Officials at the nonprofit Central American Resource Center were on pins and needles most of last month. It was the all-important year-end fundraising season, but the immigration organization, based in Washington, D.C., didn’t see large numbers of donations come in until the end of December, says Abel Nuñez, the group’s executive director.
“The anxiety level really went up,” he says. But the panic-inducing wait had a happy ending: The organization met its fundraising goals.
The group is not alone. Many charities say they’re starting the new decade on strong footing.
The comprehensive tally of 2019 giving reported by “Giving USA” won’t be available until June, but an early spot check by the Chronicle suggests last year’s strong economy and fundraisers’ intensified efforts after a weak 2018 led to a positive fundraising year for nonprofits.
“The environment for fundraising this year seemed more bountiful than in 2018,” says Dan Thain, chief fundraising strategist at consulting firm Blue State, whose clients include large national charities like Unicef USA, the Muscular Dystrophy Association, and the diabetes research group JDRF.
Fundraisers in 2018 faced the headwinds of a volatile stock market. The market’s worst December since the Great Depression happened at the worst possible time, scaring off many affluent donors who held back on giving stock.
While some economic anxiety lingers, 2019 ended with the market’s best annual performance since 2013. The Nasdaq composite rose more than 35 percent, and the Standard & Poor’s 500 Index went up nearly 29 percent. Research shows that charitable giving is closely related to changes in those economic factors and others, such as gross domestic product and consumer expenditures.
“When the S&P 500 goes up in a 12-month period, charitable giving from individuals tends to go up the following calendar year,” says Bill Stanczykiewicz, director of the Fund Raising School at the Indiana University Lilly Family School of Philanthropy. That’s especially true for middle- and high-income donors, which should give fundraisers hope for 2020.
The average increase in wages in 2019 was about 3 percent, nearly double the rate of inflation. “When people have more money, they spend more money, but when people have more money, they also can give more money,” Stanczykiewicz says.
That was good news for organizations that sponsor donor-advised funds. The National Philanthropic Trust hasn’t yet released data on its 2019 fundraising, but CEO Eileen Heisman says it was a strong year.
“We did well at the end of the year, I think partly because the market has been so robust,” Heisman says. In addition, she says, donors gave more grants from their DAFs in December than they ever have in National Philanthropic Trust’s history. Schwab Charitable also saw both grants and contributions grow at a faster rate in 2019 than in 2018, a spokeswoman said.
Nervousness about a possible downturn may have led fundraisers to spend more time on cultivation and storytelling in 2019.
“People doubled down on their efforts, they worked harder, they looked at data, they were smarter just because we felt like, ‘Who knows what’s going to happen?’ " says Kim Klein, a principal at Klein and Roth Consulting, which provides fundraising advice to smaller left-of-center nonprofits.
She says those efforts paid off for her clients. Klein says she received calls from nonprofits that had never before received a gift of stock and wanted guidance on how to accept such gifts.
“It seems like people were kind of in a generous mood for whatever reason this year,” she says.
Happily Surprised
Compass Family Services, which operates shelters and support services for homeless families in San Francisco, exceeded its 2019 goals. The organization’s annual budget is about $14 million, with about $5 million raised from nongovernmental sources.
Its year-end campaign for the organization’s annual fund runs from November through the end of January. This year’s haul is already up 37 percent over 2018, with several weeks left to go. That’s more than the annual campaign has ever brought in before, says Abbey Leonard, director of development and communications. And it’s happening at a moment when the group is halfway through a three-year capital campaign.
“We were a little surprised, actually,” Leonard says. The strength of the economy has been a boon for fundraising, but she also credits that increase to the hard work of her five colleagues who support fundraising and marketing efforts.
This year, Compass Family Services sent its year-end mail appeal a week earlier and also increased the volume of emails from three to 12. Board members have also chipped in. Roughly a quarter of all annual-fund donors were solicited by board members. Partnerships, like one with the San Francisco Opera, have helped increase the organization’s visibility.
The city’s homeless crisis is also front and center in the news media, which may have been a factor in several large first-time gifts.
“Homelessness in San Francisco is on the cover of every newspaper. It’s just not something that people can ignore,” Leonard says. “We’re at a moment where there’s a lot of interest in it and helping to address it.”
The heightened visibility has also created a sense of competition among community-based groups working to address the issue, Leonard says, though she says she tries not to think about that too much. “Whoever a donor wants to support, as long as it’s going to help people in need, is awesome. That supports our mission as well. But it is an uncomfortably competitive place to be,” she says.
Serious Jump-Start
In its eighth year, GivingTuesday flew past previous records. Charities raised $511 million online on the global giving day, up from $380 million in 2018. This year, the GivingTuesday Data Collaborative, a group of more than 60 partners, also estimated offline giving, bringing this year’s total estimate to $1.97 billion.
To get ahead of the year-end rush, many charities started sending appeals a week or two ahead of time to start engaging with their supporters.
“Groups that did really well this year, as opposed to ones that just did OK, started their year-end giving before Thanksgiving,” says Klein, the consultant.
The American Society for the Prevention of Cruelty to Animals, for example, began priming its donors for a GivingTuesday campaign a month before the fundraising day.
