Easy growth is dead

ef-hutton-commercial2There are some people that, like the old EF Hutton commercials, when they talk, you listen. Mary Meeker is one of those people as one of the lead analysts on online and high-tech issues.  

To give you some perspective, she was lead manager of the Netscape Communications IPO in 1995; usually when someone says they have over 20 years of online business experience, you assume they are padding their resume.

On June 1, Meeker put out her Internet Trends report, highlighting the evolution of the sector.  You can see the full report here.  Among the over 200 slides are some key takeaways for us nonprofit folks, so I wanted to highlight a few of them this week.

I’m on the record as opposing any article that proclaims The Death of X — that’s even what I called a NonProfit Pro article on the topic.  

So here I am violating my own rule.

In the report, on slides 37 and 38, Meeker articulates the five epic economic growth drivers of the past two decades and how they are all waning:

losing mojo
What do these drivers look like for the nonprofit sector?

  • Nonprofit giving remains at two percent of GDP.  Has been for 60+ years and looks unlikely to break out anytime soon.
  • As Meeker says, overall GDP growth is slowing across the board because of these demographic factors.
  • The number of nonprofits is increasing.
  • The number of donors is waning, with 103 donors lost for every 100 donors gained.  This is offset by average gifts going up, but getting more and more from fewer and fewer is the buggy whip model for success.
  • Anecdotally, nonprofits are increasing their quantity of communications in an attempt to cut through the noise.
  • With giving increasing by less than the amount communication quantity is increasing, costs are up and response rates per communication are down.
  • Meaning that response rates per donor are down.

We need, as an industry, to find a way out of this.  Other than the nonprofits that are working to decrease death, we can’t solve for the N and increase overall population.  Nor is there anything I think we can do at the nonprofit level to prevent other nonprofits from forming.  And we’re unlikely to budge GDP.

So, easy growth is dead.

Thus, there are but a few choices:

  1. Increase the percentage of people who give.
  2. Increase the amount that people who give give.
  3. Decrease the costs of getting people give.
  4. Die off.

All of these will come into play at some point.  We keep overfishing the same donor waters; we will have to find new donors.  In order to break 2% of GDP, we need to change our value proposition to those who donate to us.  And we need to be smarter about how we solicit and receive gifts.  Those who don’t do at least one of these three things will do the fourth.

Tomorrow, we’ll talk about a Meeker-inspired way to help potentially increase both your retention rates and your donors’ experiences (that is, working on #1 and #2).

If you’d like to get these types of tips on a weekly basis, please sign up for my weekly email here.  You’ll get digests of this information, plus additional subscriber-only content like 30 days to firmer thighs.

OK, I’m lying about that last part.

Easy growth is dead

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