Household Giving is on an Upward Trend

Mary Gleason, Congregational Stewardship Consultant at the Unitarian Universalist Association of Congregations (UUA), recently came upon an article that was posted on the Association of Fundraising Professionals for Washington website and shared it with the other Congregational Stewardship Consultants. We thought that it was such interesting and positive news that we wanted to share it with you.

Mary writes:

“There is good news on the horizon for the success of annual budget drives.

In 2009 non-profit organizations experienced a downward trend in household giving, the kind of giving our congregations rely on.  Blackbaud, makers of fundraising software, monitors giving on many levels and has noted some positive trends in the quarter April – June 2010.

Their study shows that small non-profits with annual revenues under $1 million experienced a 12.3 percent increase over the same time period last year.  That’s good news for congregations with late spring annual budget drives.  Mid sized non-profits with annual revenues between $1 million and $10 million still had a decline of 2.5% but is considered recovering because it is less of a decline than for the same time last year.

The study also reports that online giving is up by 13.1 percent for small organizations. If you are not using online giving as an option for your annual budget drive and other gifts you may want to consider adding this opportunity.”

You can read the article at the Association of Fundraising Professionals or the full report at Blackbaud.

If you’re looking into on-line giving, the UUA Office of Congregational Stewardship Services encourages congregations to explore Vanco Services.  Currently over 8,500 congregations nationwide are served by Vanco’s electronic giving solutions.

It all comes down to making a compelling case

Quite often, I receive phone calls from congregational lay leaders who want to explore various techniques to ask congregants for annual financial commitments. Our experience has been that there are a number of techniques that can be implemented as an alternative to a stewardship conversation-oriented annual budget drive. Beyond Fundraising provides descriptions of several techniques, including commitment Sundays, cottage meetings, annual congregational dinners, faith promises, pony express, telephone conversations, and direct mail appeals.

We have found, however, that the technique is not nearly as important as making a compelling case. Congregants will make financial commitments if they understand the significance of their gift . . . what difference it will make. In this era, the successful annual budget drive requires that congregants understand the connection between their gift and the vision/mission/ministry of their congregation.

I welcome stories about successful annual budget drives that you have conducted. How did you ‘make the case’? What technique did you use? How did you define success (beyond meeting your financial goal)? How many lay leaders were involved in the drive?

Does Your Congregation Have a Healthy Distribution of Financial Commitments?

Have you ever wondered if your congregation’s distribution of financial commitments (annual pledges) is healthy? Because so many lay leaders have asked that question, the UUA stewardship consultants created a chart that illustrates a healthy distribution of financial commitments:

The first 25% of total dollars is coming from the first 10% of the household donors
The second 25% of total dollars is coming from 15% of the donors
The third 25%of total dollars is coming from 35% of the donors
The final 25% of total dollars is coming from the last 40% of household donors

We believe that this distribution is healthy and we recognize that it is not the norm. We encourage congregations to use this distribution as a guide, not as the one and only answer to healthy finances.

Over the years, we have consulted with many congregations in serious financial trouble because they were overly dependent on a few household donors in the first quartile of giving. If 10 percent of household donors contribute the first 25 percent of total giving, a congregations is not too vulnerable if a top donor moves away, reallocates their financial commitments to other causes, or dies without having left a bequest to the congregation. On the other hand, if only 5 percent of household donors contribute the first 25 percent of total giving, a congregation will have a serious financial problem if a top donor ceases to contribute financial commitments.

Program Budgeting: Say “YES” to pie charts and “NO” to line items

Are you frustrated that your fixed costs and employee salary packages represent the bulk of your line item budget? Can you imagine your annual budget development process devoid of drama, line-by-line contentious arguments, and anxiety about which line items to decrease or eliminate? Because this scenario is so prevalent and fraught with negativity, I want to share this information with you.

When congregants are asked to make a financial commitment to the annual operating budget, most want to know where their money is going and how it will make a difference. At the same time, they don’t want to be overwhelmed with too much financial detail. The best approach is to develop a program budget and to communicate it through pie charts.

Program budgeting is a method designed to clarify and simplify the operating budget. A typical congregational program budget divides annual income into four or five sources and annual expenses into four or five broad categories. Pie charts show the proportion of income from each source and the proportion of expenses in each category.

A program budget does not replace a line-item budget. It serves as an introduction to the proposed budget. The program budget proposal is shared with congregants when they are asked to make their financial commitment. The pie charts make it easy to see where financial resources come from and how the congregation chooses to allocate them, including the relative significance of various programs and ministries. These priorities may be altered if the congregation chooses. After the annual budget drive, the pie charts are converted into a line-item budget and presented to the congregation for adoption.