The State of the Faith Communities Subsector
Published August 2020
From rapidly refashioning their services for online worship to rolling out virtual content and small groups, mission organizations and churches have stood as a beacon of community at a time when many are physically apart. Since the pandemic began, faith-based organizations have quickly assembled themselves to deliver essential goods, food, and health and safety items on the frontlines. Disruption to normal operational models have impacted how churches and other mission organizations achieve their work, all at a time when demand for community is higher than ever.
In crises, we can turn to our pasts for help navigating uncertainties. In this report, we will examine the factors that have affected giving to faith-based organizations over the long-term and recent past. Time and again, key best practices in fundraising and engagement have supported organizations as they weather change.
At this moment, supporters and congregants aspire to find a solution to these challenges. Churches and mission organizations play a critical—and highly personal—role in shaping charitable giving as a value throughout a supporter’s life. Providing a source of community and hope in a time of dire need, faith-based organizations must be prepared to cultivate this support and look to the past for perspective and advice in navigating this landscape.
With 2019 in what seems to be the distant past, how can we better understand which trends reflect the state of our sector now? What types of information can we provide organizations, stakeholders, and constituents to help navigate the road ahead? And when challenges feel stark, how do we remind ourselves that they offer the opportunity to reimagine our futures?
Confronted by these changing times, it is more crucial than ever that we seek greater perspective.
Understanding the long-term trends that have shaped your subsector is a key component of your response to today’s landscape. We hope that these perspectives will help you to identify and invest in the right strategies to move your mission forward in the long run.
The Long View
Taking a longitudinal view allows us to see how charitable giving has weathered similar events. It allows us to learn from these changes, grow, and move organizations forward with data-informed strategies. Adjusted for inflation, giving has increased nearly $300 billion between the years 1979 and 2019 (Giving USA, 2020). Total charitable giving has increased or plateaued in current dollars every year since 1979, with the exception of three years that experienced significant economic declines: 1987, 2008, and 2009.
While these declines coincided with severe economic downturns, overall charitable giving rebounded alongside economic recovery. Giving USA Foundation research indicates that, in the past, it has taken an average of three to four years for inflation-adjusted charitable giving to rise back up to pre-recession levels. Between 2008 and 2019, giving increased $77 billion, from nearly $350 billion in 2008 to $427 billion in 2019. The recent Great Recession ended in 2009 and yet, for the most recent decade from 2010 to 2019, the total growth in inflation-adjusted giving is 33%. Giving in 2019 reached nearly $450 billion (Giving USA, 2020).
In 2019, the religion subsector received 29% of all charitable giving, totaling $128 billion. This number, measured by Giving USA, includes giving to congregations, denominations, missionary societies, and TV and radio ministries. These contributions totaled the fourth highest inflation-adjusted value ever recorded in the religion subsector. While giving to this subsector fell during the 2008 recession, churches and faith-based organizations were able to rebound from the downturn in the years that followed. Though the full effects of the coronavirus pandemic are not yet known, focuses on community, faith, and generosity may encourage giving, as organizations respond to the immediate needs it has created.
In addition to trends in total giving, gross domestic product, or GDP, is one of the most helpful indicators for tracking and explaining changes in revenue across the nonprofit industry. Research shows that giving revenue growth rises during periods of strong economic growth, when the GDP is growing, and slows or even falls during periods of relative economic weakness (Target Analytics, 2015). Charitable giving in the United States has been about 2% of total GDP for more than 40 years. In boom times it has reached as high as 2.3%, and in recessions, it has dipped as low as 1.7%. This means that in a slow economy, not only does giving slow down, but it also declines as a proportion of the average American’s spending dollar.
In recent years, however, this figure has remained steady while overall giving has grown and philanthropy has opened its doors to additional channels like crowdfunding and donor-advised funds (DAFs). When larger circumstances influence those factors like financial capacity and inclination to give, fundraising often feels the effects. However, philanthropy tends to lag behind stock market volatility, following the general up- and downward trends across time. As markets fluctuate and as philanthropy continues to shape its response to today’s current events, it remains too early for recent market volatilities to be felt across overall giving.
