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Introducing the Blackbaud Index of Charitable Giving
A Message from Chuck Longfield, Blackbaud’s Chief Scientist
why did we create the blackbaud index of charitable giving?
Late in 2009, Paul Clolery, editor in chief of The NonProfit Times, approached Blackbaud to share an idea — to produce a dashboard that would track charitable indicators so nonprofit organizations could get an at-a-glance view of key indicators for the sector. One of the core indicators would be a comprehensive index of charitable giving across all sectors and sizes of nonprofits.
The index would be produced monthly and displayed at www.nptimes.com. We thought it was a great idea. Why? Although nonprofits already have worthwhile indices and resources including Giving USA from the Giving Institute and Indiana University, the AFP Fundraising Effectiveness Survey, Guidestar, and the Quarterly Index of National Fundraising Performance from Target Analytics, a broad-based index that reported revenue trends on a monthly basis did not exist.
Economic conditions, natural disasters, and market fluctuations have made it extremely difficult for nonprofits to make fundraising decisions informed by the latest donor behavior information. We agreed that a charitable giving index that provides insight into what happened in the prior few weeks would be very helpful to organizations.
Blackbaud is the largest provider of software and services to nonprofits in the world. Our software is used by more than 22,000 nonprofits in 75 countries. Each day we work with nonprofits of all sizes and sectors, from local food banks to the American Red Cross and the International Fund for Animal Welfare. We felt that if anyone could take on this ambitious project, we could. Today I am happy to announce the Blackbaud Index of Charitable Giving.
how is the index created?
Each month, we draw actual revenue statistics from the databases of thousands of participating organizations using a variety of fundraising systems to determine how much revenue was raised in the prior month. We include revenue from all sources of fundraising activities: direct mail, telemarketing, face-to-face fundraising, email, online, mobile giving, small- and large-scale events, and major and deferred giving. We do not include the unfulfilled portion of pledge gifts, but we do include the donated value of in-kind and stock gifts. We include giving from individuals, corporations, and foundations but do not include giving by individuals or corporations to private and community foundations or other intermediaries. To include these gifts would double count the revenue when those organizations subsequently make grants to other nonprofits. We do not currently exclude the value of goods and services provided in exchange for gifts (e.g., the cost of premiums) but hope to in the future. And lastly, we do include adjustments made to gifts (e.g., bounced checks and refunds) to provide a more accurate accounting of real revenues. As a result, you may find that Index values change slightly from month to month, as we obtain newly-adjusted data from each organization.
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Blackbaud Index of Charitable GivingIntroduction
“Economic conditions, natural
disasters, and market fluctuations
have made it extremely difficult
for nonprofits to make fundraising
decisions informed by the latest
donor behavior. That is why we
created the Blackbaud Index of
Charitable Giving – to provide
fundraisers with up-to-date data on
fundraising trends and to couple
that information with valuable
analysis by leaders in the sector.”
— Chuck Longfield, Blackbaud’s chief scientist
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Chuck Longfield, Chief Scientist, BlackbaudChuck Longfield became
Blackbaud’s chief scientist in
January 2007 and is the founder of
Target Software, Inc. and Target
Analysis Group, Inc. Chuck has
extensive experience designing
and implementing national as
well as international constituency
databases that address the
fundraising information needs
at many of the world’s largest
nonprofit organizations. Prior to
founding the Target companies in
1992, Chuck taught math to middle
and high school students. He was
honored by FundRaising Success in
2007 with a lifetime achievement
award for his contribution to
the nonprofit sector. He holds a
BA in mathematics and an MEd
from Harvard University and has
more than 25 years of experience
helping nonprofits automate their
fundraising operations.
Each organization is then categorized by one of eight sectors using its National Taxonomy of Exempt Entities — or NTEE code — as reported on its 990 tax return. These sectors are Arts, Culture, and Humanities; Education; Environment and Animals; Healthcare; Human Services; International Affairs; Public and Society Benefit; and Religion.
