During the maelstrom of the pandemic years, individuals, foundations, and corporations dug deep to meet the needs of the public-health emergency, but fundraisers are unsure how much of that support they can still count on. With an uncertain economic outlook, they worry more donors may stop giving.
As fundraisers scan the horizon, there are both rays of light and dark clouds. Unemployment is low and gross domestic product is up — clear signs of economic health. But inflation and interest-rate hikes are holding back consumer spending and many Americans feel the
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Fundraisers are in unchartered waters.
During the maelstrom of the pandemic years, individuals, foundations, and corporations dug deep to meet the needs of the public-health emergency, but fundraisers are unsure how much of that support they can still count on. With an uncertain economic outlook, they worry more donors may stop giving.
As fundraisers scan the horizon, there are both rays of light and dark clouds. Unemployment is low and gross domestic product is up — clear signs of economic health. But inflation and interest-rate hikes are holding back consumer spending, and many Americans feel the economy is in poor shape.
Put it all together and fundraisers don’t know what to expect.
“Some months we get a lot of money, and some months we get nothing. I don’t know what a trend is anymore,” says Rita Mancera, executive director of Puente de la Costa Sur, a nonprofit that serves farmworkers in San Mateo County, Calif. “That’s hard for planning.”
The Chronicle commissioned an exclusive new survey of 1,000 fundraisers to try to make sense of what’s going on. The results reveal a complicated and at times contradictory picture of fundraising in 2023. The survey uncovered striking successes and notable apprehension as development professionals grapple with inflation, staffing issues, and donors’ worries about the economy.
Three-quarters of fundraisers say their organizations have raised as much or more than they did the previous year. That breaks down to 34 percent raising more money, 42 percent holding steady, and 23 percent raising less. (The survey was conducted by Clarion Research. The margin of error is 5 percent at a 95 percent confidence level.)
However, last year was a tough one for fundraising: Contributions to nonprofits fell 10.5 percent after inflation, according to “Giving USA” estimates. Individual giving — which accounts for the bulk of all contributions to the nonprofit sector — fell 13.4 percent in 2022, erasing the gains in giving made during the pandemic.
Nonprofits continue to struggle with declines and slowdowns in individual giving. While many fundraisers in the Chronicle’s survey are confident about the amount of money their groups will raise, they’re still deeply worried about their supporters’ giving patterns. Seven in 10 fundraisers say some donors are giving less, and six in 10 say some donors have stopped giving altogether. Half of fundraisers say some donors are delaying their gifts.
The Chronicle’s database of gifts of $1 million or more shows a slowdown in the number of big contributions — and a steep decline in the dollars given. The total value of these donations declined roughly by half year-over-year, and the number of gifts dropped, too. From January 1 to October 15, wealthy donors made 408 donations of $1 million or more, totaling more than $8.3 billion. That’s compared with 478 gifts totaling $16.5 billion during the same period in 2022.
Lindsay Orlowski
Daiga Galins, director of development at the Lakeside School, in Seattle, says some donors are saying they need a “longer runway” while they wait till the economy improves so her team is coming up with ways to keep them engaged.
“The dollars aren’t necessarily flowing easily,” says Daiga Galins, director of development at the Lakeside School, a Seattle private school. “It’s just requiring a lot of legwork.”
Fundraisers right now are a little like ducks; they look placid as they swim by, but underneath the surface, they’re paddling furiously. Faced with nagging inflation, an up-and-down stock market, and an uncertain economy, fundraisers are being asked to find new donors to replace the ones who have stopped giving or decreased their contributions and raise enough money to meet rising costs of goods and increased demands for their organizations’ services.
As fundraisers look toward year’s end, some have figured out how to attract new donors and are recommitting to fundraising basics, like meaningful thank-you notes and personalized communication. Others are seeking new sources of revenue, such as planned gifts and donor-advised funds. Still, data from the Chronicle’s survey and in-depth interviews with two dozen fundraisers, nonprofit leaders, and consultants make clear that after an unprecedented three years, the profession has yet to return to known patterns.