Religion Subsector Trends in
Total Giving, 1979-2019
Just as the percentage of GDP has remained steady, the percentage of disposable income has also hovered around 2% for the past 40 years (Giving USA, 2020). Despite this continuity, major events and social movements have the power to temporarily attract attention toward specific causes. Natural disasters, for example, have consistently prompted a noteworthy charitable response in their immediate wake. In 2017, an extraordinary multitude of circumstances motivated Americans to engage socially and politically (Vital Signs Part 2, 2018). Beginning in late 2016 and gaining massive energy in 2017, civic involvement was charged with political and social energy due to the presidential election. In tandem with those influences, 2017 tax reforms further shifted giving dynamics by motivating the use of DAFs and foundations.
In the immediate aftermath, organizations saw significant rises in households making new gifts. While organizations did not retain all those new donors, the spotlights shone on their causes provided a renewed interest in giving. So far, 2020 has felt an unforeseeable convergence of similar influences. From economic shutdowns due to the pandemic to the advocacy and protests generated by the Black Lives Matter movement, we should anticipate 2020’s climate of giving to be affected by these events.
Year-to-Year Change in Households Making New Donations
History—specifically the 1970s and 80s—shows us that while these kinds of social and political movements do not directly benefit all charitable subsectors, expanding the population of donors inevitably benefits all charity. Advocacy organizations and those most directly affected by social and political movements see increased support first and often dramatically.
We can better see this by assessing the allocation of charitable dollars across subsectors. For instance, while overall giving to religion continues to receive the majority of giving year over year, it has declined as a share of giving to all organizations since the early 1980s (Giving USA, 2020). Moving from 54.8% of all giving in 1979 to 31.4% in 2019, religious giving has been on the decline for several decades. It captured 29% of all charitable dollars in 2019, which was the first time that giving to this subsector comprised less than 30%. Mirroring trends across the U.S., attendance at church services has been decreasing over time, and an increasing percentage of Americans do not belong to a religion. While Americans continue to give to the church, religious giving is now growing at a slower rate than total giving.
Though the share of dollars dedicated to religion has declined, this reallocation has allowed additional subsectors to flourish, furthering their growth.
Giving by Type of Recipient: Percentage of the
Total in Five-Year Spans, 1979–2019
Additionally, the breakdown of charitable dollars given by individuals, foundations, bequests, and corporations has fluctuated. Over the last 40 years, giving by individuals has begun to decline as a percentage of total giving. And for the most recent two years in a row, individual giving has totaled less than 70% of all giving. This is in sharp contrast to the five-year period beginning in 1980, when individuals gave 82% of all charitable dollars. The increasing concentration of wealth throughout the U.S. has played an outsized role in creating foundations. This trend, coupled with rising income inequality and the emerging influence of DAFs, continues to increase the share of giving by foundations, and decrease the percentage of giving from individuals.
Though 2020 will be marked as a time of widespread change, the overarching trends in philanthropy are positive: Individuals, companies, and groups continue to invest in the causes they care about. Giving by individuals remains the largest contributor to overall giving year over year. More than ever, this reminds us that while much is in flux, the core values of supporters remain the same. It is up to our organizations to remain committed to cultivating these relationships. Staying attuned to the long-range trends, as well as the continued influences of innovations like DAFs and crowdfunding, will support your mission as you approach your strategy for 2020 and beyond.
2019 In Review
In 2019, charitable giving in the United States grew 1.0% based on analysis of $36.3 billion in donations by the Blackbaud Institute (Charitable Giving Report, 2019). Online giving grew by 6.8% compared to 2018 after analysis of $2.7 billion in online donations.
Traditionally, most transformational and major gifts are not yet made online, so on average, online gifts are lower than offline gifts. In 2019, the average donation amount was $617, while the average online donation was $148. In the faith-based subsector, the average donation amount was $319 and the average online donation was $211. Religious organizations should continue to watch these trends closely, as the shift to virtual fundraising and engagement events may impact congregants’ and supporters’ reliance on online giving.
2019 also saw a continuation of multi-year trends in monthly giving patterns. While December remains the largest month as a percentage of giving, June continues to drive giving due to end-of-fiscal-year fundraising campaigns. While this year has proven to be a mixed bag of unexpected spikes in need and attention, organizations should continue to anticipate growth at the end of the year as organizations execute on their giving days, annual appeals, and end-of-year campaigns. According to the Blackbaud Institute Charitable Giving Report, one fifth of all donations are given in December alone. Know which months yield the highest giving for your organization to ensure that you are prepared to maximize your opportunities.
