A Message from Chuck Longfield, Blackbaud’s Chief Scientist
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 and The Blackbaud Index of Online Giving — to provide insight into what happened in the prior few weeks and valuable analysis by leaders in the sector into what fundraisers can learn from it.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 giving trends on a monthly basis did not exist. Blackbaud is the largest provider of software and services to nonprofits in the world. Our software is used by more than 25,000 nonprofits in 60 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. How do we create the Blackbaud Index of Charitable Giving and Blackbaud Index of Online Giving?Each month, we draw actual giving 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 giving 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 indices values change slightly from month to month, as we obtain newly-adjusted data from each organization.
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. Religious organizations are currently excluded from the Blackbaud Index of Online Giving as we don’t believe the data set we have for this group is representative at this time.
We report the both indices as a three-month moving average of year-over-year percent changes in giving. What exactly does this mean? Each month, we add up all of the giving 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 giving might be significant while the change in giving 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 indices 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 giving by size and sector and adjusted our results accordingly. As such, the resulting indices 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 indices monthly to reflect updated data. Similarly, we will adjust the indices as new organizations join in or others drop out. Over the coming year, we plan to release additional indices. Along with the launch of the Blackbaud Index of Charitable Giving and Blackbaud Index of Online 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.
Serving the nonprofit, charitable giving, and education communities for more than 30 years, Blackbaud (NASDAQ:BLKB) combines technology solutions and expertise to help organizations achieve their missions. Blackbaud works in over 60 countries to support more than 30,000 customers, including nonprofits, K–12 private and higher education institutions, healthcare organizations, foundations, and other charitable giving entities, and corporations.