What’s on the horizon in 2019 for philanthropy and the nonprofit sector? We took a moment to discuss emerging trends with our executive team as the year gets going.
Peter, Julia, and Kate shared their insights and predictions on tax reform, broad-based giving, online fundraising, and beyond. Read on for their perspective and advice for the year ahead.
2018 was an eventful year for the nonprofit sector. What philanthropic trends are you currently watching?
Peter: The growth of donor-advised funds continues to be a prominent headline. DAFs have become the fastest growing giving vehicle over the past decade, and in 2017, gifts going into donor-advised funds made up more than 10 percent of individual giving. I’ve been watching this trend closely, and I’ll continue tracking it in 2019.
There’s also been a strong focus on the impact of tax reform and how it might affect broad-based giving. When people don’t itemize their taxes, the cost of giving goes up for them. Will this impact their charitable contributions?
We’re hearing some reports of “bundling”—where an individual or couple plans to make charitable gifts and itemize every two to three years. In the off years, they don’t plan to give.
Beyond that, I’ve been pay attention to emerging data about the giving habits of younger generations. When defined traditionally, there’s evidence that young people are not giving as much as prior generations.
Are they giving to GoFundMe campaigns? Do they see advocacy more akin to philanthropy than prior generations? There’s an ongoing conversation around this issue.
Julia: The volatility of the stock market last December—and its impact on giving—is another development I’ve been following. This may have caused some donors to pause or elongate their decision-making process, especially around larger gifts.
Some organizations are concerned about what this volatility means moving forward. Will it have a lasting impact on the economy?
Peter: That’s a great point. There is some emerging indication that people held off making gifts of appreciated stock in December because the market dropped so much during the month.
Kate: In addition to everything Julia and Peter mentioned, I’m also following the rise of online giving and mobile giving, specifically. The share of gifts given through these channels creeps up year after year.
The way people give is continuing to shift, and all nonprofits need to make sure they’re present and accounted for in the online fundraising space.
What does the 2019 economic outlook tell us about giving, particularly after that volatile December?
Kate: From trade disputes to the government shutdown, recent events have created an undercurrent of economic anxiety and uncertainty that may affect charitable giving.
Peter: We’re also seeing some major corporations, such as Apple, downgrade their forecasts going into 2019.
Julia: What’s interesting is that when we look at the statistics, they show a relatively strong economy in 2018, with 3.5 percent growth in the third quarter and 4.2 percent in the second quarter. But the fourth quarter impact is still an unknown. Just like the market doesn’t like instability, donors do not like that sort of chaotic instability.
The economy is the most important predictor of charitable giving. Different economists are starting to share some fears—particularly with the government shutdown—around economic weakening, which could negatively affect giving moving forward.
A lot of that uncertainty hit during the most productive fundraising time of the year, so I think we’ll see that it did have an impact at the end of the year.
As you mentioned, the nonprofit sector is waiting to see if tax reform impacts charitable giving. What can nonprofits do now to dampen possible effects?
Peter: As data continues to emerge, we’ll develop a better understanding of the full impact of the tax law on giving. Analyses predicted that the law’s provisions could cause charitable giving to decrease as much as $20 billion.
There are fears, which I alluded to earlier, that smaller-dollar donors will reduce or cease their giving because the charitable deduction is no longer available to them. At Campbell & Company, our long-standing premise is that organizations with well-structured programs can fare better than others.
Julia: This is where good fundraisers can make a difference, where a strong program can make a difference. Communicating impact and stewarding donors effectively has never been more important.
Donors make charitable contributions for so many reasons. Tax benefits are a piece of the puzzle, but research has shown that they are not the primary factor.
If you can demonstrate to your supporters that you are moving the needle on your mission, if you can develop meaningful relationships with them, you will help to safeguard your organization against harmful effects that may result from the tax law.
Kate: And regardless of those effects, there will be organizations that have above average results. By following best practices and being able to pivot in a fast-moving environment, development programs can reach their goals.
This means using your database, adhering to the key elements of relationship management, and communicating a compelling case for support. In times of uncertainty, doubling down on the fundamentals of good fundraising will carry the day.
Multiple reports point to the shrinking share of Americans giving to philanthropy. What does this phenomenon mean for the nonprofit sector?
Kate: First, it’s important to recognize the incredibly complicated and nuanced nature of this topic. There are so many factors at work. We believe that growing income inequality in the U.S. is contributing to this troubling trend.
The growing divide between those who have significant wealth and those who do not may be exacerbating the decline in broad-based giving. To this end, nonprofits will have to work harder to make the case for charitable giving.
As we mentioned earlier, communicating the need and the outcomes of your work is so critical, as are fundraising best practices. Mid-level giving programs will also continue to grow in importance as organizations work to build those meaningful relationships and move donors through the pipeline.
Peter: In addition to everything Kate said, there are discussions about whether the way we traditionally measure philanthropy is capturing all giving activity. As I said at the top, younger people may be participating in philanthropy in new ways. Do we need to adjust the way we count and recognize charitable giving?
There’s no consensus on this issue, and our industry will continue to monitor and debate it in the coming years.
Julia: For example, we now see people raising money to cover health expenses on GoFundMe or using Venmo in the same way. This giving activity isn’t being captured by traditional measures of philanthropy.
Between these measurement issues and the increase in income inequality, there are significant problems we need to address. However, we believe that people are fundamentally generous, and, as fundraisers, honoring this generosity is a good place to start.
As 2019 progresses, what are your top recommendations for nonprofits?
Julia: It all comes back to relationships. Find out who’s giving to you and spend the time to capture those folks who come in through nontraditional avenues: donor-advised funds, social media, advocacy, etc. Who is interested in what you do and the impact you have?
Once you’ve identified those supporters, then the relationship-building work begins: communicating with them and demonstrating how you’re making a difference—how their gifts can and do make a difference. It’s critical to do that through all the varied communication vehicles available to you.
Peter: As you’re communicating with current and potential donors, it’s important to emphasize great storytelling. People absorb information through stories. The stories must be true and authentic, pointing to a larger message about mission and impact. In our work, we’ve seen how much donors respond to these kinds of individual stories.
Making the most of technology should also be a focus for all nonprofits in 2019. Managing the information systems and the database that most organizations already have is number one. Online fundraising also deserves attention. This requires financial investment, time commitment, and a level of competence that doesn’t pay overnight, but it will produce results over time.
Kate: I would also urge organizations not only to monitor changes in giving patterns, but to directly ask their donors for input. This is an opportunity for nonprofits to check in with donors about their giving philosophy and priorities.
Development officers can have individual conversations with major donors, but programs can also send out donor surveys to gather information and understand what their supporters care about and how they want to be involved.
Don’t wait to learn how people feel based on their giving patterns; be proactive and find out what they’re thinking now and what may be changing.
Peter: All these recommendations point to the fact that, regardless of trends, we have to be nimble and innovative. We must keep believing in the organizational mission and the willingness and desire of people to give. As a firm, we work to help make that happen. That’s what Campbell & Company is all about.