Fundraising Follies

Thirty years I’ve been in this business.  Over 40 percent of my life.  And it’s something I’m pretty passionate about.  But lately, I get this feeling that all I’ve done–all the fundraising, the coaching, the training, the consulting–has changed very little.

Last year, for example, there was this great ballyhoo about how fundraising had reached new highs.  A record $410.02 billion was given to charity in the US.  That accounted for 2.1 percent of the GDP.

By comparison, in 2012, Americans gave $316.2-billion to charity.  And guess what?  That was 2 percent of the GDP.  In fact, over every single year since we started tracking these numbers, charitable giving has accounted for…yep, just about 2 percent of the GDP.

So, we are stagnant in our fundraising.  Actually, more than stagnant.  Over $45 Billion of the $410 Billion given to nonprofits was actually given to grantmaking foundations—most that as the result of mega gifts from the likes of Facebook founder Mark Zuckerberg and his wife Priscilla Chan, and Michael and Susan Dell to their own foundations.  Can you say tax relief?  And yes, eventually some of this money will go to nonprofits. But at 5 percent per year that has to go to “charitable purposes”, not all of which actually has to fund a nonprofit’s efforts—eventually is a very long time.

More worrisome, charitablecontributions from very wealthy donors have increased significantly over the past decade. In the early 2000s, households earning $200,000 or more made up only 30 percent of all charitable deductions. By 2017, this group accounted for 52 percent. And the percent of charitable deductions from households making over one million dollars grew from 12 percent in 1995 to 30 percent in 2015.

There has been also been a marked increase in mega-gifts. In 2012, the threshold for mega-gifts was $50 million or more; gifts of that size amounted to $1.2 billion and accounted for just one-half of one percent of all individual giving in the United States. In 2017, just five years later, the threshold for mega-gifts jumped to $300 million or more. Gifts of that size totaled $4.1 billion and accounted for about 1.5 percent of all individual giving that year.

Well, fine.  Those folks can afford to give.  However, during the past two decades, the number of households that give to charity has declined significantly. From 2000 to 2014, the proportion of households giving to charity dropped from 66 percent to 55 percent.

Low-dollar and mid-level donors have declined by about two percent each year for more than fifteen years. These donors traditionally have made up the vast majority of donor files and solicitation lists for most national nonprofits since their inception.

Clearly, we are not just standing still, we are shrinking and shrinking in ways that spell disaster for small and mid-sized organizations.

At the same time that real revenue is dwindling, the cost of fundraising has exponentially increased. Fundraising professionals used to be few and far between.  Today, however, the sector spends $50 Billion in salaries and benefits.  The cost to raise a dollar has sky-rocketed.

What is a smaller nonprofit to do?

As a sector, we are bleeding both dollars and donors—and the smaller the nonprofit, the more it is hemorrhaging.  The place to start, therefore, is with those who currently give to you, and those who used to give, including those who only gave once sometime in the past.

Thank your current donors when they give a gift—and thank them again a few months later, and a few months after that. But don’t just say thanks, say thanks and because of your support, thanks and you make this happen, thanks and it couldn’t have been done without you.

Ask your board members, program managers, clients if appropriate, to write these letters making sure the note also says how much it mattered to them.

Contact your lapsed donors—via phone, email, snail mail, anyway is fine as long as it is personal (so no using Constant Contact, Mail Chimp, or other like software).  Start by thanking them for what they have done and tell them what that support meant to the organization, the clients, the cause.  And then ask, “What do we need to do to get back in your good graces?”

As lapsed donors become reconnected, remember to keep stewarding them and keeping them close.

Thinking about your donors, understand that most of your dollars—about 80percent–will come from about 12percent of your donors (and yes, this includes but is not limited to institutional donors).  It doesn’t make sense to be spending most of your time on the donors who give you the least.  Yes, you need to have a large donor pool—and that takes a lot of transactional fundraising. But the best use of your time is getting out there, meeting with your donors, learning what matters to them, and helping them make the kinds of gifts that matter to your organization.

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