Snapshot in Time
As trends throughout 2020 begin to emerge, we can identify how charitable subsectors have started to navigate the current environment.
Year over Year change in overall giving, June 2019 - June 2020
Pertaining to year-over-year trends, data from the Blackbaud Institute Index shows that overall giving declined in the immediate wake of the pandemic. The general donor population froze with the rest of the social good sector, as businesses shut their doors and individuals stayed home to quarantine. The cancellation of major events, conferences, and galas created a decrease in giving for March and May, but showed slight increases in April and June compared to giving in the same months in the year prior.
Heading into April, overall giving spiked as philanthropy responded to the pandemic. Wide-scale giving days such as #GivingTuesdayNow in May shone a spotlight on charitable giving at a time when many were receiving economic impact payments, assisting in its execution.
Year over Year change in giving, June 2019 - June 2020
Data from the Blackbaud Institute Index, which captures giving to faith-based organizations, shows that giving in the faith-based subsector held steady compared to the previous year’s cumulative 12 months. Faith-based organizations experienced a year-over-year 12-month cumulative decrease in April 2020 before rebounding in May. Regarding the 12-month year-over-year period ending in June 2020, the sector has leveled off with a slight increase of 0.2%. Potentially impacted by the fiscal year’s end in June, faith-based organizations saw steady year-over-year performance. This aligns with data from the Unstuck Church Report, which showed that, in a survey of over 500 churches, nearly 60% saw giving decreases in early April.
Beyond the faith-based subsector, other mission areas such as food banks received significant support across several months. Across many charitable subsectors, increased demand for services due to economic shutdowns, job losses, and healthcare needs have been supported with increased contributions. Organizations found their stride in late spring with overall giving in June increasing 1.2% for the last 12 months ending in June 2020, compared to the previous 12-month period ending in June 2019.
While the percentage of online donations have remained low on average for a number of years, 2020 may see an inverse of this trend as in-person stewardship and programming give way to online-only engagement. These effects will be telling if seen throughout major giving, where gifts have traditionally been made offline. Across all subsectors, there has been a 36% increase in online giving year over year from the three months ending in June 2020 compared to June 2019.
Significant jumps during the month of May show an increasing reliance on online platforms, as many organizations rushed to leverage momentum from #GivingTuesdayNow.
In addition to these emerging trends, several other factors may continue to shape the year in charitable giving. Throughout the remainder of 2020, we may anticipate heightened civic and political giving following a summer of activity that saw the growth of the Black Lives Matter movement, as well as increased advocacy for safety, health, and healthcare workers’ rights amidst the pandemic. In the fall, the potential effects of hurricane season may also draw increased support to disaster relief causes in the aftermath of any events.
In tandem with this engagement, the upcoming presidential election presents an opportunity for organizations to broadcast their causes and how they relate to issues on candidates’ agendas. This election will coincide with the start of many organizations’ end of year campaigns, which could further fuel charitable activity. Underpinning each these factors, the CARES Act of 2020 reinstated a $300 charitable deduction for one year. This may entice an uptick in low- and mid-level donations by a comparable amount, as many individuals race to give to the causes of their choice. These effects may amplify pending further changes in unemployment and federal relief.
To brace for these, several core practice areas can help bolster your organization.
Diversify Your Revenue Mix
Religious and faith-based organizations should not overlook revenue mix as a component of strategic planning. Examining data from the Urban Institute’s Nonprofit Almanac shows that, across subsectors, social good organizations follow a multitude of revenue models. While this data did not highlight religious organizations, it shows how different organizations may thrive through various combinations of revenue sources and that organizations should avoid an over-reliance on certain sources.
Percentages of Revenue by Sources of Reporting
Public Charities, 2013
As the pandemic has shown, lost income due to the cancellation of in-person events, fundraisers, galas, and more has left many organizations in weakened positions. Although crises like the pandemic are unpredictable, organizations should be aware of revenue sources that could exert an outsized influence on their budgets. Several key metrics can support you in uncovering hidden variables throughout your budget.