A Turn to Major Donors
For many years now, nonprofits have been relying on a smaller number of donors making larger gifts to fuel their missions. That trend continues to gain speed, according to the Chronicle’s survey. A little more than half of the fundraisers said their organizations are spending more time seeking major gifts now than before the pandemic.
Big gifts offer the best return on investment, says CJ Orr, president of the Orr Group, a fundraising consulting firm. “That’s where the money is.”
But there’s a danger in focusing on wealthy donors at the expense of midlevel and small-dollar donors, Orr and others say. “It’s hard to build out a major donor pipeline without a base of strong, steady supporters,” says Becca Bennett, vice president at the Orr Group. “That’s often where some of your greatest major donors come from.”
More donors who make modest one-time and recurring contributions are canceling their gifts as inflation makes household budgets tighter, fundraisers say.
Some months we get a lot of money, and some months we get nothing. I don’t know what a trend is anymore.
Ali Colbran, director of development for Feeding San Diego, a food bank, says about 20 donors called her office in December 2022 to cancel their monthly gifts. Ninety-one percent of the food bank’s donors make small contributions to the annual fund, including through monthly gifts. While the charity managed to attract 4,900 new donors in its last fiscal year, its goal was 5,600 new donors. What’s more, the new donors gave less than first-time donors had given the previous year. They contributed $1.9 million in the last fiscal year, well shy of the food bank’s goal of raising $3.2 million from new donors.
Some 2,800 miles away, at Long Island Cares, another food bank, fundraisers face similar headwinds. “While our donor retention is high, we’re seeing our donors giving smaller gifts than they gave in the past,” says Katherine Fritz, the food bank’s vice president of development and communications. “What I’m hearing from my donors is the cost of living is very high.”
With less money coming from existing donors, Fritz says the food bank is focused on aggressively recruiting new ones through local media coverage, a TV ad with a QR code to a donation page, and other advertising. “We’re balancing some of those donors that are cutting back by bringing in new donors,” she says.
The food bank is also asking anyone who gave more than twice in the past year to become a monthly donor, and fundraisers are talking to wealthy donors about the impact of inflation. “We’ve explained, ‘We really need you to consider a larger commitment this year, and here’s why,’” Fritz says. “That messaging has really worked.”
As a result, the food bank has raised more month-over-month this year than it did in 2022.
Feeding San Diego is relying on major donors to see them through. In the 2023 financial year, 368 donors contributed gifts of $5,000 or more, representing 74 percent of the food bank’s fundraising revenue. A single donor upped a gift to help save the food bank from a $1.6 million budget shortfall. Despite that generosity, the food bank still fell $600,000 short of its overall goal.
Wait and See
Not all wealthy donors have been able to give at the level they did during the pandemic.
“We have heard donors say that they need a longer runway as they wait for the economy to improve,” says Galins, the fundraiser at the Lakeside School. To that end, her team is creating more opportunities for donors to engage with the school, such as at events with the head of school, to keep donors close as they watch their finances.
We have heard donors say that they need a longer runway as they wait for the economy to improve.
With the stock market faltering, fundraisers may be in for bad news from donors who pushed their giving decisions to the year’s end. “It’s just bad timing,” says Orr, the fundraising consultant. He’s counseling clients to expect lower fundraising revenue at year-end — news he hadn’t expected to deliver this summer, when the stock market was trending up.
Fundraisers should talk with major donors about ways to give that won’t cut into their cash flow, especially through donor-advised funds, Orr says. “When people have less disposable income, they’ll turn to their DAF to give versus out of their discretionary income.”
Unless fundraisers ask directly, there’s no way to know whether supporters have opened donor-advised funds or how much money they contain. Orr advises nonprofits to make sure donors know they accept gifts from DAFs. That means mentioning them in the nonprofit’s gift-acceptance policy and profile pages on major charity registers such as Candid. He also suggests fundraisers consider attending conferences for wealth advisers to build relationships with the professionals who could suggest their clients donate to your organization in the future.
