Stuck On the Bottom Line
Why, for nearly six decades, has American philanthropy failed to grow beyond a 2% share of the Gross Domestic Product (GDP)?
After all, decade after decade athletes break new records, horses run faster, crop yields bloom with increases and on and on. But since 1970 American philanthropic giving has stayed stuck; the percentage of GDP bumping up and down in a range from 1.6 -2.3%.
Why?
That’s the question veteran fundraising consultant Michael Rosen explores in What Will It Take to Dramatically Increase Philanthropy? appearing in the Spring issue of AFP’s Advancing Philanthropy.
Michael kicks off his piece by recalling the aspirations and failure of the much-vaunted Filer Commission of the early ‘70s and its wished-for goal reflected in Independent Sector’s slogan “Give Five” (5% of income and 5 hours a week in volunteer time).
Michael says not only must we understand why the sector failed to meet those Filer Commission goals, but also explore the changes in society and technology that have occurred in the 40 years since then. Changes as in a breakdown of public trust in institutions… methods of giving (social media, donor advised funds, charity websites) …and even the methods of tallying and reporting charitable giving.
Today, the Giving Institute is picking up the challenge to seek a sector-wide understanding and consensus on how to lift giving beyond the 2% of GDP plateau. Of course, that will take time.
Meanwhile, Michael suggests there are actions fundraisers can take now to increase giving. Here are some of his suggestions:
- Talk. There needs to be more serious conversation (not just “chit chat”) about whatwe can do collectively to explore and affect real change. Michael suggests that one place to initiate or participate in such conversations is “On Fundraising”—The Official Group of the Association of Fundraising Professionals on LinkedIn.
- Master the fundamentals. Stop chasing the Unicorn in search of the New-New Thing. Most fundraisers “would do better by simply focusing on mastering fundamental skills.”, says Michael and then asks: “Do you know how to write an effective rather than simply perfunctory thank-you letter? Do you know which words on your website’s “donate now” button will get greater results? Do you know which words will alienate rather than engage planned-giving prospects? Most nonprofit organizations would raise significantly more money if they simply managed the basics more effectively and consistently. “
- Retain more donors. By now a fundraisers’ focus on retention should be as natural as breathing. Sadly, it’s not. The donor retention rate among both high dollar and low dollar donors continues to hover in the mid-40% range.
There are 95+ posts in The Agitator on “retention.” Go to our Search Archives utility, type in “retention” and make your organization richer by increasing lifetime value.
- Create and grow a monthly donor program. ”A monthly donor program will turn small donors into midlevel donors, enhance donor retention, and lead to more major and planned gifts.” Go to Agitator Archives here
- Invest in major- and planned-gift fundraising. “Of all financial wealth in the country, only 1 percent is held in cash, reports philanthropy researcher Dr. Russell James. That means that truly large contributions are more likely to come from the 99 percent of other assets (e.g., stocks, personal property, real estate, retirement accounts, life insurance, etc.). Virtually any nonprofit organization can have major- and planned-giving efforts. If properly implemented, such efforts will yield great results.”
Are fundraisers less capable than athletes, farmers or horse trainers of breaking old records and advancing to new heights? I hope not.
What steps are you taking to help philanthropy grow?
Roger
P.S. This week Nick and I will explore a few of the approaches –some new, some old, some bizarre — fundraisers are employing to increase giving.
9 responses to “Stuck On the Bottom Line”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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Ah the really really BIG question. I was one of approximately 35 people attending Adrian Sargeant’s “Growing Philanthropy in the US” gathering (D.C. 2011). Pretty much the bottom line was: Not such good fundraising by we people.
Resulting themes from our conversations: (1) Enhancing the quality of donors relationships. (2) Developing public trust and confidence. (3) Identifying new audiences, channels, and forms of giving strong potential for growth. (4) Improving the quality of fundraising training and development.
I’m thinking the same holds true today. 1.8%- 2.1% of GDP since Giving USA started studying results. Oh my…….
Our primary job, as fundraising professionals, is to build the relationships that take our donors from first time gift…to lifetime. It’s a process. One that requires patience, commitment, and faith in the final outcome.