For instance, the dependency quotient is a metric that quantifies the risk associated with a lack of revenue diversification. It assesses the percentage of an operating budget that would be left unfunded if an organization were to lose its top five donors. To calculate your dependency quotient, divide the total contributions of your top five supporters by your organizational expenditures. While some organizations may cease to exist if they lost their top five donors, others may experience minimal distress. This metric allows you to take a more nuanced approach to your fundraising strategy to steward your top donors, while also staying focused on your other revenue sources. See The Right Mix to learn more.
In addition to their dependency quotient, organizations should regularly calculate their cost to raise a dollar. This metric shows the investment that your organization requires to fundraise. To calculate this, add staff and all fundraising expenses together, then divide that by the total net fundraising total. Most development staff understand that investment is often required to achieve long-term fundraising success. Regularly tracking this metric across your campaigns, events, and more will help you to assess your most affordable or unaffordable actions and better steer your budgeting process in the long run.
While revenue mixes in the faith community are unique, these metrics can illuminate the weak spots that may be hiding in your budget. Survey research shows that the percentage of churches that had set aside adequate cash reserves in preparation for a crisis have increased over the last several months. By putting the costs of expenditures into perspective, you can strive toward financial sustainability by prioritizing a revenue mix that can weather downturns and position you for long-term success.
Inspire Your Major Giving Strategy
The Vital Signs series has found that, while the overall amount of dollars donated continues to grow, the number of individuals donating money is shrinking over time. However, donors who are still giving are giving more than ever before. Research from How America Gives also demonstrates how the influence of major donors masks the distribution of giving across income levels. A decrease in the number of lower- and mid-level donor households shows that major donors persist as a critical component of any organization’s fundraising performance.
To shore up your major giving strategy, ensure that you are familiar with the donors in your file who are already giving as well as the prospects who have the capacity to make a major gift. Organizations should continually review their file to evaluate their major giving program and track the success of their stewardship and moves management. Key demographic indicators can help to help estimate an individual’s likelihood to engage with and donate to religious causes. Additionally, wealth indicators can help assess capacity to make a major gift. Doubling down on retention, stewardship, and cultivation efforts are crucial steps in ensuring that your mission resonates with major donors.
Focus on Retention
With all the factors affecting philanthropy, our teams play a more important role than ever in guiding organizations and causes through turbulent waters. Donor retention reflects how you keep in contact with your donors and build a pathway for their continued support. It is a direct, quantifiable reflection of how you are engaging your supporters, congregants, and community, as well as expressing your mission.
You should annually calculate your overall donor retention rate to assess who is choosing to stay in your donor circle every year. While organizations with a high retention rate keep or renew many donors from year to year, those with a low rate must acquire new donors to keep their bottom lines above water. This reinforces the importance of calculating retention to benchmark your internal progress annually and over time.
Donor Retention in the Faith-Based Subsector, 2010-2015
First-year donor retention continues to be a challenge among nonprofit organizations, but multi-year retention rates remain strong. New donors disproportionately come from the pool of supporters who are already donating to other organizations. Not only do they give to twice as many nonprofits, but they also give twice as much per year when compared to donors who did not make a new gift.
While the impacts of shifting to virtual service and events is still not fully known, survey research shows that more people continue to attend online services over the in-person alternative. Among churches surveyed, two thirds indicated that since the crisis began in their communities, online engagement has increased compared to before COVID-19. This percentage has held steady since March 2020. Churches and faith-based organizations have the power to build community and center their faith in these times of crisis. Harnessing energy from supporters is a crucial tool in amplifying supporter retention.
While the value of your retained donors should be clear, their continued stewardship should remain a core priority across your organization. Recall that your marketing and fundraising strategies must be aligned to best frame and communicate the societal values embraced by your mission and programs. This results in stronger donor engagement and retention.
Invest in Sustained Giving Programs
Sustainer giving is a long-term strategy in which donors commit to regularly giving a set donation amount. Sustainer programs support your retention efforts while ensuring a dispersed revenue source.
Data from Sustainers In Focus examined multiple donor files and compared the retained revenue of new donors—those who first gave a sustainer gift and those who later converted to sustainer giving—against those who never gave a sustained gift. Overwhelmingly, this shows that revenue per donor increased in the years preceding the two years following a donor’s commitment to a sustainer program. Giving increased from 50% to 300%, with even the low end far exceeding the typical return for non-sustaining donors. As a strategy choice, there is substantial value to be found in sustainer fundraising.