“It’s not your traditional fundraising strategy,” Orr says. “It’s weird going to talk to financial advisers, but DAFs are on the up and up, so it is what it is.”
Mark McKnight, CEO of the Reflection Riding Arboretum and Nature Center in Chattanooga, Tenn., has been doing just that.
Two of the nature center’s fits board-finance committee members work in the financial sector. One is a crypto investment fund manager. Both are volunteers and have introduced McKnight to clients with a philanthropic nature.
“If you have enough money to be writing the kind of checks that he’s taking into this fund, you’re somebody that I want to know,” McKnight says. “And that’s been really fruitful.”
He has used those connections to meet an influx of people who have moved from high-cost-of-living states like New York and California to Chattanooga. A recent transplant from the Northeast who wanted a quieter life for himself and his daughters has been in talks with the nature center about its new strategic plan and vision.
“We’re laying the foundation with him,” McKnight says. “He’s talking about making a pretty substantial gift in our capital campaign.”
This new pool of donors is exciting for the nature center. “To have young people that actually have the capacity to get involved financially, as well as joining our board — we haven’t had many of those people in Chattanooga [before],” McKnight says. “So the overall tone is pretty positive.”
Rising Prices
While most organizations’ fundraising has held steady or improved since last year, two hurdles — staffing and inflation — threaten to impede their progress.
In the Chronicle’s survey, 53 percent of fundraisers said that filling open positions is challenging, and 40 percent reported that their organizations have open fundraising positions they are trying to fill. In a potentially ominous sign, 22 percent of respondents said that their organization has stopped filling open fundraising positions to cut costs.
William DeShazer for The Chronicle
Two volunteers who work in finance have introduced Mark McKnight, CEO of a nature center in Chattanooga, Tenn., to wealthy, philanthropic clients. “That’s been really fruitful,” he says.
Those empty desks have repercussions for the fundraisers who stay. Twenty-nine percent of respondents in the Chronicle’s survey said that open fundraising positions are contributing to low morale. Another problem: Thirty-eight percent said low pay or reduced benefits are contributing to low morale among staff.
Holding on to fundraisers has been hard, says Lee Grisham, donor services manager at the Chattanooga Area Food Bank.
“We’ve had a lot of turnover with our frontline fundraisers for that [major gifts] level,” Grisham says. “Lately it’s been much more difficult, just with the way that the job market is.”
He says frequent staff changes can be jarring for donors. The food bank has done its best to create continuity and maintain relationships. But whether or not the organization is successful depends on how soon it can fill an open position, Grisham says. “Building relationships and keeping them strong throughout that process is always the challenge.”
Inflation also continues to weigh on nonprofits’ balance sheets. It slowed to 3.7 percent in September, down from a high of 9.1 percent in June 2022. But prices are still going up, meaning many nonprofits need to raise more money than they anticipated.
“We know we will have to budget more for food,” says Fritz, at Long Island Cares. “But we don’t know how much more. In this economy, the way that the prices of food keep growing, it’s hard to anticipate what that growth is going to look like. It hasn’t been a linear growth.”
The demand for services from nonprofits — especially food banks, homeless shelters, and other direct-service groups — has also increased. “We’re distributing more meals than we ever have,” says Colbran at Feeding San Diego. The food bank’s weekly produce pantry distribution program grew from serving 50 households a week in 2022 to 700 a week this year.
Earlier this year, in a nationwide survey of 195 nonprofits, 68 percent of organizations reported an increase in demand for their services in 2022. Many groups were doing more with less, as about half reported less net income in 2022 than in 2021.
Even for groups that don’t buy large amounts of food or supplies, costs are rising. More of Global Witness’s budget has gone toward higher rent for office space and salary increases to keep pace with inflation, says Chelsey Gibson, head of individual giving at the international climate-change nonprofit.
