Fundraising Update

Welcome to Fundraising Update. This week, the latest “Giving USA” numbers and what they tell us about 2021. Plus, MacKenzie Scott gives another $2.7 billion to small nonprofits, and a Houston Ballet charity ball offers a blueprint for hybrid fundraising events.

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.

Giving in 2020

If you’re a regular reader of this newsletter, you know that the story of philanthropic giving in 2020 was as complex as the year itself. A global pandemic upturned daily life, and the economic fallout has been prolonged and profoundly uneven. Renewed attention to civil rights and racial justice also led to an outpouring of generosity across cause areas.

Over all, 2020 was a banner year for charitable giving in the United States, which rose to $471.4 billion, according to estimates from the latest “Giving USA” report. That’s a 3.8 percent increase over estimated giving in 2019.

My colleague Michael Theis and I spent the last week digging into the data to bring you the story behind the numbers. In the face of economic upheaval, it was uncertain how charitable giving would be affected and whether past crises would provide a road map. In the last recession, in 2008 and 2009, giving declined significantly as the economy contracted. The fact that giving grew in a year with a recession is notable.

Early fears that charitable assets would be hit hard by a declining stock market eased as the year went on. Despite a plunge in March, markets rebounded rapidly. By the end of the year, the S&P 500 had gained roughly 15 percent.

Many Americans were able to hold onto their jobs and had resources to give; many wealthy donors became wealthier. But others found themselves unemployed and couldn’t make charitable contributions.

“For a segment of the population, personal savings were up, incomes were stable, but the economic picture was very, very turbulent,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy at Indiana University, which produces the annual “Giving USA” report. “There was a lot of generosity, and those that had the means did step up. But not everybody was in a position to give.”

Here are some quick takeaways from the report:

Giving by individuals increased, albeit modestly. Individual giving increased just 1 percent over 2019, adjusting for inflation. If you take MacKenzie Scott’s nearly $6 billion in charitable donations out of the equation, individual giving would have decreased by nearly 0.8 percent. It represented nearly 69 percent of all philanthropy in 2020. Small-dollar donors had new tax incentives to give in 2020, thanks to the universal charitable deduction, but it’s still unclear how much giving that policy inspired.

Corporate giving declined, especially among industries hit hard by the pandemic. Giving by corporations declined 7.3 percent in 2020. Corporate giving is highly responsive to changes in businesses’ pre-tax profits and gross domestic product, both of which declined last year. Some of the decline can be attributed to the economy’s mixed impact on corporations, Osili said. Transportation, retail, and hospitality were hard hit while technology and financial services had extraordinary years.

In addition, many of the biggest corporate gifts that drew headlines in 2020 were multiyear commitments and pledges that included impact investing or programs like support for small businesses, which are not captured by “Giving USA.” Some employee giving programs also took a hit as traditional in-person fundraising and volunteering activities were unable to continue.

Giving from foundations increased significantly. Giving from foundations surged 15.6 percent. The strong performance of the stock market in the second half of the year had a big influence on foundation payout rates. Last year also brought public pressure campaigns urging foundations to increase payout, give unrestricted support, and loosen reporting requirements. Many foundations committed to making those changes.

“Foundations gave more last year because of the circumstances. They were not sticking to the required payout limits. They were looking at the needs of their communities and what it would take to meet their mission,” Kathleen Enright, CEO of the Council on Foundations, told Michael. “They were rising to those occasions.”

Bequests increased, showing an accelerating demographic shift. Giving by bequest increased 9 percent in 2020. This category of giving is historically volatile. While some of this was because of the pandemic’s deadly toll, changing generational demographics were the biggest driver, said Russell James, a professor of charitable financial planning at Texas Tech University. Many fundraisers also charted a greater interest in planned giving from their donors during the pandemic, which should pay off in the future. What’s more, compared with previous generations, baby boomers are more likely to be childless, making them more likely to give to charity.

Support for education causes grew, bolstered by more big gifts for health and racial equity. During the last recession, giving to education took a big hit. That wasn’t the case this time around, as giving to education charities increased nearly 7.7 percent in 2020 to $71.3 billion. That growth was boosted by the strong year-end stock market as well as Covid-19 relief, racial-justice giving, and MacKenzie Scott’s contributions to historically black colleges and universities, tribal colleges, Hispanic-serving institutions, and community colleges.

Outside of the education sector, many health charities had a more challenging year. Giving to health charities declined 4.2 percent. Some of this can be attributed to the disruption of many in-person walks, runs, and other events that disease-related health organizations host as major fundraising events.

Support increased for many commercial donor-advised funds and pooled community funds. Giving to the broadly defined “public society benefit” category of charities increased 14.3 percent. This grab bag category includes most commercially sponsored donor-advised funds, United Ways, Jewish federations, civil-rights groups, and think tanks. Several of the largest donor-advised funds reported big increases in receipts, in part because of the rebound of the stock market. Other public society benefit groups more directly involved in relief efforts said donors at all levels gave eagerly to address needs in their communities.

Donors stepped up to support human-service groups. Perhaps unsurprisingly in a year dominated by the pandemic’s many effects, donations to human-service charities increased 8.4 percent. Many groups charted a staggering increase in new donors. Looking ahead, the challenge for fundraisers will be to retain these supporters as needs continue.

