As Rhiannon Orizaga comes up with a plan for reaching individual donors, she is first reflecting on her own giving habits. Orizaga is the new executive director of ArtWorks for Milwaukee, a charity that provides yearlong arts internships to help teens prepare for the workforce, and she is a serial giver of small amounts.

If moved, she contributes — to YouTubers like FruityKnitting, to podcasters she likes, to local museums and botanical gardens by purchasing annual memberships. When the grocery store invites her to round up to support Habitat for Humanity, she clicks yes. The Instagram stranger in danger of being evicted? She Venmoed him cash.

She signed up several years ago to support an organization in her native Oregon with a small monthly gift and was floored recently when the charity emailed that her total lifetime giving had exceeded $1,200. “As a nonprofit employee, I don’t make a ton of money,” Orizaga says. “If somebody approached me and said, ‘Could you give us thousands of dollars?’ I would say, ‘I’d like to, but I can’t.’”

At many large charities and an increasing number of midsized ones, donors like Orizaga are an afterthought. Major donors have become so important to the revenue base — typically bringing in 80 percent, and often much more, of the money from individual contributors — that many charities are cutting back on efforts to engage the everyday donor.

Photo by Tracy LoMenzo

It’s not illogical. Even as major donors give more, small donors are harder to reach. Fewer than half of Americans give to organized charities, down from nearly two-thirds as recently as 2008. Volunteering has declined at a similar clip.

The causes have been well documented: income inequality, social isolation, declining religious involvement, a reduction in tax incentives, a lack of trust in institutions. Scholars aren’t yet sure of the impact of informal ways of giving, such as the person-to-person payments that Orizaga makes, but it’s possible those acts of generosity are also contributing to the decline in donors at organized charities.

The role of fundraising in the falloff in contributors has received less attention but is just as real. Nonprofits can strike out with dozens of major donors — and score just one big gift — yet still earn a far higher short-term return than they do on all their investments in everyday donors combined. And with sky-high turnover rates, fundraisers have little career incentive to woo $50 donors hoping that some will migrate up the fundraising pyramid in a decade or two. By the time that investment pays off, the fundraiser who established the connection will likely be long gone.

Nearly three years ago, the giving crisis drove the nation’s biggest foundations to create the Generosity Commission to try to find answers. The commission is expected to release its final report in September. What’s at stake, the report will say, is far more consequential than a few withering annual funds.

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“It’s connected to a robust civil society, to democracy itself,” says Jane Wales, vice president of the Aspen Institute and co-chair of the Generosity Commission. “When I talk about everyday givers and volunteers, I’m thinking of people who support the local women’s shelter, or mentor struggling youth, or join the rotary, or belong to a Divine Nine sorority, or volunteer for the fire department.”

Among the commission’s top recommendations will be a call for more research into the kinds of informal giving that are increasingly popular with Orizaga and many other young people.

But far more important than the commission’s recommendations, many experts believe, will be the responses in charity boardrooms and development offices. Will they make investments in everyday donors, even if doing so doesn’t pay off quickly or align with career incentives?

“It’s the old Charlie Munger quote: ‘Show me the incentives, and I’ll show you the outcome,’” says Nathan Chappell, co-author of the book The Generosity Crisis and an executive at the data firm DonorSearch. “If we’re incentivizing revenue, then we’re going to have transactional fundraising practices.”

Fundraiser Focus

Most development offices are structured based on how they generate revenue. City Harvest, a food-rescue operation in New York, distributes 78 million pounds of food per year. The charity has nearly 27,000 donors, but it raises 60 percent of its individual-giving revenue — some $15 million — from just 750 donors, according to Ryan VanMeter, its senior director of individual and major giving. City Harvest has five staff members focused on major gifts, two on midlevel gifts up to $5,000, and another three on the direct-response program aimed at everyday donors giving below $1,000.

Jason DeCrow for City Harvest

At Massachusetts General Hospital, the largest hospital in the nonprofit health-care system known as Mass General Brigham, eight- and nine-figure major gifts are becoming increasingly common as the hospital looks to wrap up a capital campaign this year that has already raised $3.7 billion. A very conservative estimate is that 95 percent of the revenue in a given year comes from 5 percent of the donors, according to Erin Northrop, the hospital’s managing director of development.

The hospital’s 225-person development office is structured accordingly. Seventy percent of staff members work on support services ranging from gift processing and prospect research to communications and donor relations. Of the 30 percent interacting directly with donors, more than 40 focus on major gifts, seven work on leadership and midlevel gifts up to $250,000, four handle planned giving, and nine engage with corporations and foundations. Just three focus on the annual fund and direct marketing to everyday donors, although that crew is helped by the information-management team and an outside marketing firm.