Changing Things Up
The key to raising money, even in times of uncertainty and crisis, is to keep asking, says Pamala Wiepking, associate professor of philanthropic studies at the IUPUI Lilly Family School of Philanthropy. Wiepking and her colleagues studied how nonprofits worldwide navigated the Covid-19 pandemic.
“Organizations that stopped fundraising during the crisis were suffering,” Wiepking says. “Eighty-five percent of the gifts that are made are made in response to a request. The role of fundraiser is instrumental here.”
Barbara Coury, foundation president of the North Carolina School of Science and Mathematics, says that research jibes with her 25 years of fundraising experience. “I have fundraised through three different recessions,” she says. “Some fundraisers will say, ‘We’re in a recession, no one’s going to give,’ and that is simply not true.”
When other organizations pull back, Coury says, those that stick with it do better. “All of a sudden you have less competition because half of the people aren’t asking.”
Most fundraisers — 83 percent — in the Chronicle survey reported that their organizations have changed fundraising strategies and/or tactics as a result of economic conditions. Only 10 percent made major adjustments, whereas most made moderate (47 percent) or minor (26 percent) adjustments.
Some fundraisers are working to build ties with new groups of donors. Noticing that many donors to the Mohawk Hudson Humane Society were older, director of development Whitney Philippi created a successful annual fundraising event that aims to bring millennial donors into the fold.
The pun-filled event — Oktopurrfest — launches in August with a three-week contest in which participants submit photos of their pets to be featured on a local brewery’s beer label and recruit friends and family to pay $1 to vote for their pet’s image. The contest brought in $33,213 to the charity this year — far more than the roughly $12,000 the charity used to raise from the calendar contest it scrapped to launch this event.
Oktopurrfest concludes with a cat-themed event celebrating the winner at the brewery. Designed to appeal to younger donors, the event is casual and silly, and the ticket price is affordable — $55 for a general ticket, which includes a four-pack of beer.
“We always have an honorary chair who is younger or appeals to that demographic,” Philippi says. “We’re not choosing, like, the president of a local bank.”
The event sold out for the second year in a row and raised about $47,000 from event ticket sales, sponsorships, raffle tickets, and merchandise sales. “This isn’t a huge fundraiser for us (our gala brings in about $300,000),” Philippi wrote in an email to the Chronicle. “But it brings in a lot of people who then give throughout the year.”
Donors Want to Say Yes
In difficult economic times, when asking for money gets harder, fundraising consultant Lisa-Marie Jackson says she encourages clients to go back to basics.
“This is an opportunity to do the things that they should have been doing in the first place,” Jackson says. Cleaning donor databases, analyzing giving histories, and personalizing donor communications are great places to start, she says. The tactics may be time-consuming, but they pay off over the long run, Jackson says.
When donors don’t feel they can give right now, fundraisers should suggest other ways they could give in the future, says Joshua Stein, director of philanthropy at the Jewish Community Foundation of Greater Kansas City.
“People are inclined to want to say yes, and sometimes they’re not able to,” Stein says. “One way to alleviate that sense of frustration is to use those opportunities to talk about planned giving, to talk about what might come after they’re gone.”
It’s critical that fundraisers stay in touch with donors — even lapsed ones — during times of economic uncertainty, experts advise. When donors stop their monthly gifts, Fritz’s team at Long Island Cares asks them if they would like to continue to get the newsletter. For the next year, those lapsed donors receive only updates on the charity’s work, no appeals.
Even if some donors have to step back, fundraiser Alex Shwarzstein remains optimistic.
“They’re not going away,” says Shwarzstein, director of development and communications at Momentum for Health, a nonprofit mental-health service provider. “We’re still focusing on those relationships because we know even though they may not have as much this year, they might have more again next year or the year after. Keeping those people deeply within our network will pay off in the long term.”
