Fundraising Trends - Overview of Recent Literature

The following observations are based on a review of over 30 reports, websites and blogs that all addressed the future of fund development from a North American perspective.  Several of the most prominent sites are listed as links at the bottom of the post for those who want additional detail or to remain in touch with these sources.

The Fundraising Environment

• the financial environment will continue to dampen fund development returns for several years - low investment returns, diminished corporate profit, high levels of unemployment, low confidence levels of many workers
• the fundrasing environment is increasingly competitive - many more charities, with increasing evidence of need and increasing professionalism/sophistication of fund development programs
• fundraisers remain optimistic that philanthropic giving will grow
• trust in charities has been declining and will have to be regained through clear demonstration of social accountability, communication of how raised funds are deployed, and reduction in costs associated with fundraising
• we can expect to see increased regulation due to donor concern about allocation of funds, fundraising overhead and inadequate organizational accountability.

Where is the money going to come from?

• wealth is increasingly held in the hands of individuals representing visible minorities - immigrants to Canada are more likely to donate and to make larger donations than Canadians in general
• individuals continue to lead the way in major gifts and we can expect this to continue as baby boomer executives and entrepreneurs move into retirement and reposition their assets
• corporate potential is slowly being realized and will accelerate as social responsibility and accountability to the communities that corporations serve become mandatory components of business strategy - we will continue to see a shift from corporate philanthropy to cause related marketing
• social venture philanthropy will grow dramatically as successful entrepreneurs reduce work commitments, seek more engagement in their communities, and begin to look at their investments as leverage or 'social capital'
• mega foundations (e.g. Gates, Clinton) will continue to appear and retain their propensity to invest in mega solutions or organizations - not in the smaller organizations that have limited capacity but often the greatest financial need.

What fundraising techniques will be most productive?

• direct marketing will continue to produce the greatest returns from mass fundraising (excluding major gifts)
• use of sophisticated data bases to segment markets and customize asks will increase - the only way to go
• online giving will continue to expand as our understanding of how best to work with online communities increases
• social networking will be the key for many charities - working with the committed to get messages out and personalize the online ask
• there will be increased use of regular giving (e.g. monthly) given ease of transaction and the relative appeal of dedicating smaller amounts on a consistent basis
• there is immense planned giving potential - Canadians over the age of 50 represent 26% of the population, have 60% of the descretionary spending power and 75% of the personal wealth - $1 trillion will change hands through inheritance in Canada over the next 20 years
• many believe that 'gifts in kind' will be the next big wave in philanthropy - see 'In Kind Canada' and 'Gifts In Kind International'.

Shifts in Donor Interest and Behaviour

• increasingly donors want customized interaction with their charities - even relatively small donors expect you to know how often they give, what their interests are, and how they want to be contacted - we all want to be treated like major donors
• we are seeing a general shift from regular giving to general causes to an increased focus on more specific projects and initiatives that the donor believes will make a difference; from obligation-driven giving to excitement-driven giving patterns
• donors are increasingly focused on issues rather than organizations and are prepared to shift their donor allegiance rapidly if a more effective way or team can be found to make the impact they want
• smaller donors will increasingly direct their gifts to the smaller organizations that are clearly in need recognizing that larger 'charities' such as hospitals and universities are already well supported by the taxpayer, fees and the larger donor

Shifts in Overall Fund Development Strategy

• the most successful non-profits have been able to integrate philanthropy into the culture of the organization
• fund development is more information dependent than ever and open source software is permitting more organizations than ever to develop and manage data bases
• the most effective organizations are those who are donor centered and have developed an integrated, relationship based program (pyramid) - success is more about execution of the FD program than any other trend or factor
• increasingly the effective organization will be the one that communicates their belief in the 'donor as expert'
• customization is transcending mass appeals - increasingly software will be used to allow a donor to target their gift based on their personal interests and motivations
• increasingly campaigns and individual fundrasing programs will be 'generation based' - with components and approaches customized to the unique interests, values and communication requirements of each age cohort
• organizations will increasingly work together to tap into issue-focused giving - allowing the donor to determine the percentage of their gift that goes to each organization in the collective
• regular donors (e.g. monthly) will increasingly be viewed as 'members' in the organization and accorded appropriate benefits as part of ongoing stewardship strategies
• increasingly successful organizations will use people to reach people (e.g. social networking, member messaging, event invitations)
• emphasis will shift from finding donors to making your cause and organization findable - relying on search capabilities to support those with an interest
• there will be increased focus on ethics at the governance, management and development team levels - trust is increasingly the currency of success.

