The unfortunate news in the nonprofit world is that the donor pool is shrinking and those donors who are still on board are paring down the lists of organization to which they donate.
But the good news is that focusing heavily on the tenets of good fundraising and relationship development can help organizations stem the tide.
Lead researcher Una Osili presented the findings of the 2023 Giving USA Report in the 2023 Giving USA Briefing presented by Lighthouse Counsel and Virtuous in July. After her presentation, there was a panel discussion on what those findings mean for nonprofits.
The panel, lead by Erik Tomalis, director of business development and chief evangelist, Virtuous, included:
Eckoff stressed that high-wealth individuals are worried about inflation, about a sluggish stock market and other factors that potentially could affect their way of life and their “spare money.” As a result, she said, they’re rethinking how they use that money and are pulling back to pre-pandemic giving.
“They’re really shortening that list of places where they’re willing to put their dollars,” Eckoff said. “And they’re looking for ways to do this differently.
“Most very wealthy people can’t use the tax deduction that they get for a lot of these really mega gifts,” she added. “So how else are you able to give them a way to invest in your organization? And they’re really seeing it now as an investment and not a gift.”
So how does an organization stay on that rapidly shrinking list?
That, the panel agreed, comes down to stewardship and, closely related, impact. Donors rethinking their philanthropic priorities want both.
“We’re seeing people really examine what they’re doing,” Eckoff said. “Is it having an impact? Are these organizations stewarding them well? If they’re not, they’re taking them off the list.”
Staying close to your donors, building relationships, reporting impact and staying the course of what you do are keys to holding your organization’s place on those shrinking lists when donors “start trimming the tree,” Foyle agreed.
“For UT Health Houston, we’ve seen a great increase in our support this year. But again, it’s staying true to what we do,” he said. “We’re in the middle of this post-pandemic era, we’re a health care institution, we’re focused on improving public health and our community. But also, as a sidebar, we’re in a campaign.
“And so obviously, when you stay focused on a major fundraising initiative, you do have those large gifts that make up a large percentage of your annual support,” he said. “We’ve seen some phenomenal support come in this year, so we try to not get too dismayed by the survey results in many ways. It’s just staying true to what you’re doing, your mission, and making a difference in your community.”
Corona called out the issue not only of major donors rethinking their philanthropic priorities, but of a shrinking donor pool as well, pointing out the need for nonprofits to reach out to those who historically have not been on their fundraising radar. Among those are the black, Hispanic and Asian populations.
But the interest and outreach must be genuine, and diversity can’t stop at donors.
“According to the US Census, the population is changing. Black, brown and Asian populations are among the fastest growing demographics. And these individuals traditionally aren’t in our philanthropic picture,” Corona said, “and they’re maybe not being asked or not being asked the right way.
“In order to raise funds from these communities, individuals need to see themselves reflected in the fundraisers who are asking them for money,” he added.
Corona also cautioned that organizations who focus on major gifts at the expense of lower-value donors risk creating a crisis for themselves in the future. Donors in their 30s and 40s who may not have the financial capacity for large gifts now are the potential donors of tomorrow.
“If you’re not building that relationship now to be in their top three in five to 10 years, there’s an opportunity that might be lost,” Corona said.
Tomalis cautioned organizations about focusing too heavily on “short-term wind vs. long-term strategies.”
The key, Foyle said, is to treat all donors like major donors to ensure they have reason to stay with the organization. UT Health Houston, he said, has a lead annual giving officer whose job is to focus on “next level” donors.
“You have to treat the $500 donor or $1,000 donor with that more personal attention and care because they are going to be the future major gift donors,” he said. “We need to think about our future selves.”
The conversation continually returned to stewardship and impact. Foyle pointed out that donors are no longer giving out of habit or blind loyalty, which means more pressure on fundraisers to give them more substantial reasons to give.
“You can’t rely on this generational perspective where you just support the institution because it’s a great institution or you support the president’s vision or CEO’s vision,” he said. “People want to see results; donors want to see their response to their gift and how that impact is taking place.
“And I think our direct mail appeals have to speak to that in a more specific way,” he said. “I think the challenge there is it’s harder, right? Doing one general appeal for your institution is kind of easy. But if you start to segment and get really targeted, and really start to show impact, it’s harder. But I think it’s a layer of challenge and resource allocation that has to take place.”
A major finding of the report was that foundation giving today makes up 21% of American philanthropy, which is the largestslice of the giving pie it’s ever had on record.
