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September 2, 2020
The financial wellbeing of your church communicates how seriously you take the mission of your church.
One of the critical components of your financial wellbeing is the amount of money your church receives each year.
Technically, these are called revenue streams.
The better you will understand the principles and practices that help other churches succeed in establishing a secure and stable annual revenue stream, the better you will be able to set your church up for financial wellbeing and success.
The best way to understand what works for churches is to use the best data.
What is working?
GivingUSA, an organization that invests much of their time and energy understanding the latest trends in charitable giving, recently released GivingUSA 2019: The Annual Report on Philanthropy for the Year 2018.
This report analyzes thousands of churches and organizations, billions of dollars given, and trillions of dollars spent, as it relates to the task of building and maintaining a cohort of donors to support your mission.
Thousands of churches fail to achieve financial stability each year due to unsuccessful fundraising methods.
Thousands of churches succeed in achieving financial stability through successful fundraising each year.
The GivingUSA 2019 report gives us the data we need to understand what habits, practices, and principles set up some churches for success, and others for failure.
In this article, we are going to look at exactly what are the relevant facts and best practices in church fundraising that enables churches to achieve financial security through informed fundraising practices.
The total U. S. Gross Domestic Product (GDP) for 2018 was $21.3 Trillion.
Accordingly, the total charitable giving was $427.1B, making charitable giving 2% of the total GDP for the United States.
Over the past 40 years, charitable giving by individuals increased from $32B to $292B. Inflation-adjusted, it increased still from $123B to $292B. Inflation-adjusted, it increased from $148B to $427B during the same time.
It’s important to recognize that this number excludes giving by charitable foundations, and every other organization that gives charitably. Of the $427.1B given in 2018, $292B of that an individual transferring money from their personal bank account to a nonprofit. That’s 68% of total giving.
The GivingUSA 2019 report itself stressed the significance of the decrease in individual giving. But this decrease is overblown, since fluctuation is more likely to occur with larger amounts of money, and the decrease was only 1.1%.
Individual giving, measured in percentage of disposable personal income, has remained relatively unchanged over the past 40 years (1978-2018), fluctuating between 1.7% and 2.2%. This just means people are spending more on things, while still sacrificing the same amount of purchasing power in order to give.
The important number to focus on is the inflation-adjusted increase from $123B to $292B, indicating a willingness on the part of individuals to give over nearly 250% more today than they were 40 years ago. Churches face a more willing and more wealthy giving base than ever before in history.
Religion remains the largest recipient of charitable giving.
In 2018, religious institutions represented the largest recipient category of charitable giving, totaling 29% ($124.52B total). In 2017, giving to religious institutions was up 2.1%, and 2018 it fluctuated downward 1.5%. But overall, people want to give to religious organizations more than any other category.
This means that not only are people more wealthy and more willing to give than ever before, but they are consistently more willing to give to religious organizations such as churches than any other category of nonprofit which might compete for donated funds.
This should give churches confidence in asking their members and visitors to give, not only to ancillary social causes, but to the very religious mission which defines them as churches.
Giving to foundations increased over 30% over the past 2 years. Specifically, giving to foundations increased 36% in 2017, and decreased 6.9% in 2018. This is the largest percentile increase in any category. Over the past two years, this increase represents an unparalleled surge in interest in giving to foundations in particular.
Therefore, churches would be wise to partner with foundations that are established and performing important work that aligns with their mission and values.
This would enable churches to capitalize upon the surging social interest to give to foundations that are doing good work in the form of tithes. That partnership can be leveraged to support the church’s partnership with the foundation, which benefits the church’s financial security, rather than members partnering with other foundations directly that circumvents church partnership.
Giving to international affairs increased 9.6% from 2017 to 2018, totaling $22.88B. This is an enormous increase in giving in this particular area. Churches would be wise to focus on the international work they are doing in their fundraising efforts, whether that international work takes the form of short-term missions trips, long-term missionary support, or inter-church global partnerships.
There is a rising trend to support this kind of work, and by showcasing the church’s work globally, the church can utilize what this data says about 2019 giving psychology to increase tithes. It would make most financial sense for churches to outsource international charitable giving when you can route those funds through your church’s partnership and consolidate your members’ giving efforts into a single revenue stream.
More than half of fundraisers saw increased donations in 2018, despite economic and political uncertainty.
This means that donations to nonprofit entities are trending upwards, not downwards. This also means that the surge in charitable giving over the past 40 years hasn’t been consolidated to a thin slice of hyper-prosperous nonprofits, but is distributed broadly and represents a reliable trend of fundraising success on which churches can depend.
In 2018, 27% of fundraisers met their fundraising goals, 17% fell short or greatly fell short of their fundraising goals, and 60% reported meeting their fundraising goals.
35% of the fundraisers for these nonprofits reported economic factors had little to no impact on fundraising, 29% reported a negative effect, and 36% indicated a positive effect.
Successful nonprofits are focused on increasing the quality of their communications to and partnerships with their donors and prospective donors. They are focused heavily on attracting, recruiting, and nurturing donor relationships. Nonprofits and churches which fail to do this are likely among the 40% of donors who failed to increase their revenue stream during 2018.
The size of nonprofit email lists grew, on average, 5%, compared to 9% in 2017. For every 1000 email subscribers, nonprofits averaged 806 Facebook followers, 286 Twitter followers, and 101 Instagram followers.
