October 2024: Membership Growth and Revenue Analysis

Friends,

I’m going to show you what election years do to a nonprofit like Strong Towns, one dedicated to working from the bottom up, with everyone, regardless of how messy those relationships can be. It’s kind of ugly.

I’m writing this in my first week at the office since before Labor Day. The team here has had me on the road for the fall leg of the “Escaping the Housing Trap” book tour. I’ve been all over North America, talking to audiences large and small. And I’ve spent a fair amount of time in what we’ve all come to know as swing states. You always know when you’re in a swing state. (Hint: It’s the commercials.)

Membership is the core of our bottom-up strategy. When someone signs up for a membership, they create a connection to the Strong Towns movement. We have no minimum dollar amount — you can literally donate $1 a year and be a member — because the important thing is the connection.

Here is a chart of our member totals over time. You’ll see that we’re still on an aggressive growth trend, but that trend is slowing. Membership is up from 5,161 at the start of the year to 5,301 now. That’s +140. Last year, we were +844 during that same time period. (Note that last year wasn’t a presidential election year.)

Membership is how we grow our movement — how we activate bottom-up change. It is also a major part of how we fund our organization. Our membership revenue has grown each year by 20%+. It’s been fairly consistent over time.

This year we budgeted for another 20% increase. We blew way past that during the first five months of the year. Things were going great, then not so much. Here’s a chart showing what we experienced:

We exceeded last year by more than 20% every single month until June. In June, we outperformed 2023 by 18% (slightly below budget). Then, in July, we not only didn’t meet the budget of +20%, but we fell below 2023 revenue. We were -8%.

That’s a dramatic shift! We’ve recovered a bit since, but we’re still well below budget.

My working hypothesis — and it is just a hypothesis — is that this is about the presidential election season. It not only takes the oxygen out of the room — in the battle for time and attention, presidential politics dominate — but it also diverts giving and support from nonpartisan organizations like ours to those that are in the battle of the moment.

The Biden/Trump debate in June was the real kickoff of the campaign. It was also the high-water mark in terms of outperforming our membership budget for 2023.

Here’s a chart showing what I mean:

I looked back to see if I could pluck out any trends from prior election years.

In 2016, we saw really strong membership growth in the second and third quarters. Then, during the fourth quarter, Trump was elected and many people in and adjacent to our movement turned a bit crazy. Our revenue growth slowed substantially during the fourth quarter of 2016.

During the 2020 election, we did well during the first half of the year, but then things dipped in the third quarter as the election heated up. September and October were the worst months of that year — right at the peak of the campaign. Things bounced back in November once Biden was elected and the world seemed to calm down a little.

This year, the first two quarters were strong but the third quarter fell off the table — our first negative quarterly growth in membership revenue ever. I’m sorry to those of you who hate charts, but here’s a final one showing the three election cycles:

I’m sharing all of this with you to point out the trade-off that we have consciously made. In the short term, we could boost our revenue by joining the partisan fray. We have analytics that show this. We watch other organizations do it. Becoming active in a partisan way is a known and successful strategy for a nonprofit to boost revenue and mobilize people. In the short term.

Our bottom-up strategy is about building a broad movement for change. To be successful, that movement has to change the culture of how we build our cities, towns and neighborhoods. To change the culture, we have to be able to work across differences. All the differences, especially the ones that are hard.

We have made an intentional decision to forego revenue opportunities — whether through membership or otherwise — in order to work across cultural differences. Our commitment isn’t to next quarter’s fundraising target; it’s to our mission. We will continue to make this decision, no matter how difficult. That’s our strategy. It’s also who we are.

Thank you for all you do to help us build a world full of strong towns.

— Chuck