Economic Impacts on Nonprofit Giving: Industry Insights from MissionWired’s Nonprofit Advisory Board

The insights below were shared during conversations between members of our Nonprofit Advisory Board – leaders from seven organizations including CARE USA, Make-A-Wish America, Médecins Sans Frontières (Doctors Without Borders), The Nature Conservancy, Project HOPE, Share Our Strength | No Kid Hungry, and St. Jude Children’s Research Hospital – in meetings that convened in July 2023. These discussions were designed to create space for a cohort of leaders to generate solutions to the challenges faced by the nonprofit world. You can learn more about our Nonprofit Advisory Board here.

2023 has proven to be a turbulent year for the economy, causing ripple effects felt across the nonprofit industry. Recent reports – like Giving USA’s 2023 report – confirm that nonprofit giving is experiencing a downturn after many years of growth. Our partners have been wondering what this means for direct response strategy: How are other organizations adjusting their plans and mitigating risk? And what strategies are they putting in place now to avoid program stagnation?

We sat down with industry leaders on the Nonprofit Advisory Board to discuss their perspectives on the state of nonprofit giving. The 7 Advisory Board members and our expert strategists agreed on a few key takeaways:

• This downturn requires action-taking and creative problem-solving, yes – but it shouldn’t create panic in your organization. One Advisory Board member who leads a top 100 nonprofit’s fundraising program reflected that donations saw an unprecedented bump in 2020 through 2022 – and we were bound to see some deflation eventually. This is a moment for strong strategy, not overly reactive decision-making.
• It’s important not to allow this challenging moment to cloud your strategic thinking and planning for the long-term success of your program. Keep your vision for your growth through 2024, 2025, and beyond in mind and maintain investments in effective acquisition wherever possible.

Takeaway: A downturn in the nonprofit giving industry was expected.

Nonprofit organizations saw incredible growth the last few years. From the COVID fundraising bump to the outpouring of support shown for organizations aiding refugees displaced by the war in Ukraine, many nonprofits were able to shatter fundraising goals from 2020 to 2022.

But leaders knew that this massive tide of giving would not last forever and have been bracing themselves for a downturn. Nearly all of our members of the Nonprofit Advisory Board were prepared for this because they’ve witnessed the cyclical nature of giving over the last several decades. However, several of the Board members said that the downturn this year is not as significant as they were anticipating. In fact, some of them were able to end their fiscal years on-pace with or slightly ahead of their budget.

One member recommended staying focused on your organization’s data trends to see what the analytics are telling you. Try to avoid becoming overly reactive – now is not the time to pull back on direct response efforts.

Takeaway: In order to be set up for growth in years to come, it’s important to maintain acquisition investments today.

With the downturn in giving and the rising costs of acquiring new supporters, some organizations have considered cutting back on investments in acquisition. But members of the Nonprofit Advisory Board strongly dissuaded against this: not making investments in acquisition can have a major negative long-term impact.

Several of our Board members discussed the challenges organizations faced in 2008 and 2009 following big cuts on acquisition. This had significant implications in outer years and was much more difficult to rebound from long-term. In order to not repeat history, they agreed that it’s critical to continue investing in growth now and ensure that your investments are as efficient as possible in reaching new donors.

Takeaway: With rising costs to acquire new supporters, it’s even more imperative to focus on retention and building a strong donor pipeline.

Many nonprofit organizations saw an influx of emergency donors over the last few years and have been focused on developing strategies to retain them. The Nonprofit Advisory Board discussed this renewed focus on retention – particularly as it’s getting more expensive to acquire new donors and some organizations are trying to raise more money from fewer resources.

They highlighted a few strategies to consider:

• Find new streams of engagement, whether that’s for lapsed donor reactivation or long-term lead generation. Identifying new ways to engage supporters at their individual giving level will be helpful in retaining supporters and securing additional donations.
• Balance retention strategies with acquisition investments and consider a donor’s experience once they’re in your universe. What will their journey look like once you’ve acquired them?
• Optimize your donor pipeline and ensure you’re developing strategies to move one-time donors to monthly givers, as well as build up your mid-level and major donor programs.

Remember that not all the ways someone can get involved with an organization are monetary. Finding strategies to highlight other areas of your organization’s mission can help supporters stay involved with your mission even if they’re not in a position to donate right now.

Takeaway: Sustainer revenue can be recession-proof.

Growing a monthly giving program is always a key imperative for nonprofit organizations. But right now, it’s especially important. As the economy shifts and giving trends change, having a strong sustainer program can help offset some of those changes. Sustainers help establish reliable, monthly revenue regardless of the environment.

Members of the Nonprofit Advisory Board are trying a variety of new ways to build up their monthly donor programs including direct digital sustainer acquisition, reconsidering face-to-face programs, ensuring investments are inclusive of sustainer strategies, and exploring acquisition modeling tools like ones offered by The Digital Co-Op.

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If you’d like to learn more about the Advisory Board, you can check them out here! If you’d like to learn more about MissionWired’s work with nonprofits like yours, you can read more about our services here.