To be sure, both Mass General and City Harvest are also committed to growing their donor pipelines. Mass General, which like many hospitals drew donor attention for its key role during the pandemic, has managed to hold on to many of those new supporters. Its three-year average for the period ending in 2023 is 58,000 donors per year, up from 49,000 for the three-year period ending in 2017. The charity has also been successful at encouraging donors to give to more than one area at the hospital, a retention strategy recommended by a fundraising consultant. The number that did so rose 55 percent last year.

“If somebody gives to cancer and then they make another gift to neurology, then their lifetime value and their retention rate goes up exponentially,” Northrop says.

City Harvest, another donor favorite during the pandemic, has seen many of its new donors lapse as inflation eats into their paychecks. Still, the charity is committed to expanding its pipeline because history shows that some everyday donors will quickly move to higher levels.

“The thing that we continue to see is that most major donors make their first gift to City Harvest at under $1,000,” VanMeter says. “Then within three years, we may be seeing them giving $10,000 or $20,000 a year. It is important to cultivate these lower-dollar donors because they are your next major donors.”

‘Living Off the Candy’

Data about what share of current charitable giving comes from “everyday donors” is hard to come by — and is colored by what one considers an everyday donor. Andrew Dunckelman, deputy director of philanthropic partnerships at the Gates Foundation, says an internal Gates study found that everyday donors account for 70 percent of total individual giving. But he conceded that the statistic was based in part on an Altrata study of high-net-worth philanthropy that set the cutoff at a net worth of $30 million. In other words, for the purposes of the Gates research, those making do with a $29 million nest egg fell into the “everyday” camp.

Studies tracking more conventional standards of wealth show that small groups of the wealthy do much of the giving — which aligns with charity reports that major donors make up a big chunk of their revenue.

A 2017 study by the Tax Policy Center found that the top 10 percent of households based on income gave nearly as much as the bottom 90 percent combined. In 2017, those making more than $216,800 per year gave $148 billion. The 90 percent of households below that income level gave only slightly more, $158 billion.

Woodrow Rosenbaum, the chief data officer at GivingTuesday, says that when major donors pull back, as they have recently, charities work even harder to woo them. What they should be doing instead, he says, is investing in everyday donors to create a more stable base of giving.

“What we need to do more than ever is diversify our funding bases,” Rosenbaum says. “We are in this cycle of undermining our broad base and diversification, which we know is linked to resilience.”

Josh Birkholz, CEO of BWF, a fundraising consulting firm, says he recently created a four-person unit focused on everyday donors. It may be less profitable than some of the firm’s other work, he says, but it’s the kind of long-term investment that he thinks charities themselves should be making.

“When you’re a kid, you can eat all the sugar you want,” Birkholz says. “But at some point, our body catches up with us, and we become insulin resistant. So now, we’re just living off the candy — that’s the high-net-worth donors. And the insulin resistance is in front of us. It’s not happening right now. But we’re eventually going to run out of the major donors that had 20-year relationships with us. And then we’re going to be dependent on the entrepreneurial philanthropists that come out of nowhere. That’s risky, I think, for long-term philanthropy.”

Even so, the rationale that motivates some charities to invest in everyday donors is to show a base of support that can become a carrot to entice … more major donors.

CJ Ortuno, vice president of philanthropy at Civic News Company, the nonprofit best known for the education news site Chalkbeat, says that from an economics standpoint, it makes little sense to court 1,000 donors to receive a combined $100,000 when the charity could spend six months investing in one big donor and potentially receive the same amount or more. But the big donor might reject the pitch if she doesn’t see regular people supporting the site.

“It’s hard to convince someone to give you $1 million if you’re unable to say, ‘By the way, we have X number of people that give us $10, $50, or $100 to support our work,’” Ortuno says. “The million-dollar donor wants to be part of something, just like the $10 donor.”

Outside experts tend to focus more on what gets lost when a charity’s base of support narrows to just the ultrawealthy.

When charities become too reliant on big gifts, it’s like “trying to solve 100 percent of the world’s problems with 2 percent of the money,” says Erik Daubert, a nonprofit consultant who also teaches at the Indiana University Lilly Family School of Philanthropy. “The contraction of donor participation — that’s a real concern because it contracts the number of likely participants in leadership, and it contracts the number of likely community voices that are heard. It lessens the power of those populations to bring their spirit, voice, and message to the nonprofit community.”

New data from GivingTuesday suggests more people would give to charities if they were asked. GivingTuesday’s latest quarterly report found a stable number of donors even with fewer appeals, suggesting that 7 percent more people would have donated if they had simply been solicited, Rosenbaum says.

“What we see is that Americans are very ready to give to nonprofits,” he says. “But we have to show up and be relevant and ask, and we need to give people more on-ramps into our mission.”

Running the Numbers

Austin Soundwaves, a charity based in Texas that provides music instruction via school partnerships and community programs, is growing its 200-person donor base by reaching out to parents and former students, says Patrick Slevin, its executive director.