Sources:
http://www.the-cma.org/downloads/whitepapers/CornerstoneFileAuditWhitepaper09.pdf
http://charitymash.com/
http://www.givingtrends.com/
http://philanthromedia.org/
http://www.philanthropyjournal.org/
http://www.onphilanthropy.com/
http://www.fundraisingsuccessmag.com/
http://philanthropy.com/
http://www.kciphilanthropy.com/

Fundraising Performance - Canada, 2003 to 2007

The Cornerstone Group published 'Fundraising Trends & Challenges in the Canadian Direct Marketing Sector in January 2009 (see link below).  The data is based on a comprehensive five year udit of the cumulative direct marketing fundraising efforts of 32 Cornerstone clients. Highlights include (direct quotes):

• on average, Not for Profits are raising much more each year than they were five years ago, up 20%, from 4% fewer donors
• during the same time frame, calendar year revenue per donor increased substantially, outpacing inflation (9%) by 15% ($52 to $64)
• the 24% increase in revenue per donor is attributed to larger one time gifts and an influx of monthly donors
• there is also strong growth in monthly donor programs.  File sizes grew by 28% ($165million to $212 million) over the five year period and per donor revenue grew by 58% ($21 to $34)
• there has been a slight decline in retention rates for all donor segments
• new donors (those who made their first gift to an organization in the previous year) renewal rates dropped 5% (39% in 2003 to 34% in 2007)
• in comparison with 2003, almost 20% fewer new donors were added in 2007 (536 milliion to 452 million) - however the average gift rose by 23% ($29 to $36) keeping the revenue from new donors fairly flat
• there are now more than four times the number of new donors, per organization from online initiatives than five years ago (9 milion to 40 million.

Source: http://www.the-cma.org/downloads/whitepapers/CornerstoneFileAuditWhitepaper09.pdf

Canadian Recreational Spending - shifting to home based

Frances Kremarik, published 'The Changing Recreational Spending Patterns of Canadian Families' in Canadian Social Trends (Spring 2002).  The data (1982 to 1999) reflected a period with two recessions where average after tax income was only 4% higher at the end of a 17 year period.  Income growth did not keep pace with spending increases as average household expenditures increased by 10% of the period (compared to 4% increase in income).  Spending on recreation increased by almost 40% over the period.

While some of the shifts within the recreation category can be attributed to increasing costs of products or services, and others to the onslaught of the digital age; what is perhaps most significant is the obvious shift towards spending on home-based recreation and leisure.  Spending on recreation fees and athletic equipment increased only 8% in each sub-category - much less than the overall 39% increase.  Event admissions were the only non-home based sub-category to increase faster than this overall rate - at 47%. 

Note the huge influence of increased computer expenditure on the overall trend optics.

   Average annual $ spent by all Canadian households

Public Sector Expenditures on Recreation and Culture - Canada, 1988 to 2005

Harry Kitchen (Trent University) and Enid Slack (UofT) produced a paper in 2006 entitled 'Trends in Public Finance in Canada'.  The tables below are taken from this paper - modified to focus on recreation, culture, environment and resource conservation.

   Distribution of Municipal Government Expenditures
         by category - Canada, 1988 and 2004

Distribution of Provincial/Territorial Expenditures
   by category - Canada, 1989 and 2005

  Distribution of Federal Expenditures

    by category - Canada, 1989 and 2005

Essentially, the data demonstrates that public expenditure on recreation and culture more than held its own against other government expenditures at both the municipal and federal levels - but lost budget share at the provincial/territorial level.  This in spite of relatively large increases in other areas:

• at the municipal level the greatest increases from 1988 to 2004 were in housing (1.8% of total budget in 1988, up to 3.7% in 2004), social services (7.4% to 10.2%), environment (14.6% to18.1%), health (2% to 2.5%) and protection (14.8% to 16.7%)
• at the provincial/territorial level the greatest increases related to health (26% in 1989, up to 33.6% in 2005)
• at the federal level the greatest budget pressures related to health (from 5.7% of the total budget in 1989 to 10.9% by 2005), environment (0.4% to 0.9%) and general purpose transfers (6.4% to 10.8%).