“It’s our job to make sure that the general population really understands that we don’t just get to turn a light switch and go back to normal, especially for our most vulnerable populations,” Karen Leies, vice president of resource development at the Community FoodBank of New Jersey, told me. “It’s going to be a long, long road.”

There’s a lot more to unpack. Read the full story for more expert analysis and insight from your fundraising peers.

Hear From You

Are there ways in which your organization’s 2020 fundraising diverged from the trends captured in the “Giving USA” report? Drop me a line. I’d love to hear from you.

Need to Know

— MacKenzie Scott on the leaders of the nonprofits she supports

The trailblazing philanthropist just gave another round of billions to charity. She announced Tuesday that her most recent gifts total more than $2.7 billion for 286 nonprofits, most with missions that have historically received little from big donors.

She focused her latest giving on two- and four-year colleges and universities with a record of successfully educating students who come from low-income and marginalized backgrounds and to religious and other nonprofits that are focused on working with organizations of other faiths and ethnic backgrounds to bridge divides.

She also gave to small arts and culture groups and said in her announcement that she and her husband, Dan Jewett, chose to prioritize this round of giving on charities that focus on helping local organizations that work to get nearby people involved in their missions and those that empower women and girls. As she did last year, Scott also made it a priority to support groups that are led by people of color.

In a Medium post announcing the contributions, Scott wrote that the charities that receive her gifts still need more support from many other donors. She also criticized the news media for focusing on the huge amounts of money wealthy philanthropists like her give away — rather than on people leading nonprofits who are working to change systemic inequality and help those most in need.

To learn more about how women from different backgrounds are changing the giving landscape, be sure to sign up for our free online briefing on Tuesday, June 29, at 3 p.m. Eastern. Chronicle senior reporter Maria Di Mento will host a conversation with a major donor, who is also a foundation executive, and a nonprofit leader who is a frontline fundraiser. They’ll examine the power and the potential for change that women donors present in 2021 and beyond.

Plus:

• In an opinion article, Christina Asquith argues that nonprofits need to embrace transparency, even if the Supreme Court rules to protect donor privacy. Asquith is COO of Hack Club, a network of 500 student-led high-school computer coding clubs that has made all its financial transactions publicly available online — from a $500,000 gift from Elon Musk to a $22 office fan purchased from Lowe’s. So far, 36 student-run nonprofits have made their finances public using the Hack Club’s technology.

  “Greater financial transparency, made increasingly possible by technological innovation and new social norms, is becoming a hallmark virtue of the 21st century for young people raised on social media and smartphones,” Asquith writes. “Their vision for a more transparent world will become the expectation in the years to come — regardless of what the Supreme Court has to say on the matter.”

Case Study: Hybrid Event

As more people across the country receive Covid-19 vaccines, nonprofit leaders are starting to consider what a cautious return to in-person fundraising events might look like. My colleague Maria Di Mento got the scoop on the Houston Ballet’s successful 2021 spring ball, which offers a blueprint for charities that want to experiment with hybrid events that include a combination of socially distanced in-person gatherings and virtual programming.

Prepandemic, the organization’s spring ball was one of its biggest fundraising events, Maria writes. The February 2020 gala celebrating the ballet company’s 50th anniversary raised $1.8 million, the most it’s ever raised at a charity ball. The group’s fundraising team knew the Houston Ballet Ball Home Edition couldn’t come close to raising that amount this year, but the event found success in other ways. The March 6 program included micro parties in private residences in addition to a lively virtual program and raised nearly $850,000, much more than the $500,000 the group’s fundraisers were hoping for.

Among the key ingredients for a safe and successful program: Invite only a small group of people to the in-person portion, provide donors who host small gatherings with planning and other support, and make sure the videotaped content has the feel and energy of a live event. Flexibility is also critical.

“We knew we had to have a flexible model because we really didn’t know what we were dealing with every day and every month,” Angie Lane, the organization’s chief development officer, told Maria. “We were not sure what our longtime patrons would be comfortable with, what protocols our city would require, or what the impact of vaccines might be.”

Read more about the details that made this event work.

What We’re Reading

Sales of Girl Scout cookies cratered this year, leaving the organization with 15 million unsold boxes and, critics say, laying bare some systemic problems. Amid on-and-off pandemic closures, many Girl Scouts abandoned their table sales, and alternatives such as drive-through sales and Grubhub delivery did not make up the difference. Some local council leaders say some troops ordered too many boxes in light of steadily falling membership, and they blame skewed projections on a new technology platform adopted by the national office. In addition, some troops boycotted the sale this year over concerns about sourcing of the palm oil that goes into the cookies; a spokeswoman said the national organization is working with a nonprofit watchdog to monitor palm oil suppliers. The national organization will not say how big the revenue shortfall will be, but local councils “depend on the cookie sales to fund programming, travel, camps, and other activities.” (Associated Press)

Plus:

• 4 New Revelations on How People Give to Crowdfunding Campaigns (Fast Company)
• Bidder Pays $28 Million in Charity Auction to Book Space Flight With Jeff Bezos (Washington Post)