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Report: Critical giving from small donors a threat for nonprofits

Written on Oct 28, 2022

As economic turmoil continues, a new report shows nonprofits are losing the supporters who could help them navigate a downturn.  

The number of donors to organizations fell by 7% 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%, and 8% 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, despite temporary pandemic-driven growth in giving and 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% — this after a 7.2% decline in 2021. 

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

The report, released by the Fundraising Effectiveness Project, 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%. “Organizations could reap considerable benefits by ensuring they stay relevant for this group through consistent solicitation and outreach activities,” researchers 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.