The Vanishing American Donor
The share of American households contributing to charities has dropped to the lowest level in nearly 20 years.
As reported by the Associated Press, a study published by the Lilly Family School of Philanthropy finds that from 2000, when 66 percent of U.S. households donated to a charitable organization, the number dropped to 49.6 percent in 2018, the latest year with comprehensive figures from the sample of 9,000 households studied.
Those with a glass-half-full mindset may believe that the spurt of pandemic giving will reverse that trend. We’ll have to wait a while to see whether that’s the case.
Frankly, I doubt that we’ll see this trend reverse merely because of the pandemic. This trend of decline in the number of American donors has been occurring year after year for the 15 years we’ve been publishing The Agitator.
There are a variety of reasons. Take your pick or combine any number of them. Declining levels of trust in institutions, including nonprofits. Financial pressures in all but upper income families (8 out of 10 households with more than $200,000 of wealth gave in 2018; fewer than four in 10 households with wealth less than $50,000 made donations. Failure of charities to effectively communicate their message and rising competition –a growing number of charities chasing fewer and fewer donors.
Whatever the reason, the problem trend is real and on a predictably steady decline. I note this not to spoil your day, but to alert you to the existential importance of paying serious –and by serious, I mean fresh and deliberate attention to making the most of donors you already have and the precious few new donors you acquire.
It’s clear that conventional fundraising approaches are faltering. Mailing more and more topped off with deluges of digital—the sick symptoms of the ‘more is better’ syndrome simply won’t cut it.
And it’s equally clear that many groups either don’t have—or won’t discipline themselves to acquire– the skills, patience, or funds to tackle the problem. T
So, rather than deal with issues of retention, donor experience, donor identity by applying new and proven techniques many fundraisers simply abandon the bottom of the pyramid and opt to concentrate their resources on major gifts.
The decline in annual giving in hundreds of colleges and universities…the neglect in opening up new and diverse donor markets…and the rising aberration in donor pyramids (i.e., 15% of donors giving 85% of the money) are evidence of failure to deal with this trend.
I understand the pressures and attractiveness of avoiding the hard work of dealing effectively with a base of smaller gift donors. But abandoning them and focusing on the big gifts is a dangerous –and quite temporary–solution. A heightened focus on major donors may save some work and financial pain right now, but in the end the organizations is likely to be faced with the problem of deep dependence on a small number of donors.
It’s personally ironic that 50 years ago when we founded Common Cause, one of the principal motivators was to avoid what was then a big money trap. In those days social change organizations were largely funded by foundations and labor unions. The idea of a democratically based organization fueled by hundreds of thousands of smaller gift donors was new.
Today, when it comes to the ideal of an organization little dependent on big money history seems to be reversing itself.
This is nuts.
Neglect of small gift and mid-value donors is the equivalent of salting the earth for future fundraising. Sure, it may be immediately cost effective to neglect the millennials or communities representing many diversities who don’t give much today, but what about 25 years from now when times (and wealth and society) have changed . A time when your organization approaches them for that special gift and these folks who’ve been neglected say, “Where have you been?”
To meet the challenges reflected in the declining trend in the number of donors, it’s essential we all learn to take the steps necessary to retain those donors we have and properly nurture them for today, next year and two decades from now.
This means focusing and investing four key programs:
- Donor Retention
- Mid-Value Programs
- Monthly Giving
- Bequest Giving
We’ll return with posts on each beginning next week.
Don’t tell me the distant future is someone else’s problem. Our duty is to not only harvest this year’s yield, but we also have a duty to plant and nurture the donor orchard for the future.
Roger
9 responses to “The Vanishing American Donor”
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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Roger, maybe I missed it. In my opinion, the decline which I, too, have seen for many years is because by whatever means of communicating we do not report accomplishment or achievement. I am not talking about more beds for homeless or accessible education or healthcare. Over the years, I have grown to accept that philanthropy is to improve the role of citizens in their community. We report activity, not impact.
Of course, you know I am a large contributor financially to fundraising education and applied research. Very disappointing that after billions of dollars have been raised for improvement in this sector, frankly, we can argue at the margins, but over all philanthropy has been flat when compared to growth in the for profit side.
