Econ 201: Macro Influences Impacting Micro Fundraising
As a fundraiser, you are well aware of your internal program’s performance metrics. Changes in average gift sizes, donor retention rates, and revenue can all be tracked back to changes in your campaign strategies.
But are you also stepping back and looking at how larger, macroeconomic forces may affect your results?
A variety of factors drive donors’ giving behavior, some related to your organizational decisions and some related to the world around you. The donorCentrics team within Target Analytics recently studied findings from the Giving USA Foundation, publisher of Giving USA reports, and key economic indicators to review which external factors have the highest correlation to, and may help predict, charitable giving.
Their findings focus on a few key areas:
- Income trends, as represented by the Gross Domestic Product
- Wealth trends, as represented by the S&P 500 Index
- Tax policy, and its impact on charitable deductions
- Interest rates, and their impact on saving vs. spending
- Unemployment rates, and their impact on donor numbers
- Population growth, and its impact on the pool of potential donors
Perhaps most interesting is the historical correlation between the S&P 500 Index and overall fundraising revenue.
The Index serves as a good proxy for measuring the growth and decline of personal wealth, and can thereby be a key indicator for how much financial support wealthy donors are able to give to charities.
Also informative is the historical change in overall donor numbers as compared with employment and population growth. Both of these factors may go a long way towards explaining the donor declines the entire nonprofit industry has experienced in recent years.
The study concludes with thoughts on how to incorporate this information into program changes to better account for larger economic trends, including making greater use of a variety of giving programs and channels.