Returns on sustainer giving are long-term, and the success of your sustainer program relies on excellent retention strategies.
Double Down on Acquisition
To expand, organizations need to focus on strategies that address the changing macroeconomic environment in which we find ourselves. Though many of us are focused on retention and sustained giving at this time, they cannot happen without acquiring new supporters, congregants, and followers. Mission-based organizations should not take their foot off the gas of acquisition. To provide the most long-term growth for your team, you’ll want to continually add to your pool of donors and enhance your acquisition strategy as a sustainable practice.
To support your strategy, you may consult your donor acquisition cost. This metric is calculated by adding all expenses that go into recruiting a new donor, then dividing by the number of new donors acquired over a given period. By calculating the donor acquisition cost at your organization, you can better pinpoint the tactics that merit further investment while zeroing in on the channels, preferences, and behaviors that will expand your supporter base.
10-Year Overall DonorCentrics Index Revenue & Donor Trends, 2007 - 2017
As highlighted above, major social and political advocacy throughout 2016 and 2017 resulted in a spike of new donors throughout 2017. In 2020, spotlights on wide-scale political change, civil rights, and social movements have garnered similar attention. Organizations aligned with these causes are in advantageous positions to welcome new supporters into the fold. As services and events move online and as the path of the pandemic unfolds, faith-based organizations must focus on cultivating community to initiate and maintain these relationships.
Navigate Your Digital Transformation
As the pandemic has illustrated, the sector’s reliance on digital engagement has only deepened over time. The ability to not only reach a new audience of supporters but also keep your current followers will continue to be vital in the foreseeable future.
From reducing your manual processes through workflow automation to thriving in remote working environments and embracing new platforms, your mission organization must adhere to a new focus on delivering strong, digital experiences to supporters. While a focus on retention and stewardship will advance your mission, you’ll also want to be sure that you are speaking to your stakeholders through the channels, experiences, and platforms that they are embracing.
As consumer behavior begins to show itself across the social sphere, individuals are more eager to sit in the driver’s seat of their engagement. The acceleration of avenues like crowdfunding, do-it-yourself, and peer-to-peer fundraising will continue to be cohesive components of overall fundraising strategies. Speaking to individuals on a one-to-one versus a one-to-many level, these campaigns continue to gain traction and connect people to the causes they care about through the channels they regularly use.
Your mission’s success in these arenas lies in leading your staff and stakeholders. Whether you are leading your organization through shifts in day-to-day operations or toward a full digital transformation, you must be prepared to support the donors, followers, and networks who are your best advocates.
Although our minds may try to steer us differently, crises are when we need to be most collaborative. Communicating needs and understanding your community’s reality will help you find tech tools that match their access and skill options. It is increasingly apparent that the churches and faith-based organizations that utilized online and mobile giving channels before the pandemic were better positioned to weather its effects. As churches continue to offer virtual services, small online groups, and content beyond weekend services, and as organizations find new ways of delivering their services, we can all reflect on how we are both innovating and investing in long-term growth.
In a changing digital environment, these platforms will be more crucial than ever before. They give you the ability to make more informed decisions about how to identify and nurture your supporters.
Though we are still watching 2020 unfold in real time, we can expect a further confluence of influences to alter the year ahead. As the Black Lives Matter movement grows across the U.S. and as we head toward a presidential election and end of year giving, we may anticipate heightened civic activity resembling the waves felt in 2016 and 2017. The potential for an active hurricane season coupled with continued coronavirus relief may also usher in similar activities. While much may feel uncertain, we can better prepare for these events by grounding ourselves in the long-term perspectives that have helped philanthropy to adapt over time.
Challenges often expose the areas in our organizations that require additional support or change. We can use these moments to emerge in stronger positions. Reflecting on how our communities of faith can adapt and innovate will help tap into the practices that will endure into the future. Our churches and mission organizations play an invaluable role in this—both as sources of community and as critical conduits that connect people with their values. How you nurture and care for your faith community is paramount at this moment, and together, our organizations can do more to serve others and advance our ministry. As we grapple with the pandemic, the intentions that we set in our processes, relationships, and cultivation efforts will color how we respond to this challenge and any others that lie ahead.