Welcome to Fundraising Update. This week, we look at a new study of 2020 giving, along with the authors’ predictions and advice for 2021. Plus, the problems brought on by a bottom-line mentality in fundraising and a case study on how one organization decided to dip into its endowment during the pandemic.

I’m Eden Stiffman, senior editor at the Chronicle of Philanthropy. If you have ideas, comments, or questions about this newsletter, please write me at eden.stiffman@philanthropy.com. Thanks to sponsor DonorPerfect for supporting Fundraising Update.

2020 and Beyond

Remember the dawn of this decade when pun-y headlines about 2020 vision abounded? We thought we had our pulse on what was coming down the pike — and to a degree, we did. But no one anticipated the way the pandemic would upend our lives, our organizations, and the way we give and raise money.

Now the data is rolling in. And while hindsight isn’t exactly 2020, we’re starting to piece together a fuller picture of how people gave last year.

Yesterday, GivingTuesday released a report based on aggregated 2020 data from 74 charitable-giving platforms. The study focuses on giving to established nonprofits that raise no more than $25 million annually, and it is one of the most complete snapshots we have of giving last year. The annual “Giving USA” report will provide another broad view of 2020 philanthropy when it’s released next month.

My colleague Michael Theis dug into the new GivingTuesday report, which estimated that overall giving in 2020 increased 5.2 percent from 2019, driven mostly by large donations from supporters who had previously given to the same organization in 2019 or earlier.

Further, the long-term downward trend in the number of overall donors was reversed in 2020. The 1.3 percent increase in the number of supporters was driven “almost completely” by an 11 percent increase in the number of gifts of $101 to $500.

According to Woodrow Rosenbaum, GivingTuesday’s chief data officer, it’s unclear if smaller-dollar donors will continue to give in such volume.

“This is the question about so many things we observe in 2020: Was that a one-off, or does it herald a change? To a degree, we don’t know,” said Rosenbaum. “It remains to be seen how much of that was driven by the emergency of the moment. But what we expect is continued volatility.”

Last year’s growth in overall giving was uneven, to be sure. Most nonprofits, by number, saw fundraising revenue drop 5 to 10 percent as the lion’s share of giving went to organizations with already-robust fundraising totals and whose work was directly related to the effects of the pandemic.

The authors of the report do aim to look ahead. They predict a return to pre-pandemic charitable giving patterns this year. As the pandemic recedes in severity and local economies begin to bounce back, the authors expect human-service groups, whose programs were in high demand in 2020, to see their fundraising levels go back to what they were before the crisis. They also anticipate charities less directly connected to the pandemic response and civil-rights issues will recapture donors who had given before but not in 2020.

The authors recommend maintaining contact with new 2020 donors and reminding them of the impact of their gifts. In addition, the authors urge charities to promote recurring donations to keep new donors in the fold. That will be an important tactic for fundraisers looking to hold onto contributors who gave $500 to $5,000 in 2020.

“Whether or not we continue to tap into the desire of the American public to be generous depends on whether or not we go and meet them,” said Rosenbaum. “Being present and giving people the opportunity they’re looking for to affect change is one of the ways that we can recover strong.”

Read Michael’s story. There’s a lot of good information to absorb.

Share Your Thoughts

How are you budgeting for the future as we move into the next phase of the pandemic? What kind of guidance would be helpful as you plan? Drop me a line. I’d love to hear from you.

Bottom-Line Mentality

Sometimes professionals can become so focused on a job-related goal that they neglect other important goals or aspects of their lives. Such hyper-focus on a goal often leads to negative behavior that may be attributable to bottom-line mentality, writes Nazifa Zaman, a graduate student studying talent management and a former nonprofit professional.

This kind of mind-set is sometimes seen among fundraisers and senior leaders at nonprofits. For example, development professionals may become so obsessed with meeting big-gift targets or building their reputations and networks that they behave unethically. Providing incentive pay to fundraisers may increase the likelihood that they will develop these behaviors.

Zaman presents a scale for identifying this mind-set in the workplace and explains how leaders can take steps to prevent or correct it. Read her column.

“This Is What Our Endowment Is For”

Nonprofits with endowments usually are loath to dip into them. Endowments provide a long-term sense of stability, and organizations come to rely on the income generated by investment returns. And there are also legal constraints.

My colleague Dan Parks has a story about the UJA-Federation of New York, which during the pandemic has dipped into its $950 million endowment six times to immediately boost giving to the nonprofits the federation regularly supports. So far, the organization’s board has unanimously approved a total withdrawal of $53 million — $27 million for grants and $26 million for interest-free loans.

Dan’s story examines why so many organizations opted against using reserve funds last year and explains why officials at the UJA-Federation of New York are confident their donors will more than rebuild their endowment. The group’s fundraising in fiscal 2020 hit a record high.

    Tips & Tools

    What We’re Reading

    • The Biden administration’s proposed tax hikes would give the wealthy more incentive to make charitable donations, a Biden aide told nonprofit leaders last week. Biden’s plan would nearly double the capital-gains tax rate for those who earn more than $1 million annually and would likely send those taxpayers looking for more deductions. Biden could have limited that workaround by proposing a cap on itemized deductions for high earners, as he did in the campaign, but such a plan was not included in his $4 trillion economic agenda introduced this spring. The aide’s admission was implicit acknowledgment that the wealthy will look for ways around the tax hike. Some organizations are already pointing out to potential donors the increased value of gifts under the proposal, and one scholar said the enhanced tax break could give wealthy donors an excuse to give more to charities and leave less for their heirs. (New York Times)
    • Muslim giving in the United States has shifted focus in the decades since the 9/11 attacks from international relief to civil rights and social justice. Muslim-led organizations in the United States raise the bulk of their budgets in the three months before, during, and after Ramadan, which this year runs from April 12 to today, May 12. Although international relief still gets the biggest share of donations from Muslims, the recent focus on racial justice has accelerated a trend that began after the 9/11 terror attacks, when some large international Muslim charities shut down amid suspicion of funding terrorism. Muslims “tend to focus on funding nonprofits dedicated to basic needs such as food banks, health-care clinics, and social-service organizations helping with adoption or mental health” and they give about as often to causes outside the Muslim community as to causes within it. (Religion News Service)
    • Here’s one real moonshot of an online fundraiser: auction off a trip to space. That’s the approach being taken by Blue Origin, the space venture founded by Jeff Bezos, which said last week that it will fly people to the edge of space for the first time this summer and that one of the seats will go to the winner of an online auction intended to raise money for its nonprofit, Club for the Future. That group seeks to inspire young people to pursue careers in science, technology, engineering, and math “and help invent the future of life in space.” Sealed online bidding opened last Wednesday, with the live online auction set for June 12. (Washington Post)