Many organizations that send a high volume of appeals had trouble with email deliverability in 2018, says Thain, the consultant. That was less of an issue last year.
Email volume has increased sharply, he says. That might increase revenue in the short term, he says, but could present challenges in the not-too-distant future. “There are warning signs that a sort of churn and burn or scorched-earth email policy is turning off donors and turning them away from those organizations,” Thain says.
On the digital front, he’s also concerned about what he describes as an “arms race” for matching contributions. While a few years ago it was common to see charities offering to double or triple a donor’s gift, this season he saw organizations offering to match a gift five times or even 10 times over, maybe adding a free tote bag or water bottle as a cherry-on-top incentive.
“There just comes a point where that becomes not necessarily entirely credible,” he says. “If groups are going out with offers that donors no longer believe or start to question, it really poisons the well for every organization that’s trying to get out there, too.”
As nonprofits finish tallying 2019 results, they’re also looking ahead to 2020. Fundraisers and consultants shared their thoughts on what to look out for in the new year:
IRA Distributions
As huge numbers of baby boomers move into their early 70s, Klein, the consultant for progressive grassroots groups, says more of her clients are asking for and receiving gifts from individual retirement accounts for the first time.
“This reflects something that’s really happening,” she says. “Many baby boomers have IRAs.”
Fundraisers who want to promote this kind of giving among their donor base should be aware that a new law passed in December raised the required minimum distribution age for IRAs from 70.5 to 72, effective January 1. Fundraisers can still ask younger donors for tax-free contributions from IRAs, but there’s no requirement to distribute funds until age 72.
‘Bunching’ Continues
The 2017 tax law, which roughly doubled the standard deduction, appears to be prompting some donors to “bunch” what would otherwise be multiple years of charitable giving into one tax year to maximize the tax benefits.
In 2019, Cheryl Bier, chief executive of the Jewish humanitarian charity Bnai Zion, said she saw more high-dollar donors rolling multiple years’ worth of gifts into one bigger end-of-year contribution so they could meet the higher threshold for the standard deduction. Typically, these donors responded to Bier’s end-of-year appeals for a donation with an explanation that “for tax reasons, they’re willing to do it, but they want to do it in ’19 [to cover gifts] for the next five years or the next three years or whatever works for them,” she says.
Donor-advised-fund sponsoring organizations also say they’re seeing account holders employ this strategy.
Looking ahead, this raises questions of how charities will adapt their fundraising planning and donor communication, says the Lilly School’s Stanczykiewicz. That might mean going to a two- or three-year fundraising plan as opposed to an annual fundraising plan or asking lapsed donors who may be bunching contributions to make a pledge for future contributions.
“If donor behavior is changing, as some of the early data indicate it might be, nonprofits and fundraising planning are going to need to adjust accordingly,” Stanczykiewicz says.
Election-Year Competition
Political advertising in 2020 is estimated to hit all-time records. As a result, nonprofits will likely face steeper rates to get their messaging out on platforms like Facebook — and more competition for attention from supporters.
“There’s going to be lots and lots of money spent on those platforms, which is going to make it harder for nonprofits to be seen, and similarly it’s going to be harder for them to get their message out unless they are more aggressive, more interesting, more inspiring than they have been previously,” Thain says.
Organizations with causes that align with campaign talking points and the news cycle may have an easier time gaining traction. But for groups like libraries and animal shelters, “getting your time is going to be tricky,” says Klein. Fundraisers should focus on spending more time with their donors, seeing them personally, calling them, and upgrading the quality of their thank-you notes, she says. “For people who keep up that level of work, it’ll probably be OK.”
Cecilia Calvo, interim chief development officer for the League of Women Voters of the United States, says early indicators suggest 2019 was one of the organization’s strongest year-end campaigns. While the group is still processing its final numbers, she says, digital fundraising was up 70 percent over 2018. The amount raised from individual donors and major gifts was also higher in 2019 than the past two years, she said in an email.
She attributes most of the increase to the election cycle. “The end-of-year giving season in 2018 came right after the midterm elections, while the 2019 end-of-year period came on the eve of a presidential election year,” she says. “We think there’s more urgency to give ahead of a big election rather than right after one.”
Widening Inequality
Nonprofit leaders and fundraisers remain concerned about the erosion of the middle class and the decline of the middle-income donor. Some charities say they’re increasingly relying on a smaller group of wealthier donors to meet their revenue goals.
“That’s not great for democracy and civil society,” says Heisman, head of the National Philanthropic Trust. “We need people participating at all levels.” The burden is on fundraisers to figure out how to appeal to lapsed donors, she says. But it’s incumbent on everyone in the nonprofit sector to identify answers to the all-important question: “What can we do to reclaim donors?”
Eden Stiffman reports on nonprofit trends and fundraising for the Chronicle. She recently wrote about the fact that GivingTuesday is now an independent nonprofit. She also writes a popular weekly fundraising newsletter. Email Eden or follow her on Twitter
Emily Haynes covers fundraising and research. She recently wrote about the sharp decline in giving among some causes and about a grandmother video that went viral and brought attention to a university. Email Emily or follow her on Twitter.