Look Back To Look Forward

Last month Giving USA published its Annual Report on Philanthropy for 2022.

It’s not looking great on the giving landscape.

But just because the numbers are problematic doesn’t mean your nonprofit has to suffer and deal with a downturn in donations.

Looking Back To Look Forward

Below I look at five data points from the Giving USA report. I check on what happened last year and offer some advice for how your nonprofit can not just survive but thrive in the second half of 2023 and beyond.

No need to push the panic button

Look back: Almost half a trillion dollars was donated in 2022. Yay! However, total giving fell 3.4% from 2021, a drop of 10.5% when adjusted for inflation. 

Look forward: Giving being down is not a surprise. Many people stepped up during Covid to help numerous causes and more money was donated. Things are now going back to their “norm.” Hopefully you planned accordingly and didn’t expect the Covid windfall to continue.

A recession is here (or isn’t here, depending on which economic pundit you speak with on which day at what hour). This does NOT mean slash and burn- i.e. cut jobs and slash everyone’s salary by 10%. It DOES mean planning accordingly and stepping up your game in those areas where the rewards are great.

That could mean

• Strategizing about how to raise your donor retention rate.
• Launching or strengthening your monthly giving program. (Monthly givers have higher retention and higher lifetime value rates than other donors.)
• Offering more ways for donors to give. For example, gifts of stock, planned giving, in kind donations. Give them numerous options so they find the best way for them to contribute. That’s how you help develop a relationship.
• Stepping up your email fundraising and marketing game

Just because many nonprofits live with a scarcity/poverty mindset doesn’t mean you have to. A recession isn’t all doom and gloom. There are plenty of ways to grow and thrive.

Individual giving is a problem

Look back: Giving by individuals was down 6.4%. It fell by $21.9B. That’s a LOT of cash missing in the organizational couch covers!

It’s a very worrying trend given that just 40 years ago, the individual share of overall giving in the U.S. topped 80%. It’s now down to 63.9%. That’s a massive decline!

Look forward: You could blame the decline on increased Covid giving. But that’s not the whole story.

People have less trust in nonprofits than ever before. And that is a factor in their giving decision! If they don’t trust your organization to do what you say you will with their gift, they’ll stop giving or they’ll give less so they take a smaller hit to their wallet.

What does that mean for you?

• Demonstrate impact: Share with donors how their donation has helped people in their community. They want to do good in the world through your organization. Let them know how they’re making the world a better place.
• Constant communication: To do this use email, direct mail, reports, social media, your website, video, pictures, postcards… is that enough ways? Stay in touch with donors. Don’t leave a six-month gap between their donation and when you update them.
• Gratitude attitude: Say thank you as quickly as possible. Not a perfunctory, businesslike thank you. Yuck! A genuine, heartfelt, warm thanks that gives the donors all the feels.

That’s one of the ways to build retention.

Where have all the people gone?

Look back: At the beginning of this century, about 67% of Americans donated to charity. In 2022 that number dipped below 50% for the first time.

Look forward: More money is being donated. Plenty of 7-figure checks are being written.

The downside is more and more people are NOT donating to charity. That’s not good for the long-term health of our sector.

What can we do?

Stop praying for MacKenzie Scott to call. Because she won’t.

Too many organizations are putting their eggs in the major donor basket. They pay lip service to small donors but they place their time, effort and money into finding big donors who can drop six and seven figure checks.

This drives me nuts. Even in bad economic times (hello July 2023!), small donors can still give a small donation. But if your attitude is “they only gave $10 and they’re not worth our time or attention” those donors will simply go elsewhere or stop giving altogether.

Small donors don’t feel like they’re being treated nicely. They feel like cash cows and nothing more. No wonder individuals are abandoning giving to charity!

Add to this the crappy donor retention rate of 45% and the uber crappy first-time donor retention rate of 20%. If a donor isn’t treated well at organization X, they’ll move on.

But what happens when they don’t feel welcomed at organizations X, Y, Z or A? Frustration sets in and that could cause someone to stop giving altogether.

Maybe this will help: Acquisition costs 5-10 times more than retention. Worried about your bottom line? Invest in donor retention! Spend more time developing relationships with current donors- big or small- and less time chasing new donors.

Fewer than half of Americans are donating to charity. Sound the alarm bell. This is a HUGE problem but one that is solvable.

What goes up must…

Look back: Foundation giving grew by 2.5% to $105.21B but because of inflation it’s actually a 5% reduction. Corporate giving was 6% of all donations, totaling $29.48B but inflation adjusted it’s a 4.2% decline.

Look forward: I mentioned earlier about not putting all your fundraising eggs in one basket. Should you be submitting grants and connecting with foundation funders? Absolutely. Should you be seeking opportunities for partnerships with business and corporations? You betcha.

Should those be the only two fundraising activities to pursue?

Hell no!

If we’re actually in a recession, corporations are going to curb spending. That includes charitable donations.

Same could be said for foundations. They have an annual 5% minimum payout. During good economic times, some foundations will give much more than that 5%. But in today’s climate, some foundations may be considering cutting back how much they distribute. The goal is to protect their investments and assets.

I don’t know if foundation and corporate giving will be down in 2023. But your organization should prepare for that possibility.

What does that mean for you? It’s time to think like an investment analyst.

If you had money to invest, your investment banker would probably tell you to diversify your portfolio. Some bonds, some tech stocks, some real estate etc. Don’t put all your eggs in one basket.

Do you know of organizations that used to rely heavily on gala events for their annual income? Remember what happened to them when Covid hit? Yeah, it wasn’t pretty.

Diversify your fundraising portfolio. Yes to foundation giving and corporate partnerships. But also yes to monthly giving, stock gifts, peer to peer fundraisers, planned giving and more.

Attract more people with more options. Then keep them as donors for longer because you know how they like to give and what they give to.

Better stewardship, more personalization = higher retention. And that’s the name of the game.

It’s Not All Doom And Gloom

The Giving USA report could certainly be a downer. But it doesn’t have to be! There are plenty of ways to strengthen your organization in the next six months so that 2023 and 2024 are successful years.

For expert insight into the report, I suggest you read the insights from fundraising expert Barbara O’Reilly. While you’re at it, subscribe to her excellent enewsletter and learn from one of the top people in our sector.

Is your organization experiencing a downturn in gifts? Worried about how you’re gonna make it through 2023 and 2024? Let’s move you from survival to thrival mode! Take advantage of my Level Up offering. I’ll join your team on an interim basis and provide you all the guidance needed for your fundraising and marketing efforts to succeed.