How is this relevant for generating revenue? Fundraising email revenue represented 13% of all online revenue. That 13% could be the difference between falling in the red and making it into the black. If your church isn’t building its email list, nurturing giving relationships, and using email as a tool to ask for members to sign up for recurring giving, you could be missing out on anywhere from a 10%-25% revenue increase.
The GivingUSA 2019 report draws heavily on a recent data analysis by Sharna Goldseker and Michael Moody called Generation Impact: How Next Gen Donors Are Revolutionizing Giving. In this book, Goldseker and Moody predict that $59T of wealth will occur from Boomers to Generation X (GenX) and Millennials.
There are certain characteristics of GenX and Millennials which help fundraisers to better build charitable giving partnerships with these populations. For instance, GenX and Millennials are likely to want more hands-on involvement with charities to which they give. Giving2019 agrees with Goldseker and Moody that attracting and retaining GenX and Millennial donors will be critical to ensuring organizations’ long-term sustainability.
Giving 2019 gives three tactical suggestions to churches and nonprofits for longevity:
Focus on data health, commit to donor retention, and invest in sustained giving programs. By data health, the authors mean fostering continual engagement, relational connection, stewardship, strong donor buy-in among givers.
By a commitment to donor retention, the authors mean that churches and nonprofits should have a system for converting new givers into recurring donors.
By investing in sustained giving programs, the authors mean that churches and nonprofits should build a subscription-based or otherwise recurring program for donors to extract value from and supply funds to the recipient.
One way that fundraisers can do this is by combining highly visible service opportunities for donors with clear, impressive, and quantifiable deliverables.
Surveying 475 individuals with investable assets of $100,000 or who made $10,000 in charitable contributions, only ⅓ of Baby Boomers made “impact investments,” while ¾ of Millennials and GEn Xers did.
If churches and nonprofits want to continue fundraising success, they must offer more “plug and play” options for donors to get their hands dirty with the work of the cause itself as one option for cultivating retention, maintaining data health, and giving recurring opportunities to refortify donor buy-in.
Fundraising has tended to focus on female donors.
Yet, GivingUSA 2019 found that households in which men make giving decisions are more likely to replace charitable contributions with impact investing.
Online giving platforms don’t compose a majority of giving, but this says nothing of their growth and trajectory for the future. 20 years ago, online digital giving numbers were all flatlined at $0 and 0%.
In 2018, online donor retention averaged 37% across all subsectors (p. 77), 3 percentage points lower than in 2017. This fluctuation is likely due to the novelty of these platforms and the philosophical struggle some churches face to become sufficiently tech-forward to invest in maintaining and using these platforms.
Contributions to religion in 2018 reached the fourth highest inflation-adjusted amount recorded to date. Combined with this, Millennials made over 40% of their purchases through a mobile device in 2018. These growing numbers will inevitable pair in a spike in online giving user retention, donation amount, and platform efficacy.
The data is already hinting at this trend.
Online giving is growing in popularity for religious organizations. The amount of churches who offer digital giving options increased from 42% to 75% between 2015 and 2017. Online giving grew at more than twice the rate overall change in online giving (2.9% for religion, vs. 1.2% overall), and the number of times online giving has been mentioned during church services increased from 52% in 2015 to 65% in 2017.
Online giving is 9.6% of overall giving to religion, compared with 8.5% of overall charitable giving average.
The mean gift to religious organizations is $337 (compared with $499 overall), while the mean online gift is $195 (Compared with $147 overall). This is likely because online giving platforms are inclined toward a recurring model—that is toward a monthly tithe, as opposed to an annual gift to a foundation or acute cause of some kind.
Some think of GenX and Millennial generations as less religious than boomers, but this is simply inaccurate.
Millennial members of evangelical churches are engaged in more frequent attendance than Boomers and GenXers.
Denominationally, this plays itself out in clear metrics.
The Presbyterian Church in America (PCA) denomination saw an increase in total contributions to 3.7%, paired with an increase in membership of 0.2%, compared with the PCUSA, who saw an increase in per capita giving of 4.7% and a decrease in overall membership of -4.6%.
The Southern Baptist Convention's membership declined -1.4% in 2018, but worship attendance increased 2.3%, and giving increased as well.
What does this mean for giving trends?
This means that attendance—or rather, the ability to cultivate engagement and buy-in (basic fundraising skills)—predicts giving more than membership.
For example, despite decline in active members (-3.0%), the Evangelical Lutheran Church in America (ELCA) saw a modest increase of 0.7% giving in 2017. GivingUSA 2019 found worthwhile a Baylor study found that the more materialistic a person is, the less likely the person is to have a high rate of charitable giving. This is an obvious corollary of the fact that a church must cultivate buy-in—or, some theological agreement—to generate tithes.
This should prompt churches to become more savvy in their communications strategies. In other words, if churches desire to generate more funds in a downward trend in church membership, they should seek to cultivate engagement and participation through becoming persuasive in their message and marketing.
All of this data should give churches confidence that there is money to be raised, there are eager givers to be asked, and the fundamental skills of matching money with mission is persuasiveness.
Communications skills, awareness of brand strengths and weaknesses, and adaptability are evidently the critical variables which will determine whether churches and nonprofits are able to secure financial stability in the next decade.
Churches will do well to capitalize on the clarity this data supplies, seize the opportunity to secure financial stability by producing engagement through persuasion in their churches, and ought especially to implement a digital giving platform immediately to make sure that the $59T in wealth that transfers to GenX and Millennials over the next 20 years is easily transferred to their tithing practices as well.