus. First:

Q1 2007 was the first quarter in almost two years in which year-over-year growth in the Target Analysis Group Quarterly Index of National Fundraising Performance was essentially unaffected by major disaster giving. All indications are that index revenue has now stabilized at typical pre-disaster levels of growth.
And second:

A longer-term trend that continues to cause concern, however, is a general decline in donor populations over the past five years. Donors declined a median 0.9% from Q1 2006 to Q1 2007.

The declines in donor numbers are mainly due to steep declines in new donor acquisitions. While index donors overall declined 0.9% from Q1 2006 YTD to Q1 2007 YTD, new donors were down 4.1% over that same period. Only 43% of the 70 organizations participating in the index this quarter had increases in new donor acquisition in Q1.

Organizations have generally been able to compensate for these donor declines so far with increases in revenue per donor so that revenue growth has been able to keep up with inflation. In previous quarters we have cautioned that if these trends continue, at some point giving amount increases alone may not sustain overall net revenue growth. With rising inflation a concern for the year ahead, it will be important to watch donor growth rates as more declines could jeopardize real revenue over the long term.
We're not sure we agree with the second point. From our experience, to say that organizations are "compensating" for lower donor numbers by increasing revenue per donor is confusing the cause and affect.

This trend could very well be an intentional move by nonprofits to focus their efforts on only acquiring and retaining more committed donors. All of the smart nonprofits seem to be using less junky premiums just to churn through members and are instead looking for higher value donors (or monthly donors) who contribute a better lifetime value.

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