Source: http://www.utoronto.ca/mcis/imfg/pdf/trends%20in%20public%20finance%20in%20Canada%20-%20June%201.pdf

Giving to Recreation and Sports - Canada, 2004 and 2007

Statistics Canada conducts regular surveys to monitor the philanthropic and volunteer behaviours of Canadians - for Imagine Canada and Volunteer Canada. A recent report (Statistics Canada - Catalogue no. 71-542-X) provides insights into trends from 2004 to 2007.

Almost 23 million Canadians, 84% of the population aged 15 or over, made a financial donation to a charitable or non-proft organization in the 12 month period preceeding the 2007 Canada Survey of Giving, Volunteering and Participating. Trends:

• the donation rate remained virtually the same in 2004 (85%) and 2007 (84%)
  
• the number of donors increased by approximately 2.9%, in part due to a 3.7% increase in the population of Canadians aged 15 or over
  
• Canadians donated a total of $10 billion in 2007, an increase of 12% over the $8.9 billion reported in 2004
  
• the average annual donation increased by 9% - from $400 in 2004 to $437 in 2007
  
• the average number of donations (per individual per year) decreased from 4.3 in 2004 to 3.8 in 2007.
  

Some significant shifts in giving among specific demographic groups were noted:

• a 17% incrase in the average donations made by those who are religiously active - from $887 in 2004 to $1038 in 2007
  
• a 20% increase in the average donations made by those aged 35 to 44 - from $370 in 2004 to $443 in 2007
  
• a 13% increase in average donations among females (from $374 to 422)
  
• a 7% increase n the donor rate among those who have only school aged children living in the household (from 84% to 91%) and a 56% increase in their average donation (from $335 in 2004 to $522 in 2007).
  

In 2007, donations to sports and recreation accounted for only 2% of the total amount donated; even though 14% of Canadian donors aged 15 and over supported sports and recreation organizations.


Donor Rate by selected organization type
population aged 15 and over - Canada, 2004 and 2007

Type of Organization	2004	2007
Health	57%	56%
Social Services	43	39
Religion	38	36
Hospitals	18	18
Education and research	20	14
Sports and Recreation	18	14
Grant-making, fundraising, voluntarism promotion	13	10
International	7	9
Environment	7	7
Law,advocacy and politics	6	5

Mean Annual Donation ($) by selected organization type
population aged 15 and over - Canada, 2004 and 2007

Type of Organization	2004	2007
Religion	$395	$469
International	199	256
Grant-making, fundraising, voluntarism promotion	150	176
Hospitals	89	120
Health	84	99
Law, advocacy and politics	78	99
Environment	114	97
Social Services	80	87
Education and Research	55	63
Sports and Recreation	45	58

Source: http://www.givingandvolunteering.ca/files/giving/en/csgvp_highlights_2007.pdf

Recreation Expenditure Trends - Canada

Despite the fact that average household incomes remained essentially the same throughout the 1990's (in constant dollars), Canadians increased their recreation spending over 28% from 1992 to 1998. This in spite of the fact that shelter expenses had to increase by 24.6% during the same period, health care expenses went up 37.4% and education expenses increased by 57.9%.
Canadians value their leisure experiences. The table below shows the average household expenditure in Canada on recreation (in current dollars).

1992	1996	1997	1998	% change
$2,300	$2,641	$2,784	2,947	28.1

Source: Statistics Canada Family Ependiture Survey 1992, 1996 and Survey of Household Expenditures 1997, 1998.

Canada's office of Consumer Affairs has looked at annual growth rates in each of their household spending categories, based on the Survey of Household Spending (1997 and 2002).  The greatest increases over the five year period were in the areas of health care, education, furnishings/equipment, transportation and tobacco/alcohol.  Recreation came next - closely matched by gambling.  The greatest decreases were in the categories of reading materials, clothing and personal taxes.

Source: http://ic.gc.ca/eic/site/oca-be.nsf/eng/ca02117.html