What The FEP 2023 Fundraising Data Tells Us About The Importance of Major Donor Stewardship

The Fundraising Effectiveness Project (FEP) recently released their Q4 2023 data, which includes a Year-to-Date Nonprofit Sector Trends report for 2023. Several shifts and developments provide important clues for Major Gift officers looking to focus their efforts on high-impact projects in the year ahead. Here are some of our main takeaways from the report:

1. The Number of Active Donors Continues to Decline

Despite a slight uptick in 2020, this two-decade old trend continues; the overall number of donors to nonprofit organizations dropped by an estimated 3.4% from 2022 to 2023. This is particularly true for small, grassroots charitable giving - the drop in donors contributing less than $500 was responsible for 79.3% of the overall decrease. Even as American generosity continues to take on new forms (such as non-institutional giving through mutual aid or crowdfunding efforts) and the shrinking middle class feels the economic squeeze of inflation, overall fundraising revenue is estimated to have only decreased by 2.8%, bolstered by larger gifts from a smaller group of donors. This is the second consecutive year that FEP has recorded decreased fundraising numbers, signaling that despite the fact that major donors have, so far, largely shielded nonprofit budgets from the effects of the shrinking donor population, charitable revenue growth is not a given. 

2. Major Donors Provide The Vast Majority of Fundraising Revenue

Despite representing only 2.6% of the total number of charitable givers, donors who contributed over $5K accounted for 76.4% of all dollars donated in 2023. Even amongst that group, the data skews toward the largest donors. The small group of philanthropists who gave over $50K represented just 0.3% of donors, but gave over 50% of charitable dollars in 2023. 

3. Donor and Donation Retention for Major Gifts Both Faltered in 2023

Despite the huge role that major donors played in funding nonprofits last year, they were not immune to the downward trends affecting all donor size cohorts. The FEP categorizes donors into five tiers based on the size of their giving, Micro ($1-$100), Small ($101-$500), Mid-Level ($501-$5K), Major ($5K-50K), and Supersize ($50K+). 

Both the number of donors and the total donation revenue dropped for every donor cohort in 2023, and Major and Supersize donors saw some of the biggest percentage losses. The number of Supersize donors experienced the largest decrease, falling by 7.4% year-over-year, with Major donors just behind at a 6.8% decrease. The Major donor category experienced the largest percentage decrease in dollars donated, dropping by 7.1%. This should signal to Development professionals who are focused on major gifts that there is an increased need for strong stewardship of this critical group of funders.

4. A Rise In New Donors Signals Hope, But Organizations Often Struggle To Secure A Second Gift 

One positive development stands out in the report: the number of new donors rose year-over-year, increasing by 2.3%. This is the first time that new donor counts have increased since Q1 2021. In 2023, new donors made up 41.3% of all donors, while repeat retained donors (those who have previously made multiple gifts) accounted for 37%. New retained donors (those who gave for the first time last year) and recaptured donors make up a significantly smaller slice of the pie, at 7.4% and 14.3% respectively. 

The small overall number of new retained donors comes as no surprise, as nonprofits saw the biggest decrease in that category, down 20.1% since 2022. This suggests that while nonprofits are succeeding at attracting new donors to the organization and keeping their faithful annual donors engaged, they may have difficulty bridging the gap between those two groups. Securing a second gift and stewarding new donors to develop a long-term relationship is a must for successful and sustainable fundraising. On the surface these developments may not seem particularly relevant for Major Gifts teams, but it is important to remember that major donors often start out with smaller gifts to an organization. Engaging new donors well is a crucial step toward keeping major gift portfolios supplied with qualified prospects for cultivation.

5. Donor Retention Rates Are A Mixed Bag For Large Donors

Donor retention rates measure the percentage of people that donated last year, who donated again this year. While retention rates fell for donors of all sizes, Major and Supersize donors suffered the biggest decreases in retention rates. However, despite the decrease from last year’s retention rates, these donors are still ultimately retained at higher rates than Midsize, Small, and Micro donors. 

The bigger a donor’s gift, the more likely they are to be retained. This may partly stem from a donors’ alignment with an organization’s mission (donors are likely to give big gifts only to causes that they care deeply about), but it may also speak to the heightened level of stewardship which is received as gift levels increase. Either way, with retention rates slipping this year for even the most loyal cohorts of large donors, creating a strong stewardship plan is essential.

How should Major Gifts Officers respond to these trends? The FEP summarizes data collected from across the nonprofit sector, including organizations of all sizes and missions, so evaluating your own organization's data is an important first step. Did your fundraising in 2023 follow the trends of sector, or differ? Looking at your donors' year-over-year retention and gift sizes may point you in a slightly more specific direction, but based on the high-level trends identified in this report, the importance of developing a culture of strong donor stewardship is clear. Because the largest portions of fundraising revenue come from major donors and repeat donors who are retained year after year, fundraisers must focus efforts on expanding and engaging this donor group. Strengthening retention of your most loyal donors, while adding additional stewardship activities that will encourage new donors to join your repeat donor community, will yield positive results today and bolster the sustainability of your organization's revenue.