But so few organizations have the basics down. As a donor, I’ve made gifts to organizations with some fairly sophisticated digital fundraising…and never received so much as a thank you.
This article outlines precisely what we’ve been preaching AND teaching for the past 9 years or so. With comprehensive classes on monthly giving, planned giving, stewardship, and more. You can lead a horse to water but you can’t make it drink.
Once again a marvelous challenge to the sector as a whole by Roger…
I am still amazed when working with new perspective customers who have a full or part time professional fundraiser and I hear a long pause or see a puzzled look when I ask these three simple questions:
1. What qualifies as a major gift to your NPO?
2. What would it mean to achieve 1-2 more major gifts per quarter?
3. How many legacy or planned gifts are your planning on this year?
As you state above Roger these three questions, and more importantly, the answers should be top of mind for all of us engaged in any aspect of fundraising.
Great post, with great fundamentals from Michael.
And I’ve had the same experience as Jay.
I’m wondering… do you think folks are getting more exposure to the fundamentals these days due to the digital revolution? I would hope so. There’s a LOT of information available that’s readily accessible.
I can’t help but think that the hope for moving the 2% of GDP rests in our ability to drive a shift in giving habits. Away from the Annual Giving mindset (which we are responsible for creating/reinforcing) toward a new commitment to Sustained Giving.
First, I want to thank Roger for devoting this post to a summary of my article. I’m honored.
Second, I want to thank everyone who has commented. I appreciate you for being part of an important conversation. There are certainly things that are in the control of the nonprofit sector. However, there are also factors at play in the broader culture that have an affect on philanthropy. The best we will likely be able to do concerning those cultural factors is figure out how the nonprofit sector can adapt.
Third, I want to address Claire’s comment regarding the availability of information about fundraising fundamentals. Yes, there’s plenty of information out there (i.e., blogs, books, webinars, seminars, college courses, research, etc.). However, there are two problems: 1) People don’t read enough. We can lead a horse to water, but we can’t make him drink. 2) It’s not always easy to figure out what is good v. bad advice.
Thanks for a thought-provoking article. But I’m intrigued by this sentence: “There needs to be more serious conversation (not just “chit chat”) about what we can do collectively to explore and (e)ffect real change.” What’s the difference between “serious conversation” and “chit chat”? For example, do the comments following your article constitute the former or the latter? What can your readers (including me) do to encourage serious conversation and discourage chit chat?
For me, the difference between chit chat and serious conversation is action, with an equation chit-chat + action = serious conversation. For me, the forum doesn’t matter as much as does it spark an idea? Does it lead to a test? A program? Deeper study? etc.
For me, there’s a central challenge with breaking 2% – it has a different set of competitors. That is, if we become better fundraisers and get people to switch their allegiances from a different organization to ours, we’re doing our jobs well. But we are redistributing, not increasing, the pie.
To break 2%, our competitors are the other 98%. We have to figure out how to shift funds from the hedonic to the transcendent. No easy task, this.
So much could be said here:
1. Thanks to the Agitator for broaching this critical topic and positioning it as you have, i.e., others are moving the needle, why not nonprofits.
2. Thanks to Michael as well for his ongoing willingness to tackle tough topics, he’s a pro and a gem.
3. With regard to Simone’s comment “Ah the really really BIG question. I was one of approximately 35 people attending Adrian Sargeant’s “Growing Philanthropy in the US” gathering (D.C. 2011). Pretty much the bottom line was: Not such good fundraising by we people.” Might some volunteers with work with AFP to lead discussions using pieces such as the Growing Philanthropy Report (a book group of sorts, but using articles)?
4. With regard to knowing about fundamentals, I teach an online fundamentals course and have been for nearly four years. The reality is many people do not know the fundamentals or even where to look, including some individuals who have founded nonprofits (which as we know is quite easy to do in the U.S.).
As Michael suggests there is also the matter of curation of materials. Yes, there is plenty out there, but what is good what is not so good and how do the uninitiated know how to choose among them.
Great discussion!