The results are in—FY2021’s first half was a bust for fundraisers.
Even as the market rebounded across the Fall, advancement’s steep performance drop continued. Calendar-year-end brought no reprieve, as most institutions saw big declines in dollars, donors, submitted proposals, and new major gifts. And more than one in four advancement teams saw fundraising revenues decline by more than 30%.
This bleak picture is what my research team uncovered when we analyzed fiscal-year-to-date performance data from 104 advancement teams across the US and Canada.
We asked our partners to tell us how big of a performance change they saw from the start of their fiscal years through December 31 compared to the same period during the previous year. The results were startling.
The bottom line shrank thanks to a major gift cultivation slowdown
54% of institutions saw dollar declines, with the median institution experiencing a 9.4% drop in the value of new gifts and pledges. For 49% of institutions, the declines reached into the double digits.
Much of the revenue pain is attributable to a slowdown in major gift activity. Development teams have broadly struggled to reorient their work to the Zoom era. Few have found reliable ways to keep cultivation and solicitation activity high.
As a result, a plurality of our partners, 49.5%, saw a decline in the number of new $25,000+ proposals, compared to 41.6% who saw an increase and 8.9% who stayed flat. More than 2 in 5 saw crippling double-digit proposal drops.
Many of these declines came for the first time after years of growth within major gifts teams, which had helped lift overall productivity. This year, though, the return on that staffing investment stalled.
Donors balk at big proposals, undercutting returns
Despite the problems many institutions had with submitted proposals, far more of the dollar slowdown stemmed from donor hesitation rather than gift officer inertia. The median institution saw 11% fewer $25,000+ gifts through December 31. All told, nearly two-thirds of institutions ended the calendar year behind where they had been at the same point twelve months prior.
Donors, it seems, are simply less ready to commit to making major gifts given the pandemic’s persistence and the ever-present threat of market volatility.
Donor-count drops underscore anxieties about the future pipeline
What worries many advancement leaders the most is not today’s slowdown, but rather the impact on future years’ donor pipelines. Indeed, mentions of “a lost generation of donors” have begun to punctuate my research team’s advancement-leader interviews in recent weeks.
While the median institution only brought in 4% fewer donors than they did the year before—a sizable dip, but not a catastrophic one--60% of all institutions saw drops, and a startling one in four saw 20%+ fewer donors compared to the previous year.
Pockets of high performance emerged—with caveats
The silver lining in the storm is that pockets of high performance do exist. About one-third of institutions grew total dollars raised by at least 10%, and 15 of the 104 institutions improved on every target KPI. For advancement, which thrives on economic certainty and in-person cultivation—neither of which we currently enjoy—that’s a real accomplishment.
Still, even the glimmers of good news emerging from the research bring with them foreboding signals. For example, while the public sector fared surprisingly well on the revenue front—the median public institution actually grew fundraising dollars, albeit by a modest 3%--the number of newly closed major gifts plummeted for 70% of public institutions, and donors dropped for 65%. A few very large gifts at the top of the pyramid, it seems, drove publics’ strength, masking erosion elsewhere in the pipeline.
For nearly every other institutional segment, fundraising KPIs pointed south. Canadian institutions and US doctoral institutions fared especially poorly on most fronts.
In the end, the declines plaguing higher education fundraising won’t likely abate until at least the end of the fiscal year, if not later. Cultivation is unlikely to return to normal anytime soon, slowing down gift evaluations, and many donors will wait for less volatile conditions before making major philanthropic commitments.
As a result, some advancement leaders have noted during our research interviews that they are starting to socialize with their presidents and boards the idea of an underwhelming FY2022 in addition to missed FY2021 revenue targets. Their early efforts to reset expectations may prove wise come 2023.
Want help charting a course through COVID-19?
Watch our on-demand roundtable profiling breakthrough strategies to sustain ROI and fill next year’s proposal pipeline despite the pandemic.