In With The New: Fundraising in 2011

As the nonprofit world continues to emerge from the recession, we want to draw on our experience, as well as a variety of recent studies and surveys from nonprofit observers, to reflect on the past year and begin looking ahead to the immediate future.  Initial data indicate that giving in 2010 was just as strong, if not stronger, than in the previous year, when donors gave more than $300 billion despite the economic downturn.  At the same time, we have seen a number of distinct trends emerge in giving from the three sources of philanthropy: individuals, corporations and foundations. 

We summarize these trends below and hope that this article will serve as the basis for an ongoing conversation regarding changes in fundraising.  Throughout the year, we will be engaging Campbell & Company consultants to discuss how these and other trends have affected nonprofit organizations across the country and share strategies for successfully adapting to the evolving philanthropic marketplace. 

Individual Giving

While individual giving continues to represent approximately 88 percent of total philanthropic contributions, the nature of it has changed in the recent economic slowdown.  Donors have increasingly focused their giving on the organizations with which they have the closest relationships, and many have been more deliberate in their decision-making process in order to weigh the timing, size and vehicle of their contributions. 

Research has demonstrated that three personal factors affect individual philanthropy: income, household wealth and past giving, which strongly determines whether an individual will give in the future.  While nonprofit organizations cannot control the first two factors, they shape giving experiences for all of their individual donors, and effective donor stewardship can foster a strong basis of philanthropic support.

The face of philanthropy is changing.  Though donors tend to be middle-aged, married, well‑educated and employed, several key demographics have increasingly had an impact on philanthropy.  Studies such as the Center of Philanthropy at Indiana University’s Women Give 2010 have revealed how, controlling for education and income, women give more generously than men.  Women’s giving patterns also differ from men’s in significant ways.  Women are more likely to research organizations before committing to gifts and typically give to organizations that have a positive impact on their families and larger communities.  In addition, they tend to favor giving efforts that involve collaboration among women in support of an organization.      

At the same time, Generation X (30- to 45-year-old) and Millenial (20- to 30-year-old) donors understand philanthropy in terms of its global impact and support causes that reach far beyond their communities.  These segments concentrate their giving toward organizations where they and their friends are already involved; many require a longer period of cultivation before they trust an organization.  Not surprisingly, individuals in these groups are best reached through multiple channels, which may include traditional direct mail and telemarketing vehicles in addition to e-mail, mobile phones and social networks. 

As a whole, donors want to know how their gifts make a difference.  Observers have frequently commented on this trend in the past, and it has rapidly become a permanent feature of the philanthropic landscape.  Donors and prospects increasingly come to organizations with penetrating questions regarding their operating models, outcomes and the impact of contributions.

Still, despite this professed preference, Hope Consulting’s recent “Money for Good” report found that while 85 percent of donors identify an organization’s performance as one of the top criteria for their philanthropy, only 35 percent actually engaged in any research.  Further findings showed that three-quarters of those individuals spent less than two hours researching and more than 60 percent only looked for basic facts and figures.  This portion of the report concluded with the surprising statistic that only three percent of all donors ultimately give based on an organization’s relative performance. 

Foundation Giving

Despite increasing strain on their assets, foundation giving in 2009 actually fell short of the severe drop that some analysts predicted.  Many foundations cut their operating expenses and drew on their reserve funds, and these decisions allowed them to maintain a higher level of grants than expected.  Foundations will not be able to sustain these measures, however, and so are likely to refrain from making new grants in the near term (while those that do will be less inclined to make multi-year gifts).  Still, given recent conditions, foundations have increasingly been willing to support operating expenses at their beneficiaries. 

Typically, foundations set their level of giving based on the market value of their assets on a three-year rolling basis.  Given this window, we predict that foundation giving will begin to recover in the next 18 months

Corporate giving

Corporate giving has significantly declined from its 2005 high, when businesses demonstrated unprecedented generosity in response to various global disasters.  Giving levels are tied to companies’ pretax profits, which have suffered during the recent recession.  However, the business world’s increasing emphasis on social responsibility provides an opportunity for certain nonprofits to secure greater corporate support.

Going forward, corporations will continue to align their giving with their social responsibility goals, and many will use increasingly specific guidelines to direct their giving.  On the ground, this trend means that companies may shift their giving from “backyard” initiatives in their communities to more focused social priorities. 

As a result, we expect to see corporate giving concentrated among fewer nonprofits.  Companies’ interactions with these organizations will grow increasingly diversified, including cause marketing efforts, donations of products or other gifts in kind, and skills-based volunteer partnerships.  As their giving becomes more focused on specific issues and programs, companies will be less likely to provide outright support for operations.  Many will likely be more hesitant to underwrite special events, as well.

IN WITH THE NEW

The New Year began with encouraging signs for the nonprofit world.  A Chronicle of Philanthropy survey found that more than 62 percent of nonprofit organizations experienced an increase in giving compared to the previous year.  As 2011 unfolds, we hope to see this upward trend continue.  In the end, nonprofit organizations will need to continue learning about and engaging their donors.  When organizations demonstrate the importance and impact of support to donors, they can build relationships that will last for years to come.