Wake Up Call for the World of Nonprofit Fundraising

By Eric Jacobson, Vice President, Media Development

Charitable giving in the U.S. is estimated to be only 2 percent of average household disposable (after tax) income, according to Giving USA Foundation 2011. And despite an increasing marketing effort on the part of nonprofits, planned-giving websites, the Internet, social media and ever-emerging digital channels, the 2 percent level is also the 40-year average.

In other words, individuals today are no more generous than their predecessors were over four decades ago.

This is indeed a wakeup call. It’s this alarming statistic that brought together the nation’s first Growing Philanthropy Summit, held in Washington, DC, on June 9, 2011. Thirty-five leading U.S.-philanthropy experts attended, from:
· AARP & AARP Foundation
· Arthritis Foundation
· National Wildlife Foundation
· Project Hope
· Special Olympics International
· The Salvation Army
· Habitat of Humanity
· Humane Society of the United States
· Consulting firms and universities

Attendees gathered to develop an action-oriented agenda on growing philanthropy. Their discussions covered more than 30 topics on these four themes:
· Enhancing the quality of donor relationships
· Developing public trust and confidence in nonprofits
· Identifying audiences, channels and forms of giving with a strong potential for growth
· Enhancing the quality of fundraising training and development

The full report, presented by Blackbaud, Hartsook Cos. Inc. and Hartsook Institutes for Fundraising, offers attendees’ recommendations for nonprofit fundraising.

What strikes me most are these 11 observations and recommendations from the report, stated mostly in the words of authors Adrian Sargeant, Robert F. Hartsook chair in fundraising at Indiana University, and Dr. Jen Shang, philanthropic psychologist and an assistant professor at the School of Public and Environmental Affairs at Indiana University – Bloomington:

1. We should be striving to find new and creative ways through which individuals can discover and express their own philanthropic identity and thus experience the joy of giving.

2. We should develop a new set of fundraising metrics focused on the long-term value in relationships.

3. Know that a typical charity will lose 50 percent of its cash (i.e. annual) donors between the first and second donation and up to 30 percent year over year thereafter.

4. In general, there is a failure among nonprofits to understand what is meant by “relationship building.”

5. The sector is too fixated on the categories of the campaigns it runs, be it annual fund, capital campaign, planned giving or endowment.

     a. “No one supports a single nonprofit because they happen to have an annual fund or an endowment. It is not the vehicle that matters to donors, it’s the difference they can make in society,” Sargeant and Shang write.

     b. “The food bank Harvesters, for example, used to approach its donors for annual gifts, capital gifts and so forth. In contrast, it now asks donors to help them feed children, feed families, feed seniors and promote healthy eating. This approach is immensely more powerful,” they explain.

6. The wide adoption of monthly giving (also known as regular giving or sustained giving) in the U.S. could itself transform philanthropy. The lifetime value of supporters giving in this way is estimated to be 600 to 800 percent higher than the annual giving (also known as cash giving).

7. Offering choices can increase loyalty because when supporters choose what they want, communications move from intrusion to invitation. When we offer communications options, supporters should be encouraged to take greater control over the relationship they have with the nonprofit.

8. The sector should continue to promote giving at an early age.

9. We should empower individuals to take action and allow them to articulate their support in ways that they personally find appropriate.

10. While 80 percent of Americans will support the nonprofit sector during their lifetime, only around 8 percent of them will do so on their death. With the baby-boomer generation moving into retirement, 90 percent of this inevitable enhanced mortality will result only in the loss of annual giving.

The full report, Growing Philanthropy in the United States, is a must-read. It’s a wake up call.
It’s also a timely read, being December and end of the year. Ironically, in today’s mail at my home, came annual gift requests for donations from three different nonprofit organizations.

What recommendations from this enlightening Summit report will your organization implement?