You certainly hit the nail on the head, that our trade has not adopted the uniqueness and means to improve grassroots and our work on creative methods for large gifts has also been ignored. With the risk of being attacked, I wonder whether it is just easier to do it the way we always have.
I don’t know the answer to this question, perhaps you do, combining charitable giving with political giving whether there is this same trend. My gut makes me think the overlap of these two gifts of what I refer to as the “discretionary dollar” distribution may not have receded when political and charitable are combined.
Roger, I love this piece so much I want to hug it. Thank you. (Consider yourself hugged, too. Covid-safe, even!)
It’s not easy work to build a wider base of donors giving smaller dollars. It takes, as you say, time and skill. It takes looking beyond the appeal to the whole of the donor’s relationship with the work. And you have to keep learning – none of us get to decide we already know it all.
But when you do this, you really do build for the future. AND… you help philanthropy to be everyone’s joy and responsibility. I’d bet lots of people with little means think their $5 doesn’t matter, so why bother. But that gift would be a vote of interest and maybe commitment to your organization’s work. It does matter.
Thank you!
Roger, The decline you report should have every fundraiser, worthy of the name, trembling in their boots (or branded trainers). You are also absolutely right about the idiocy of ignoring small, irregular donations and inconsistent givers.
Similarly Bob Hartsock, who has done more than most to try and improve fundraising practice, is right to identify poor grass roots communications and lack of emphasis on our impact.
I fear much the same is happening in the UK. My own research (I hope soon to be published) shows that regular givers – who tend to be better looked after – are giving more, whilst occasional givers are turning off. I’ve identified that the relationships (or lack of them) between fundraisers and givers are at the heart of this problem. The solution is rather more complex and I think needs much more joined up thinking from the fundraising communities. It does include however getting the message out early in life. (As Ignatius Loyola is reported to have said, “give me the child until he is seven, I will show you the man” Though Clutz suggests that Aristotle got there first).
In short, fundraisers need to stop chasing market share and start growing the pot. That of course requires a long-term investment and mindset. A bit like tackling climate change.
Hi Peter,
Apologies for the delay in response, but as always you’re spot on. As you note “Growing the pot” should be a key element of fundraising practice. Unfortunately, it seldom is.
Good to hear from you and glad to see your concern for the trade hasn’t dimmed a bit.
Roger
Brava Roger! Today’s Agitator should be required reading for every Non Profit CDO and every NP Board Development Committee. Major gifts are an important piece of the fundraising puzzle, but just one piece. Thank you for this. Stay well.
Well said. I appreciate the counter-intuitive point about the importance of stewardship of so-called small donors.
Like you, I have been aware of this trend since the beginning of my career. Here is what I am wondering recently: Are gifts and donations from working class people going undetected because they are happening in mechanisms not tracked by the studies? I am thinking: Patreon, eventbrite, Facebook, and, yes, cash. What do you think? Do you think the people who study this control for such things? I don’t have much free time nowadays, otherwise I would link up with a researcher and study this myself.
Kevin, your questions are good ones, but frankly the answers will not substantially change the result. The trend has been too long lasting. I am known to be among the first to question methodology. I would encourage you to accept the trend, ignore the specifics, and consider that for 30 years we have sunk billions of dollars into philanthropic research and study with no measurable improvement in the philanthropic actions of Americans. The mere fact that only you and I have offered a comment shows that nonprofit executives are focused of course on meeting their own goals, not the bigger picture. Hartsook Institutes has created a “think tank” gathering of ten of the brightest young fundraising creative success personnel to study and recommend changes in our philanthropic methods and models. Both of which are out of date.
[…] we recently warned, there’s a real danger in focusing short-term and too much attention on the largest gift donors […]
Bob is always right on the money and Roger delivers a great point here, I do not ignore any of the donors I work with. The 5 dollar donors get the same love and attention major donors get. Though small amount donors can be surprised if we give them too much attention and I have certainly faced that, but still it never fails to thank people and get them recognized. Yes, I spend more time talking to major and mid-level donors on virtual and in-person visits, but we still make time to thank our monthly donors with the same level of gratitude. Sometimes, management does not see this wisdom and asks their fundraisers to focus on the “low-hanging fruit” but that means all the amazing people will be overlooked because other charities are also chasing the same donor. We often make a point of talking or highlighting our small amount donors to inspire others to stop feeling small. Once again, a great article!