Survey: 6% drop in first quarter giving could mean $25 billion in lost revenue for nonprofits

Individual giving declined 6% in the first quarter of this year compared with last year, a trend that would lead to $25 billion in lost revenue for nonprofits if it continues throughout 2020, according to a new survey.

The implications for nonprofits may be even worse than those numbers indicate because the first two months of the year were good ones for fundraisers, followed by an 11% decline in March compared with March of 2019

If the trend for the quarter holds for the rest of the year, the revenue loss for nonprofits will be far more than $25 billion in 2020.

However, there are early signs of a second-quarter rebound. How big that rebound will be remains unknown.

The results are from the Fundraising Effectiveness Project, which is managed by the Association of Fundraising Professionals.

One bright spot that surprised researchers: Donations under $250 rose 6%. The 2017 tax law means that millions fewer people see any tax benefit from giving, but Congress voted to allow people who don't itemize to deduct up to $300 in cash charitable giving for one year only, on their 2020 taxes. According to Nilsen, the first-quarter fundraising has been declining year over year for several years across all categories of donors, so an increase in small-dollar donations was a surprise.

Further, Nilsen said it remains to be seen how donations to social-justice causes in the second quarter, spurred by protests against systemic racism sparked by the killing of George Floyd, may affect charitable giving.

Other findings from the study include:

• The number of donors dropped by 5.3%.

• The donor-retention rate — the percentage of donors who gave last year and have already given in 2020 — dropped 3 percentage points, to 16.4%.

The data analysis is drawn from anonymized information on 2,496 nonprofits in the United States and Canada provided by AFP members. According to the AFP, the results are designed to be representative of organizations that have more than $100,000 and less than $10,000,000 in annual revenue. As a result, the report may not represent the situation for very small or very large nonprofits.

The results follow the latest Giving USA report, released last week, which showed that giving rose 2.4% last year.