Nonprofits can lean into that trend, Corona said, by taking the same approach to foundations as it does to individual donors. This is especially true with family foundations where funding decisions lie with just one person or a couple. It’s all about 1. relationship building and 2. showcasing a sense of urgency in your proposals.
“Foundations that direct funds through a board or multiple layers of administration are hard nuts to crack and take up a lot of time,” he said. “So really focusing on those family foundations that have one person or a couple making the decision is the better way to go. Developing relationships with a single person or couple is much easier than even where offspring are involved. It’s still a lot of work, but it provides an opportunity to truly understand the donor’s interests and how you can help them meet the type of impact that they want to make in the world.
“We’re all in unchartered and uncharted territory – this is a brave new world for all of us,” he said. “And so, this is where we, the fundraisers, can really develop a relationship in which we’re learning together, or we can advise, or we can help them build confidence in their philanthropy.”
Corona also advised that, as with individual appeals, it’s key to focus on urgency in an appeal to a foundation.
“Don’t be generic; articulate what you need funding for now,” he said. “The question that you should be answering is not why they should give to you but why should they give to you now, right now.”
Witherspoon talked about The Salvation Army’s well-known Angel Tree program, which partners with more than 100 companies and organizations to provide Christmas gifts for families in need. The pandemic and ensuing work-from-home trend took its toll on the program that enlists volunteers for support, he said, but that situation seems to be righting itself as workplaces settle into the new normal.
Many companies reached out to The Salvation Army as soon as their employees started returning and looking for meaningful volunteer opportunities.
“I think that was the testament to people wanting to get back to their normal, whatever that normal was, or the new normal. And the new normal has to have some things that resemble or feel like what the old normal was,” he said. “And the Angel Tree program, I think for a lot of these organizations, is a team-building activity for them. It’s an opportunity to bring their departments together to do something that’s going to be impactful in the community. And it also brings their employees together.
“We’ve been getting a lot of requests for group volunteer opportunities,” Witherspoon added. “Our challenge is having enough opportunities right now. So, we’re seeing this return to wanting to be more engaged with the organizations that they’re supporting financially, wanting to see how to bring their employees back into this and what the impact is for the community. I see a coming back, if you will, to somewhat of a normalcy in volunteering – for us at least.”
As for workplace giving, maybe not so much yet. That, he said, may take more time. But companies that have their own workplace giving programs – as opposed to going through a third party like United Way – seem to be recovering more quickly.
“Again, it goes back to bringing their teams back together. And then getting back to our normal operation – and that also includes how we give and how we support community organizations,” he said.
Relationships and stewardship were recurring themes in the panel discussion, and carefully curated new donor and new email subscriber series can lead the way from new or one-time donor to long-term and major donor, according to Tobia.
That path, she said, is one of increasing trust and understanding.
“I think for many years, as fundraisers, we assumed that once someone donated it was because they understood our story and our mission and then they wanted to support it,” Tobia said. “I think what we’re really seeing is that there are some donors who are willing to make that first gift and then learn more about us and then continue to build that relationship.”
Those donors are evaluating how the relationship proceeds in the first six to 18 months, so the stewardship must be thoughtful and allow the story of the organization to unfold.
That storytelling element need not always be complicated.
“I think it’s going to become more important that we give direct storytelling to our front-line staff.” Tobia said, “and we have some great technology partners to help us with that. But you know, the iPhone and the technology that our staff has really helps us with that storytelling,” Tobia said.
“It doesn’t always have to be bringing in a film crew to make the glossy trifold and the glossy video for the gala,” she said. “That’s still part of our video and digital strategies, but there are some really great materials and stories and impact lessons that come from just asking your staff to take pictures when they go for ice cream for the residents, or the folks that they’re serving, or the back of their car filled with gifts. It doesn’t always have to be the faces; it can be that story and that impact in progress.”
Tobia concluded advising organizations to encourage fundraisers to try new things, to budget in “room to fail.” Doing so, she said, allows them to not always and only rely on what has worked in the past.
“We have to be building that into the fundraising culture,” she said. “Part of the budget allows us to try a different direct mail approach, a different acquisition list, a different technology partner, just to start testing those waters and seeing if that’s the right fit for our donor.
“We as fundraisers as a field and as nonprofits need to start stepping out and saying, ‘Well, what could work next year? What are we going to give ourselves with that room to not always be perfect, but to be authentic?”