“One thing we’ve learned is — don’t make the decision for people,” Slevin says. “We have families that are very low income that make it a priority to give back or are happy to be asked. We do ask, and we are starting to build our parents into our communications. We also have 400 alumni, many of whom are now in college, and we’re starting to see some of them give back at meaningful levels.”

As charities reach out to more diverse audiences, they need to make sure they have fundraisers on staff who understand the communities where they’re soliciting. One takeaway from “Philanthropy Always Sounds Like Someone Else: A Portrait of High Net Worth Donors of Color,” a report on BIPOC donors from the Donors of Color Network, is that when people are the first in their families to accumulate wealth, often they’re inclined to send money home to support low-income family members in addition to giving to charity.

“If you don’t have diverse representation in the room listening to messaging and thinking about how things are going to resonate with different audiences, then it’s going to fall flat, and you’re not necessarily going to bring in as many donors as you want,” says Natalie Skinner, managing director at the consulting firm CCS Fundraising.

But do investments in everyday donors really pay off? Nearly every charity has an anecdotal story about the $100 donor who leaves a large bequest, but few longitudinal studies examine the long-term payoff from courting entry-level donors.

Bob Guittard, an executive vice president at BWF who oversees its new unit focused on everyday donors, says he examined nearly 50 years of individual giving at a very large public university, a period in which the institution raised more than $5 billion. During that time, 620,000 donors gave to the university, and for 98 percent of them, their first gift was below $1,000 — in other words, an annual-fund gift. The people who started at that everyday level contributed 85 percent of the money over time — a sum worth nearly $4.3 billion.

“I don’t know all the things that they did during that time, but they spent money, they spent energy,” Guittard says. “They spent time moving people to give a first gift, whatever that was, over four to five decades. If they hadn’t done those things, they would have lost out on 85 percent of the revenue, basically.”

Tom Kissane, vice chair at CCS Fundraising, says charities that closely examine their own data can often find statistical support for investments in everyday donors, even when such spending yields no immediate financial return. One of the firm’s clients considered abandoning its direct-mail campaign after an audit revealed that it was spending $1.35 for every dollar it raised.

“On a superficial point of view, you’d say, ‘Let’s abandon direct marketing,’” Kissane says.

But further digging revealed that doing so would have been a mistake. “A review of the data showed that 48 percent of their planned gifts, primarily bequests, came from people who started the relationship through direct marketing,” Kissane says. “And planned giving represented 60 percent of their total revenue.”

One university that has long invested in its annual fund is William & Mary. The university has 21 staff members focused on annual giving, and it’s adding five positions in the coming year, says Matthew T. Lambert, senior vice president for university advancement. The investment is already paying off — the university is raising $20 million per year from gifts under $50,000 — and Lambert believes many of those donors will make major gifts over time.

“I often joke that because I became a VP for advancement in my 30s and didn’t intend to leave W&M, I knew I would be around to deal with the consequences of my actions,” Lambert says.

Even small commitments from everyday donors can quickly pay off — if they’re structured correctly. Louis Diez, founder of the Donor Participation Project, a group of advancement professionals addressing the national decline in donors, says a $10 monthly recurring gift can quickly yield far more than a $100 annual gift even though both seem similar during the first year. That’s because the retention rates are far higher for recurring donations than for annual gifts. Over a five-year period, 1,000 recurring donors at the $10 level will give three times as much money as a dwindling pool of 1,000 annual donors whose first gift is $100.

Diez says he recently shared that finding with the chief financial officer at a health-care charity, who was surprised by the degree to which the recurring donor outperforms.

One charity leader who would not be surprised is Orizaga of ArtsWorks for Milwaukee. She knows from her own giving that recurring donations add up. She signed up several years ago for a monthly giving program at PCUN, which advocates for working Latinx families in Oregon. She started at $20 a month, moved up to $50 a month, and ultimately gave the group a total of $1,250 before shifting her focus to Milwaukee charities when she moved east.

Orizaga plans to kick off a campaign this fall to sign up recurring donors at ArtWorks. Just 100 donors at $15 a month would yield $18,000 a year. That would increase the charity’s current fundraising from individuals by more than 50 percent.

“A lot of people can easily afford to give you $15 a month,” Orizaga says. “That’s like a sandwich, is how I think about it. Give us one sandwich a month, and that will add up to quite a bit.”

The Magic of Recurring Giving

Fundraisers can tap into the loyalty of everyday donors — and build charitable donations into their personal budgets — by persuading them to sign up for recurring gift programs. Recurring gifts work for charities in much the same way they work for Netflix and Spotify — once you get people signed up with a credit card to pay a modest monthly sum, they’re unlikely to step away. Here, Louis Diez of the Donor Participation Project provides a hypothetical example of how recurring donors who agree to give $10 a month will give three times as much money over five years as donors who start with an annual gift of $100. The difference is due primarily to the much higher retention rates for the recurring donors, especially in the first year.