Small Nonprofits 2023 Year in Review

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Since the surge in donations that most nonprofits saw during the 2020 pandemic, the nonprofit world has been paying close attention to donor and organizational trends. Would that surge continue or drift back down to pre-pandemic levels? Had the ways in which people donated changed permanently, even as in-person events returned? 

Industry experts have reported some surprising stats. For example, in 2022 gifts from individuals saw a substantial decrease for the first time in decades. This did not recover in 2023. With individual giving down several years in a row, nonprofits are focusing more on corporate sponsorships and other avenues.

What does this mean for smaller nonprofits? What can organizations with annual revenues below $1 million expect from the year ahead? As many of our customers are SMB nonprofits like these, here we’ll discuss key points for them to take into 2024.

The Numbers

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Recent research surveyed more than 900 nonprofit professionals to ask about their fundraising methods, goals, concerns, and use of technology. Of these 900+ participants, roughly 43% were part of nonprofit organizations with annual operating revenues (AORs) below $1 million. 28% of all participants belonged to organizations whose annual operating revenues were below $350,000. 23% have between one and five members of staff (not volunteers). SMB nonprofits were well represented.

Event and Online Fundraising Combo

Small nonprofits saw steady success combining event and online fundraising tactics. This one-two punch was indeed more successful for smaller nonprofits (with AORs under $1M) than for larger nonprofits, as the number of smaller organizations who reported meeting or exceeding their goals was higher in 2023 than in 2022. More than half of all nonprofits surveyed reported that event and online fundraising accounted for 21% or more of their annual operating revenue.

It’s no surprise that this method is working: in person events create connections, foster a sense of community, and drive donor retention, while online fundraising can expand an organization’s reach by thousands, or more.

Constrained by Budget and Staff Limitations

Though small organizations clearly had success with combining event and online fundraising tactics, this might have been due to circumstance rather than inherent skill sets or other factors. In other words, part of the reason SMB nonprofits saw such success with events and online fundraising is because they were the most accessible forms of fundraiser for them. While 70% of organizations with AOR under $350,000 generated 21% or more of their revenue through online and event fundraising, only 52% of nonprofits with AORs between $1 and $5 million reported the same. These larger organizations have the resources to pursue other funding avenues like grants, corporate sponsorships, and board-driven fundraising.

Data is Out of Reach 

While larger organizations are able to harness data with specialized staff and tools to analyze gifting trends and donor information, this is unrealistic for many smaller nonprofits. In fact, smaller organizations were 20 times more likely to report that accessing data was a challenge.

The skills and tools needed to gain actionable insights from large datasets is simply out of reach for nonprofits with small operating budgets and very limited staff. 

Maybe Tech Can Help

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Given the data challenges facing SMB nonprofits it’s no surprise, perhaps, that they are investing in technology. The number of <$350,000 AOR organizations that reported allocating 6% or more of their budget to fundraising technology rose from 40% in 2022 to 46% in 2023.

This question of technology refers largely to online giving technology, peer-to-peer fundraising, marketing automation, CRM/donor management, and other nonprofit  tools. However many of these tools now offer considerably more data than they used to, allowing nonprofits to export reports and raw data or even, in some cases, helping to analyze them. Nonprofits of all sizes have consistently invested as much or more into technology in the last several years, with virtually none reporting that they were decreasing their tech budgets. Clearly new fundraising technology solutions remain in demand.

Steady Success

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Happily, SMB nonprofits reported meeting their fundraising goals at relatively the same rate as in 2022. 65% of the smallest nonprofits surveyed said they met or exceeded their fundraising goal in 2023. Perhaps surprisingly, more medium and large nonprofits reported not meeting their goals than the previous year. Organizations with AORs between $1 million and 50 million were slightly more likely to report that they raised less than budgeted (organizations with AORs above $50 million reported meeting or not meeting their goals at the same rates as the pr).

We can’t know from this survey whether smaller organizations were simply better at setting realistic fundraising goals last year or medium/large organizations just didn’t hit the mark. There are many factors that could have led to these numbers, but SMB nonprofits are seeing steady success despite the extreme ups and downs the nonprofit sector has experienced the last several years. Focusing on improving data access and management, expanding the use of online giving technology, and leaning into creative ways to re-engage donors will help small nonprofits continue this trend.

What to Expect from 2024

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In 2023 SMB nonprofits saw success by hosting events and using online fundraising tools. Though frustrated by size limitations and their inability to access and leverage data, small nonprofits continued to meet goals at roughly the same rate as the previous year. 

In 2024 we expect to see small nonprofits continue to invest in technology that can help them further their successful tactics: tools that help make it easy to host events (with ticket sales, raffles, peer-to-peer tools, etc.) and fundraise online (tools to help accept donations, virtual events, etc.).

82% of all nonprofits reported that finding new ways to fundraise was “important” or even “critical.” Last year in-person auction events were rated the most successful fundraisers, followed by golf outings, runs/walks/rides, and in-person donation events, however these can be out of reach for small nonprofits. SMB nonprofits searching for affordable technology solutions that can help them diversify their fundraising techniques should consider peer-to-peer events and auctions with a virtual component.

While most nonprofits reported they anticipate hosting in-person and virtual events at the same rate as last year, in 2023 fewer plan to host hybrid events with live stream features. This makes sense as we move away from pandemic measures and nonprofits look to spend their efforts on events with the best return on investment: in-person events make connections while virtual ones spread reach.

One pitfall SMB nonprofits should avoid in 2024 is failing to focus on donor retention. Fewer nonprofits overall reported donor retention being a critical priority (51% vs 2022’s 57%), despite the fact that donor acquisition is the more expensive tactic. In contrast, 94% of nonprofits reported they plan to focus on increasing funds from existing campaigns: many organizations are sticking with what works and doubling down on campaigns that their donors will already be familiar with. As long as these campaigns have the flexibility to appeal to existing donors and focus slightly less on acquiring new ones we foresee success.

Key Takeaways

Small nonprofits can look forward to another year of challenges in 2024, but hopefully rewards as well. Though an uncertain economy and inflation have affected donor habits, SMB nonprofits can weather these and other changes to hit their fundraising goals by: 

• Focusing on donor retention and existing campaigns
• Investigating affordable fundraising tech solutions
• Hosting a combination of in-person and virtual events/campaigns

SMB nonprofits face limited time and resources but can find success in leveraging their existing relationships and finding affordable tools that can help them expand their reach.