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‘Collapse’ in Small Gifts Poses Threat for Nonprofits as Recession Looms, Report Says

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As the chances of an economic recession grow, nonprofits are losing the supporters who could help them navigate a downturn, according to a new report.

The number of donors to organizations fell by 7 percent in the first half of 2022 compared with the first half of 2021. The decline is due largely to a “collapse” in the number of small-gift supporters in those six months, the report says. The number of people making contributions of $100 or less dropped more than 17 percent, and 8 percent fewer donors made gifts of $101 to $500.

“That’s an indicator as a sector that we’re not ready for a recession,” says Woodrow Rosenbaum, chief data officer for GivingTuesday and one of the report’s researchers. Broad support — including from small-gift donors — is critical during an economic downturn. Research indicates wealthy donors curtail giving in response to bad economic times, Rosenbaum says.

The report is the latest evidence that weakening support for charities — a trend for more than a decade — continues. Although 2020 saw a pandemic-sparked uptick in giving and new donors in 2020, the number of individuals giving to charity has now shrunk for five straight quarters, according to the report.

Researchers are particularly worried about donor-retention rates. The number of people who made a gift last year and again this year declined 4.2 percent — this after a 7.2 percent decline in 2021.

“The bottom is falling out, and we’re heading for a big problem if we don’t address that,” Rosenbaum said.

The country’s extraordinary economic situation muted even good news from the report. Dollars donated to charity grew by 6.2 percent in the first half of the year, but that failed to keep pace with the country’s 8.5 percent inflation rate.

Bright Spot

 

The report — released by the Fundraising Effectiveness Project, a research effort of the Association of Fundraising Professionals Foundation for Philanthropy and GivingTuesday — captures $4 billion in giving to nearly 9,000 nonprofits, none of which receive more than $25 million in contributions annually.

Among the few bright spots in the report, the number of “recaptured donors” — individuals who did not give to the organization the previous year but had donated before — grew 6.3 percent. “Organizations could reap considerable benefits by ensuring they stay relevant for this group through consistent solicitation and outreach activities,” Lori Gusdorf, executive vice president of the AFP Foundation, said in a news release.

Researchers suggested that this group of donors likely includes those who supported a charity during the surge in pandemic-related giving in 2020. It also includes donors who paused their giving during the pandemic and resumed in 2022.

Rosenbaum said organizations could use the last months of the year to double down on engagement and broad stewardship of everyday donors. “There’s lots of room to move and lots of opportunity to turn things around.”

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