Fundraising Update

Welcome to Fundraising Update. This week, a new study says giving jumped 10.6 percent in 2020, driven in large part by a wave of small donations. Plus, more than six in 10 couples make charitable-giving decisions together, according to a new report.

I’m Nicole Wallace, features editor at the Chronicle of Philanthropy, filling in again for Eden Stiffman, who is hard at work on an upcoming cover story about the fundraising inclusivity problem. If you have ideas, comments, or questions about this newsletter, please write me at nicole.wallace@philanthropy.com.

Thanks to sponsor DonorPerfect for supporting Fundraising Update.

Good News — and a Big Challenge

Another new study confirms that 2020 was an outstanding year for giving — but it also flags donor retention as a serious challenge for nonprofits going forward.

Eden reports that charitable giving grew 10.6 percent in 2020 over 2019, driven by increased need during the Covid-19 pandemic.

Despite early concerns that pandemic-induced economic hardship would suppress philanthropy, charities benefited from gifts of all sizes from people in a broad array of income levels. Small donors, however, outdid more affluent Americans.

These results are from the Fundraising Effectiveness Project, which is managed by the Association of Fundraising Professionals in collaboration with GivingTuesday and analyzes donation data from the Growth in Giving Database. The data analysis includes giving details from 2,496 nonprofit organizations based in the United States that raise $100,000 to $10 million annually.

Gifts of less than $250 grew by 15.3 percent over 2019. Gifts of $250 to $999 increased 8 percent. And gifts of $1,000 or more increased 10.4 percent.

One reason for the rise in small contributions could be Congress’s decision a year ago to let everyone take charitable deductions, not just people who itemize, Jon Biedermann, chair of the Fundraising Effectiveness Project, said in a statement. “It’s striking that on December 31, there was a 28 percent increase of $300 gifts, which is exactly the maximum amount a donor can take using the universal charitable deduction.”

The overall number of donors grew by 7.3 percent over 2019. That growth was led primarily by an 18.5 percent increase in new supporters and a 13.7 percent increase in “recaptured” donors — those who had given to a charity before 2019, did not give in 2019, but then gave to that same charity in 2020.

The Struggle to Keep Donors Loyal

Still, donor retention — the percentage of donors who gave to a charity in both 2019 and 2020 — dropped last year by 4.1 percent. The overall 2020 donor retention rate was 43.6 percent, the lowest rate charted since the Fundraising Effectiveness Project began tracking this data with 2004-5 figures. Last year’s decline was driven by the 9.2 percent of new 2019 donors who did not support the same charities again in 2020. Fewer than one in five donors who gave to a charity for the first time in 2019 gave to the same charity last year.

These statistics could pose challenges for nonprofits going forward. Even with the strong showing of new small donors in 2020, fundraisers will have to work hard to keep generous supporters to meet pressing needs.

Persuading supporters to give again and again tends to be less expensive than recruiting new ones. Jay Love, chief relationship officer at the fundraising software company Bloomerang, suggests that fundraisers should focus on keeping those new and recaptured donors in the fold. Charities, he said, “need to have a clear plan to follow up and build strong relationships with these donors.”

Monthly giving can be an important strategy to increase donor retention. Some research suggests that communicating with donors in multiple ways can boost retention. Making donors feel appreciated is also critical.

Amid the challenges of the pandemic, some organizations are hurrying to solicit gifts from donors without making as much effort to protect the long-term relationship, Lynne Wester, founder of Donor Relations Guru, a fundraising consultancy, told my colleague Lisa Schohl last summer.

“One of the things nonprofits have to consider is that we’re in it for the long haul and that relationships happen and unfold over many years and decades,” she says. “So thanking donors — and even more than thanking, telling them what their money is doing — is really important.”

Check out Lisa’s story about how to thank donors during a crisis. It’s good food for thought as your organization thinks more about donor retention.

Hear From You

What is your organization doing to keep donors in the fold? Is it working? Drop me a line. I’d love to hear what you’re doing.