We report the Index as a three-month moving average of year-over-year percent changes in revenue. What exactly does this mean? Each month, we add up all of the revenue for the prior three months and compare this total to the same three months one year earlier to calculate the annual percent change. Why do this? Many organizations have big campaigns (events or mailings) that occur at roughly the same time each year. However, if an event was in late April one year but early May the next, the change in monthly revenue might be significant while the change in revenue over a three month period might actually be the same. An index based on a moving average is less sensitive to these small timing issues and will serve as a more practical decision-making tool. However, one downside to a moving average is that the “smoother” index will dampen large fluctuations caused, for example, by disaster relief giving.
We also adjust the Index to be representative of the nonprofit industry, by size of organization and by industry sector. There are nearly 2 million nonprofits in the country, and we didn’t want the indices to be skewed by organizations or sectors where Blackbaud had greater representation. Using the 990 data, we determined the relative representation of fundraising revenue by size and sector and adjusted our results accordingly. As such, the resulting Index will be more representative of both specific sectors and the industry as a whole.
how will the index change over time?
As we mentioned above, we will adjust the Index monthly to reflect updated data. Similarly, we will adjust the Index as new organizations join it or others drop out. Our initial Index will start with 1,400 organizations representing $2.2 billion in revenue, but we hope this number grows as additional organizations participate.
Over the coming year, we plan to release additional indices. Along with the launch of the Blackbaud Index of Charitable Giving, we are also releasing additional data that segments organizations by size. After all, the trends in giving at a small nonprofit that raises $100,000 a year may very well differ from one that raises $100,000,000 a year, even if they are in the same sector. And we hope to produce separate indices for each sector as well as for various channels. Knowing how an organization compares to similar cohorts by size, mission, techniques, or other shared attributes can be invaluable when trying to determine if it was strategy, implementation, economies of scale, or donor behavior that drove results.
I’m sure many of you who share my passion for the nonprofit sector will have great ideas for other directions in which we can take these indices. My team and I look forward to your suggestions and hope you find these initial indices useful.
Share your feedback at bbindex@blackbaud.com.
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Analysis by Roger Craver, Editor in Chief of The Agitator and Founder of DonorTrends
The premier edition of Blackbaud’s Index of Charitable Giving carries some fascinating news. In short, nonprofits of all sizes are now emerging from the recession. The Blackbaud Index of Charitable Giving reports that overall revenue increased by 12.1 percent in April 2010 for the 3 months ending April 2010 as compared to the same period in 2009.
The Blackbaud Index of Charitable Giving represents 1400 organizations with combined annual revenue of $2.2 billion.
The chart represents the change in revenue for the 3 months ending April 2010 as compared to the same period in 2009.
The data show that donations for the smaller organizations bottomed out in July of 2009, remained roughly flat compared to 2008 throughout the second half of 2009, and turned upward starting in January 2010. Donations to large organizations may have reached bottom in December 2009, but it is hard to tell which part of the large upturn in March was due to Haiti versus general improvement in ongoing donations, especially since donations declined in April.
small is beautiful
Although small organizations had the most significant declines between July 2008 and April 2009, they’ve been the first to come out of the recession.
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The Blackbaud Index of Charitable Giving
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Roger M. Craver Roger Craver is a pioneer in direct
response fundraising. He is the
founder of Craver, Mathews,
Smith & Company and is also the
founder and CEO of DonorTrends,
the independent research firm
that tracks giving and fundraising
trends and provides innovative
data solutions for fundraisers.
Roger has helped launch and build
several nonprofit organizations,
including Amnesty International,
Habitat for Humanity International,
Greenpeace, World Wildlife Fund
International, and the Heifer Project
International. Roger is also the chief
editor of The Agitator, the daily
online information service that
provides fundraising advice and
insights to thousands of fundraisers
around the world.
Through his company DonorTrends,
he tracks current developments
in fundraising — both online and
offline — that affect fundraising
today and tomorrow.
Roger holds an A.B. degree, Summa
Cum Laude, from Dickinson College
and a Doctor of Jurisprudence,
Summa Cum Laude, from the
George Washington University
National Law Center.
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The Blackbaud Index of Charitable Giving - Small Organizations
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The Blackbaud Index of Charitable Giving - Small Organizations represents 1127 organizations with combined annual
revenue of $381 million. The chart represents the change in revenue for the 3 months ending April 2010 as compared to
the same period in 2009.
