The Changing Fundraising Landscape

Surely, I thought, it must be at least April.  One month into the new year certainly has not been long enough to deal with all that happened.

The weather, of course, could have warned me.  April would be decidedly warmer.  Fundraising might be focused on upcoming spring appeals rather than looking back at the end of year campaign that perhaps did not do as well as you hoped.

In the past few months I’ve done several workshops on the changing fundraising environment.  That meant that I read a lot of blogs and articles, talked to a lot of people in the field and even tried to watch a webinar or two.   I kept hoping that someone would say something startling, but no one did.

As I read though the data, what structure me was the precipice drop in individual giving.  Oh yes, the number still look great, but much of that is thanks to mega gifts—those gifts of 8 figures or more—that most of us will never get.  Percentage wise, individual giving has gone from 82% in 1983 to 67% in 2023.  Some of this has to do with the increase in the number of foundations, all of whom have to give at least 5% of their assets for charitable purposes each year.  More troubling is the fact that more families have stop giving charitably.  We tend to think about big gifts when we dream of fundraising success, but the drop in gifts of $500 and below is negatively affecting more of our nonprofits.

Along with this is the huge transfer of wealth that is going on.  Over $90 trillion will pass from Boomers to Gen X, Y, and/or Z.  And the younger generations approach fundraising differently than their parents and grandparents.  It will be up to each nonprofit to figure out strategies that will appeal to these generations.  That will mean looking at monthly giving, peer to peer fundraising, thinking of ways to make giving—even small gifts—more personal so the donors have a sense that are involved.

The growth of DAFs has been in the news for several years.  These Donor Advised Funds provide nonprofits yes, with somewhat of an opportunity—though as of yet there is no way to reach out to those who have DAFs but haven’t given to you—there are several downsides.  One if that fact that you cannot market to DAF owners in any meaningful way.  You also frequently can’t thank those who give to you through their DAFs as you may not know who they are.  Another big, very big, factor is that payout rate seems stuck at 24%.  That is, only 24% of the funds put into DAFs is coming out, providing revenue for nonprofits.

Generative AI, of course, is another one of those things that get talked about a lot.  And the news from China has increased chatter.  While I think AI can help those organizations who have so many records, so much data that AI can really help to parse through that, for most of us, if we are using it, we’re using it to help with writing appeals, stewardship letters, and the like.  It’s not for me, but perhaps it is a real help to you.  I do have concerns about confidentiality and about the environment.  I’m not generally in favor of perhaps making your life a little easier today when it will negatively impact our environment tomorrow.  Generative AI uses a lot of electricity and water, and especially here in southern California, those are two things about which we need to be aware.

You might be thinking, “What about the political landscape?  How is it impacting our sector?  But then again, with what occurred during the last week of January, I’m just assuming we all know the threats that face us and are, hopefully, thinking about opportunities that will allow us to continue doing the work that we all do.