Need to Know

— Share of couples who are married or live together that make giving decisions together

When one partner makes giving decisions for the household, women are slightly more likely to do so — 15.3 percent — than men — 12.1 percent. The remaining couples — 11.1 percent — make giving decisions separately. That’s according to a new study by the IUPUI Women’s Philanthropy Institute at the Lilly Family School of Philanthropy that I reported on.

The implications are significant for development officials, says Jacqueline Ackerman, associate director of research at the Women’s Philanthropy Institute.

“Fundraising can’t be one size fits all,” she says. “We know anecdotally that even in 2021, fundraisers are still making the assumption that the man in the household is the one in charge of giving decisions.”

The study included people in LGBTQ couples. Their responses are part of the survey findings, but the number of LGBTQ respondents wasn’t large enough to pull out and analyze separately.

Plus:

• After a tough 2020 that saw fewer eight- or nine-figure donations from wealthy donors than in previous years, 2021 is starting out on a positive note. The billionaire investor Bill Ackman said in a tweet on Monday that he gave all of the shares he owned in a South Korean company, worth about $1 billion, to three nonprofits, including his Pershing Square Foundation, a donor-advised fund, and another charity he declined to name. The money comes from his stake in Coupang, an e-commerce company whose stock soared after it went public last week, my colleague Maria Di Mento reports.

  And in February, Tesla Motors founder Elon Musk and the geneticist Arthur Riggs each donated $100 million to nonprofits.
  

• Maria also talked to veteran fundraisers about how to connect with prospective major-gift donors now — a tricky proposition when meeting face-to-face is still difficult. She found a lot of good advice. For example, Sarah Fonder-Kristy, chief development officer at the Atlanta Community Food Bank, recommends looking for “hidden gems,” donors who show up in a nonprofit’s donor files in less direct ways, such as corporate employee-giving campaigns. A donor who made a high four- or five-figure gift through a payroll deduction could have the potential to give a major gift.

Reader Feedback: Inclusive Fundraising

The Warrior-Scholar Project works with colleges and universities to provide college-prep boot camps for transitioning service members and veterans. Because the majority of students are people of color, the nonprofit keeps issues of belonging and inclusion top of mind, Ariella Nasuti, director of foundation and corporate relations, wrote to Fundraising Update.

She says it can be easy to fall into a “‘cut and paste’ rut of recycling pitch content,” but inclusive fundraising requires tailored case statements that include authentic and culturally competent stories that show what makes your programs unique. “Do this effectively, and donors will write themselves into those stories to ensure happy endings,” she writes.

Nasuti also recommends thinking about donor support in its broadest terms. “Not all donors are ready or able to contribute, financially or otherwise,” she says. Be patient and invite supporters to learn more about your mission. “Every step a donor takes with you is an investment of time and commitment, one it will become increasingly difficult for either of you to walk away from.”

Thanks for sharing your experience, Ariella!

Tips & Tools

• How to Create a Culture of Inclusive Fundraising: Many big-gift fundraisers still overlook donors from a variety of demographic groups, even though about 14 percent of U.S. millionaires are from minority groups. That number will likely grow.
• How to Diversify Your Nonprofit’s Board: Advice to help you recruit trustees with varied backgrounds and experiences to ensure an inclusive approach to governance.
• Covid-19 Has Reshaped Big-Gift Fundraising. Let’s Hope It Lasts: A year into the Covid shakeup, one fundraiser takes stock of how her profession has changed for the better.

What We’re Reading

Doctors at a Philadelphia medical center are objecting to a new fundraising effort that ties some bonuses to patient-donor referrals. Among the factors that go into calculating department chairs’ bonuses at Jefferson Health is now how many potential donors among their departments’ patients they refer to the development office. In addition, last year the system launched a way for physicians to flag the electronic records of patients who could be supporters. A Johns Hopkins bioethicist said mixing fundraising and patient care could damage the doctor-patient relationship. A hospital spokesman said, “It’s important to note that these discussions are always initiated by the patient.” (Philadelphia Inquirer)

Have you ever opened an email with a casual, conversational subject line like “Hey” or “Checking in on you” and been surprised to find out the message is a fundraising appeal? Apparently that’s happened to the folks at Harper’s, too. The magazine’s April issue includes a poem composed entirely from the subject lines of fundraising appeals sent during the 2020 election season. (Harper’s)