How did these organizations fundraise in a challenging year?
By Micah Mann, Strategist/Senior Account Director
From Giving USA’s Annual Report on Philanthropy to M+R’s Nonprofit Benchmarks, it’s clear that 2022 was a challenging year for many nonprofit organizations.
As CY2022 results started to come in, I couldn’t help but be curious: How did 8 of the top performing nonprofits do in 2022?
Earlier this year I presented research in a webinar called “From Good to Great in 5 Years: What do nonprofit ministries with the largest revenue leaps have in common?” focusing on the top 8 nonprofits whose fundraising revenue grew the most from 2017 to 2021. The top 8 had revenue growth in this timeframe that more than tripled the benchmark average.
Dual headwinds made 2022 particularly hard for nonprofit fundraising: effects of inflation and all-time revenue highs from 2021 primed many nonprofits for a drop in revenue in 2022, even the top 8. (Not including that 2022 was the first calendar year since 2019 without stimulus checks!)
On the surface, the top 8 nonprofits in our research had a mixed performance in 2022: 3 continued their meteoric revenue growth, 2 were flat, and 3 saw their revenue decline.
What lessons can we learn from the top 8 nonprofits? Let’s take a look at what led 3 of the top 8 to continue growing, and call out fundraising vulnerabilities that contributed to 3 that declined.
What helped these 3 nonprofits to continue to grow their fundraising revenue?
When the going was good (CY2017 – CY2021), they grew even more than their peers (more than 3x more). Now in CY2022 when the going is tough, they continue to grow. What is setting these organizations apart from the rest?
Answer: Fundraising revenue diversification and evolution.
Let’s look at three examples of this below:
1. Growing Major Gift development (MGOs)
- In our “Good to Great” research, 6 of the top 8 increased their number of Major Gift Officers (MGOs) from 2017 to 2021.
- Most importantly, 4 of the top 8 nonprofits had grown to between 3 to 5 full-time MGOs. The 3 nonprofits that continued growing their revenue in 2022 all fell into this group (the fourth nonprofit with 3-5 MGOs was flat year-over-year in 2022).
- For these 3 nonprofits, their MGOs continued to develop their relationships and evolve their skills, with results that showed: $10k+ revenue grew 17%, 29% and 33% respectively.
2. Evolving a winning strategy
- 1 of the 3 revenue growers secured and promoted a $1 million year-end matching campaign for the first time in 2022.
- This organization had traditionally had a 6-figure year-end match for years; working with BDI they added a successful 6-figure May match as well.
- In 2022, their matching donors combined for an extraordinary $1 million year-end match, which was vital in pushing the organization over their 2021 revenue total.
3. Making investments to diversify
- 1 of the 3 revenue growers began making investments four years ago in their grants program:
- They hired a talented person and provided the room (and time) to grow the skills necessary to move the organization’s grants program forward.
- In four years the organization’s grants grew 620%, culminating in a 7-figure grant in CY2022.
What is the downside of not diversifying your fundraising efforts?
For the 3 nonprofits whose revenue declined in 2022, this difficult year exposed fundraising vulnerabilities: in particular, less diversified fundraising efforts and fewer MGOs (this group fell in the 0 to 2 MGO range).
1. Fewer MGOs = fewer Major Donor relationships
- MGOs can only cover so much ground. Fewer authentic relationships with Major Donors ultimately leads to fewer opportunities in down economic times.
- In addition, relying on 1-2 MGOs can carry its own risks:
- Even strong MGOs can be hired away or even fall ill, leaving a big hole to fill.
2. Not diversifying fundraising efforts leads to putting all your eggs in a few baskets:
- 1 of the 3 nonprofits whose revenue declined was the only top 8 organization to not have at least 1 matching campaign in 2022.
- The nonprofit with the largest year-over-year revenue decline was the only organization in the top 8 without an MGO.
Ultimately, the results from CY2022 added another wrinkle to what we learned in the “Good to Great” research from CY2017-CY2021. Investing in authentic Major Donor relationships and diversifying fundraising efforts not only provide a multiplying effect in strong fundraising years, it can also act as a hedge during down fundraising years and reduce the risk of revenue decline for your organization.
Do you have questions about these findings? Request your FREE Case Study that dives even deeper into the data and discover strategies that can help you position your organization for growth!
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