Has COVID impacted Recurring Giving?

Tim Paris – 4 December 2020

The whole world has been shaken by the effects of COVID-19, and fundraising is certainly not immune. The pandemic has had huge impacts on physical events and peer-to-peer fundraising activities that have either been cancelled or delayed significantly. This has put a lot of pressure on other fundraising programs, like annual appeals and monthly giving,  to pick up the slack.

At the beginning of the year there was a lot of uncertainty as to the effects of COVID-19 and nobody knew the answer about what impact it would have on fundraising. Some of us were bold enough to make predictions about what would happen (including me). Now, as we head into 2021, it is a good time to use actual data to assess the real impact of COVID on fundraising.

In this analysis, we will be looking at the effect of COVID on Recurring Giving (RG) specifically.

What we thought then

Back in March, we made the following prediction based on the relationship between RG churn and  Consumer Confidence during the last major global crisis, the GFC.

If the effect of COVID is similar to that of the GFC, RG churn may increase by 25% up to 100% (double the rate of churn). 

This prediction was based on the fact that consumer confidence appears to be a leading indicator for churn (for more, read the blog, or watch the webinar). This means that when belts tighten in an economic downturn, an increase in regular giving churn rates may soon follow. You can see this in the red circle below, which displays average churn rates alongside consumer confidence since before the GFC.

What the data shows now

It has been very interesting to see nonprofits react to COVID. Although many programs have been reduced or shut down, we have also seen some great innovation. We have seen Victor Chang Cardiac Research Institute reduce their churn rate by using predictive donor scoring. We have seen Royal Flying Doctors Service become more efficient by cutting costs and improving  targeting in their appeals.

To understand the impact of COVID-19 on regular giving to date, we reran the previous analysis, incorporating data between April and December. Each bar in the following graph represents a 3 month sliding window in this analysis.

The results show that while churn rates clearly did increase from 11% to 14%, they already appear to be lowering again back to around 12%. This is great for two reasons:

  1. The increase in churn and the impact on regular giving programs was on the lower end of my predictions. The damage was not as bad as it could have been in Australia.
  2. The increase in churn seems to have already hit a peak and is returning to pre-COVID-19 levels. We may have turned a corner already in Australia.

What have we learnt

In the throws of chaos during an epidemic, it can be easy to buy into the hysteria. At the time, a lot of discourse focused on the more extreme, worst-case-scenarios. While there have undoubtedly been some devastating effects, it seems for Australia at least, the worst may already be over for recurring giving programs.

 

(1) Data taken from a pool of Australian charity data consisting of ~1 million recurring givers since 2000.

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