It seems that mid-sized organizations didn’t take a significant hit until mid-2009, but the decline was more significant than other groups, and they only began pulling out of the slump this spring.
The Blackbaud Index of Charitable Giving - Medium Organizations represents 258 organizations with combined
annual revenue of $521 million. The chart represents the change in revenue for the 3 months ending April 2010 as
compared to the same period in 2009.
In the case of larger organizations, they had declines for all of 2009 and are also now pulling out of the recession, primarily driven by Haiti-related giving to relief organizations.
The Blackbaud Index of Charitable Giving - Large Organizations represents 23 organizations with combined annual
revenue of $1.4 billion. The chart represents the change in revenue for the 3 months ending April 2010 as compared to
the same period in 2009.
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The Blackbaud Index of Charitable Giving - Large Organizations
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“Blackbaud’s Index of Charitable
Giving carries some fascinating
news. In short, all sizes of
nonprofits are now emerging
from the recession, but smaller
organizations are recovering faster.”
— Roger Craver, editor-in-chief of The Agitator and
founder of DonorTrends
Continued on following page
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The Blackbaud Index of Charitable Giving - Medium Organizations
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© June 2010, Blackbaud, Inc.
This white paper is for informational purposes
only. Blackbaud makes no warranties, expressed or
implied, in this summary. The information contained
in this document represents the current view of
Blackbaud, Inc., on the items discussed as of the date
of this publication.
All Blackbaud product names appearing herein are
trademarks or registered trademarks of Blackbaud,
Inc. The names of actual companies and products
mentioned herein may be the trademarks of their
respective owners.
About BlackbaudBlackbaud is the leading global provider
of software and services designed
specifically for nonprofit organizations,
enabling them to improve operational
efficiency, build strong relationships,
and raise more money to support
their missions. Approximately 22,000
organizations use one or more
Blackbaud products and services for
fundraising, constituent relationship
management, financial management,
website management, direct marketing,
education administration, ticketing,
business intelligence, prospect research,
consulting, and analytics. Since 1981,
Blackbaud’s sole focus and expertise
has been partnering with nonprofits
and providing them the solutions they
need to make a difference in their
local communities and worldwide.
Headquartered in the United States,
Blackbaud also has operations in
Australia, Canada, the Netherlands,
and the United Kingdom.
For more information about Blackbaud
solutions, contact a Blackbaud account
representative. In the United States and
Canada, call toll-free 800.443.9441. In
Europe, call +44 (0) 141 575 0000. Visit
us on the web at www.blackbaud.com.
why is there a difference when it comes to the size of an organization? Small organizations are far less likely to have structural sources of income (e.g., monthly giving, endowment income, and planned gifts) than large organizations, and therefore, their income is more susceptible to the vagaries of the economy.
As for the faster recovery by small organizations, I suspect that because small organizations tend to be localized and work toward meeting community needs like hunger, housing, and other human services, donors likely focus more on supporting their causes in tough times. Thus, giving to small organizations increases and leads this group out of the recession.
As a general rule, large organizations have a far broader and deeper range of income sources such as monthly giving programs, well-developed planned gift and endowment programs, as well as corporate and foundation grants. Because the Index reports on virtually all sources of income, it would be expected that this group would be slower heading into the trough and a bit slower than small organizations coming out of it — they have a “bigger boat to lift,” so to speak.
The puzzle is why mid-sized organizations show the greatest proportional decline going into the recession and the slowest recovery. If our explanations about the small and large groups are on target, we’d expect the mid-size groups to be, well, right in the middle. Perhaps it has to do with this sector’s type of giving. For example, if mid-sized groups tend to be more dependent on events, online giving, or other sources, this may account for the difference in timing.
The big takeaway here is that smaller organizations had more significant declines between July 2008 and April 2009, and as such, they are doing better on a relative basis right now. Larger organizations had declines for all of 2009 but are now pulling out of it, led by relief organizations and Haiti-related giving. And mid-size organizations fared fairly well through 2008 and early 2009 but had more significant declines later in 2009.
What’s for certain though, is that Blackbaud’s Index of Charitable Giving carries some fascinating news — all sizes of nonprofits are now emerging from the recession.
Visit www.blackbaud.com/blackbaudindex for monthly updates on the Blackbaud Index of Charitable Giving.
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