Every new year brings trends that will shape how fundraisers do their jobs and interact with donors. This year is no different. Some issues — like a loss of donors — are recurring themes that fundraisers must attempt to address each year, and others — like potential changes to the tax law — are unique to the moment.
Read on to learn about the top issues for fundraisers to keep an eye on as the year unfolds.
Tax Law Changes, Other Legislation
With the Tax Cut and Jobs Act expiring this year, lawmakers will be scrambling to pass new tax legislation to replace it.
The TCJA has been a thorn in the side of charities since it was enacted. A working paper found changes in the bill likely cost charities $16 billion in gifts each year since 2018. The reason: TCJA raised the standard deduction, resulting in fewer people who itemize and use the charitable tax deduction.
This year, a bipartisan coalition of nonprofits will push for a charitable deduction for non-itemizers. If that passes, fundraisers need to be ready to let donors know how a new deduction might allow them to increase their giving.
While a new tax law is extremely likely to pass, the likelihood of other legislation that would affect fundraisers is more nebulous. There is talk of requiring payouts for donor-advised funds. If such a law were passed, it would mean more money to charities. There is also concern among nonprofit leaders about a bill that would give the treasury department power to revoke an organization’s nonprofit status.
Integrating Fast Changing A.I. Advances
Last year, many fundraisers got their feet wet using artificial intelligence. Some experimented with using A.I. to help write appeals and launch campaigns with lapsed donors. Others went so far as to use A.I. to interact with their donors through an autonomous fundraiser.
But as the technology quickly advances, it may become harder for fundraisers to keep up and figure out how to best use the technology in ways that support their work — but don’t alienate donors.
Even as some fundraisers are using the technology, it’s not clear donors are ready. A trust survey by the BBB Wise Giving Alliance found that many wealthy donors don’t trust A.I. — among those earning $200,000 or more, 70 percent said they would “be discouraged from giving” to a charity that used A.I. in its appeals. Another study that specifically looked at how much donors trust artificial intelligence, found 31 percent of donors would be less likely to donate to charities that use the technology.
Fundraisers will have to navigate these tensions as they determine how best to use new A.I. tools while still maintaining the trust of their supporters.
Dwindling Donors Remain a Problem
For years, the number of donors who give to charity has been decreasing. “Our numbers show that giving could end up in the single digits in 49 years,” Nathan Chappell, co-author of The Generosity Crisis, told the Chronicle last year. “That’s the horror. Any downward trajectory ends at zero somewhere.”
The call to get more people giving echoed throughout 2024. The first quarter Fundraising Effectiveness Project data showed the number of donors who gave $100 or less dropped by 10.4 percent, compared to the previous year. Then Giving USA showed giving had declined 2.1 percent in 2023, and the share of overall giving that came from individuals had fallen to 67 percent, a far cry from the 82 percent that came from individuals in 1983.
The Chronicle dug into what was driving the exodus of everyday donors and what nonprofits are doing to win them back. One problem: Too often, fundraisers are rewarded for bringing in big gifts, not a bunch of small ones. We profiled nonprofits that are making a concerted effort to reconnect with everyday donors and asked fundraisers for their best advice.
There was a bright spot in December. Seven percent more people gave on GivingTuesday, compared to 2023. The question fundraisers have to ask this year is: Was that a blip on the radar, or can they make it a trend they can build on moving forward?
The Promise of Donor-Advised Funds
Over the years, there has been an uptick in the use of donor-advised funds, which allow donors to get an immediate tax break when they set aside funds that will later be given to charity. DAF proponents say they are great for charities because donors are more willing to give from them year-round, and not just during year-end.
The Giving USA report found that nearly 10 percent of giving in 2022 — $52 billion — came from donor advised funds.
But a persistent problem both charities and critics of DAFs note is that finding DAF holders can feel like locating a needle in a haystack. “There’s a whole class of nonprofits that just don’t know how to find DAF holders,” Chuck Collins, program director at the Institute for Policy Studies and a longtime DAF critic, told the Chronicle. “It’s not like there’s an application form at Fidelity where you send your request in.”
The Institute for Policy Studies forecasts that DAF and private foundation assets will top $2 trillion by 2026, and complains there is no mandate that people who have received the charitable tax deduction for their gift funnel that money to charities in a timely manner. “Philanthropy has become captured by the wealth preservation industry,” the report argues, noting that DAF holders are encouraged to watch their money grow, not give it away.
Fundraisers have long told the Chronicle that many of the gifts they receive from DAFs are anonymous, making it difficult to thank donors and build a relationship with them. We investigated and learned that those gifts might not be so anonymous after all. Fundraisers and consultants shared their tips for what to do when you get what seems to be an anonymous DAF donation.
A report from the National Philanthropic trust found DAF assets had grown to $250 billion by 2023, a sign they are here to stay and thriving as a giving vehicle. The question this year is whether fundraisers can figure out how to tap into them in a meaningful way.
Nonprofit Finances Strained
The backdrop of the entire election season was that Americans didn’t feel good about their finances. There was a level of economic pessimism that persisted until the fourth quarter, when Americans spent a record amount on both Black Friday and GivingTuesday.
But it’s not clear if these spending boons are a fluke or a sign of a good 2025. Last year was marked with financial turbulence for nonprofits. A number of organizations saw a drop in funding that led to hiring freezes, program cuts, layoffs, and in some cases, closures.
“We’re absolutely seeing more challenges for the nonprofit sector around financial distress, and the financial sustainability of organizations, along with a rising demand for services,” Nonoko Sato, executive director of the Minnesota Council of Nonprofits, recently told the Chronicle.
The sector also hasn’t fully recovered from the pandemic, a recent report found, noting the Covid-19 pandemic may have cost nonprofits 1 million jobs.
While GivingTuesday was a good sign for year-end giving, and nonprofits were hopeful they would achieve their fundraising goals, it’s not clear that the challenges Sato discussed are behind us. This means nonprofits need to stay atop their fundraising game to help buffer against financial stresses in the coming year.
