It’s no secret that wealthy donors are becoming dominant in the nonprofit sector — but that’s especially true for larger charities.
A recent study by researchers at the Indiana University Lilly Family School of Philanthropy set out to explore the commonly held notion that 80 percent of fundraising dollars come from just 20 percent of donors. They found the scale tipped the most at the largest charities — those with budgets of $10 million or more — where the top 20 percent of supporters gave 95 percent of individual donations. At small charities, those with budgets of $200,000 or less, donations from the top 20 percent made up just 84 percent of contributions.
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It’s no secret that wealthy donors are becoming dominant in the nonprofit sector — but that’s especially true for larger charities.
A recent study by researchers at the Indiana University Lilly Family School of Philanthropy set out to explore the commonly held notion that 80 percent of fundraising dollars come from just 20 percent of donors. They found the scale tipped the most at the largest charities — those with budgets of $10 million or more — where the top 20 percent of supporters gave 95 percent of individual donations. At small charities, those with budgets of $200,000 or less, donations from the top 20 percent made up just 84 percent of contributions.
Even a major gift at a small charity may come from an everyday donor, whereas a top donation at a large hospital or university is almost surely from someone with significant wealth.
Courtesy of GlobalGiving
The vibrancy of civil society depends on there being lots of organizations and causes, and that requires a wide base of donors, says Victoria Vrana, CEO of GlobalGiving.
“The vibrancy of our social sector is dependent on there being a plurality of organizations and causes, and in order to have that, you need a wide base of donors,” says Victoria Vrana, the CEO of Global Giving and a longtime advocate for everyday giving. “This decline in giving disproportionally hurts smaller community-based organizations.”
Charities of all sizes need to revamp their approach to better connect with small donors, says Genevieve Shaker, an associate professor of philanthropic studies at the Lilly school and a co-author of the study of the 80-20 rule, which has not yet been published.
“Have a strategy for new donors at all levels that makes them feel valued and welcomed,” Shaker says.
Here’s how three nonprofits of varying sizes are trying to secure a better future by connecting with everyday donors.
Civic News Company
Goal:Build stronger engagement with members. Like many nonprofit newsrooms around the country, Civic News got started with the help of major gifts and is building more support from everyday donors as it grows readership. Its flagship site, Chalkbeat, which covers education, is only 10 years old, and newer sites focus on health and voting.
Approach:Figure out what message will resonate with everyday donors. CJ Ortuño, the charity’s vice president of philanthropy, started by surveying the readership — why did they think Chalkbeat was a valuable resource? He expected the kind of aspirational sentiments that many staff members feel and that appeal to many major donors — like “saving democracy” and “strengthening communities.” Instead, most members said they came to Chalkbeat for its practical information, such as explaining nonsensical bureaucracies in school districts or shining a spotlight on wrongdoing.
That information allowed the charity to solicit donors, where appropriate, with the same practical language the donors had used. “You’ve got copywriters talking about changing the world — meanwhile, you have readers saying, ‘I like the idea of seeing what ‘s happening on the ground,’” Ortuño says. “It really informed our decision to come down from the clouds and start to talk practically.”
How it’s working. The charity raised $200,000 from members last year and increased membership from 1,200 to 1,500, although membership appears to be dropping again in 2024.
Cornerstones
Goal: Turn volunteers into donors. Cornerstones, a human-services charity in northern Virginia, has traditionally relied on area corporations for support, but when they began to pull back, the charity reached out to Orr Group, a fundraising consulting firm, for help in building more support from individual donors. The charity wants more of its 6,000 volunteers to also contribute financial support.
Approach: A more authentic approach to fundraising. The charity conducted an audit and determined that it was spending too much on corporate donors, when its individual donors had potential to give much more. The charity is based in an affluent area, but only 60 percent of its individual-giving revenue comes from major gifts of $2,500 or more.
Cornerstones is now using a more authentic approach — hosting fundraising events at sites where it helps clients and working with the charity’s communications department to identify anecdotes that show firsthand how clients have been helped. “That’s something that a lot of nonprofits don’t invest enough in — really collecting those anecdotal stories to be able to share back out with their donors,” says Katy Beth Cassell, a director at Orr Group who has worked closely with Cornerstones.
How it’s working. The new approach allowed Cornerstones to re-engage about 141 lapsed donors last year, helping it maintain level fundraising at a time when many charities in the area are experiencing declines.
Courtesy of Austin Soundwaves
Patrick Slevin, CEO of the music-education charity Austin Soundwaves, calls new donors who make gifts as small as $5 a month to try to make a personal connection.
Austin Soundwaves
Goal: Build a bigger base of everyday donors to reduce reliance on major gifts. Austin Soundwaves, a small Texas charity that provides music instruction in schools and the Austin community, has received a few six-figure donations and is using some of that money to try to reach everyday donors. The charity has gone through a number of fundraisers since its founding 13 years ago, and Patrick Slevin, the charity’s CEO, decided to hold off on hiring a replacement after the most recent one left for another job.
“You can do the math pretty easily,” he says. “If your donor base is a certain size and you’re paying X salaries, it doesn’t always work out.”
Approach: Bring more of a human touch to fundraising. Diez suggested stripping down the automated email communication with donors to simpler language, with a touch of humor. One example: “Your support has already hit some high notes at Austin Soundwaves. Thanks to you, last year we were able to reach over 1,100 youth, giving them a platform to express themselves through music.”
“We’ve removed a lot of the sheen,” Slevin says.
The charity has just 200 donors, so if someone makes a gift as small as $5 a month, Slevin gets on the phone to make a personal connection. Donors are invited to get “behind the scenes” by coming to schools and interacting with students who participate in the program. On GivingTuesday — which has never been a big day for Austin Soundwaves — the charity didn’t even ask for a gift. Instead, it sent a message of thanks and named other charities in the city that were worthy of support.
How it’s working. With two months left in its fiscal year, Austin Soundwaves had already exceeded its donor count and fundraising total from the prior year.
Ben is a senior editor at the Chronicle of Philanthropy whose coverage areas include leadership and other topics. Before joining the Chronicle, he worked at Wyoming PBS and the Chronicle of Higher Education. Ben is a graduate of Dartmouth College.
