Are Donors Really Disappearing?

Are donors disappearing? We'll go over the latest donor trends that you need to know about for your nonprofit organization.
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Ask a handful of nonprofits for their thoughts on direct mail and you are likely to hear one of the following responses:


1. It’s ancient and expensive. No one does that anymore. Individual giving is all online now.
2. It’s the backbone of our program. It anchors all other fundraising we do.
3. We would love to have a direct mail program; we just don’t have the capacity to get anything like that up and running.

Anecdotally, you will find little consensus among those in the field as to precisely how effective direct mail is as a philanthropic strategy. A recent special report from The Chronicle of Philanthropy, however, charges that direct mail is part of a critical and overlooked failing of modern philanthropy: that individual donors are disappearing.

But is that true?

In her article titled Where are my donors? Nicole Wallace notes that, “Even as Giving USA has reported record charitable fundraising three years in a row, the share of Americans who donate to charity is falling. In 2014, the latest year for which data is available, 56 percent of American households made a charitable donation. In 2000, that number was 10 percentage points higher.”


 


That the collective donor pool might be shrinking is alarming for several reasons. First, it puts added pressure on select few donors who are already giving big to continue doing so, and to give even more.

 

An analysis of IRS tax data completed by the Chronicle showed a 22% increase in giving from households earning $200,000 or more from the early 2000s to today. Blackbaud Inc. recently found that only one percent of households accounted for a staggering 49 percent of giving to the 1,042 nonprofits they surveyed.

This consolidation of wealth also means a consolidation of ideas, power, and influence. It curtails authentic relationship-building and drives short-sighted fundraising policies. When nonprofits focus only on major gifts (donations that tend to come with more strings attached), they sacrifice unrestricted revenue. This can be damaging to programs, services, and even mission-fulfillment. 

 

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But are donors really disappearing? No, my friends. Donors are not the Post Office or land-line telephones or my patience after riding in a car for 10 hours with two toddlers. Donors are actual people, and they are not disappearing. Their passion for your mission is still there; the will to support your organization is still there. The funds to do so? Now that’s something worth investigating.

Consider the reasons why the number of donors is decreasing:

1. Income Inequality: Currently, the wealthiest one percent of Americans hold approximately 40 percent of the nation’s wealth. Conversely, the lower 90 percent own nearly 75% of the the country’s debt. And while the New York Times reports that the richest one percent of the United States holds more wealth than the entire bottom 90 percent, The Washington Post recently confirmed the continued, accelerated shrinking of our once-strong middle class.

In his working paper, “The Rate of Return on Everything,” Oscar Jorda, an economist at the Federal Reserve Bank of San Francisco, expertly demonstrates for The Washington Post how wealth (returns on what you already own) accumulates much faster than either an economy or a person relying on wages could ever keep up. Simply put, middle-class folks (read: supporting and intermediate donors) aren’t disappearing; they are losing the discretionary income needed to support philanthropy.

2. Race and Gender: While the Chronicle points out that “generational differences” may contribute to the loss of donors, they fall woefully short of fully engaging on the topic of race and gender in philanthropy. It is true that by population statistics alone, we may never have as many people roaming the U.S. again as during the time of the Baby Boomers. Yes, that statistically shrinks the donor pool (way to bum everyone out, Chronicle).

But mortality rates barely scratch the surface of generational differences around giving, and the philanthropic sector has for too long neglected the needs of donors of color and women. By 2045, people of color will outnumber white people in America (Brookings). By 2020, the majority of people under the age of 18 will be girls and boys of color; by 2027, the majority of people ages 18-29 will be of color; by 2033, ages 30-39; by 2041, ages 40-49; by 2050, ages 50-59.

As women and people of color, two marginalized groups typically at a greater economic disadvantage than their white, male counterparts, become greater in numbers and their wages continue to stagnate (as is expressed in #1), would it not stand to reason that this could be a significant contributor to the fewer number of donors able to give? Again, these are not donors who have disappeared; these are people who have been ignored by traditional philanthropy.

Outside of capacity, the Chronicle also notes that the donor pool could be decreasing due to the “new philanthropy” available to folks, like crowdfunding, and the decline of religious affiliation. I just want to take a moment to debunk those ideas entirely. 

As for “new philanthropy,” crowdfunding and social fundraising account for a microscopic percentage of the many billions being raised every year in the U.S. Additionally, these types of fundraising vehicles still create donors, a great number of donors, actually, giving at smaller levels. And cause marketing dollars do not supplement philanthropic gifts. This is a silly idea. You are not losing donors to Carol’s Facebook birthday fundraiser or pink brooms in October. If anything, these tools bring more new donors to the collective pool; not less.

Secondly, the research that the Chronicle references as around how religious affiliation spurns giving is actually their research. While it’s true that the percentage of Americans who attend worship service or claim religious affiliation is on the decline, this doesn’t correlate to a decrease in the overall number of donors (there is no research to support correlation between the decline in religious affiliation and giving, the number of donors, the types of philanthropies losing support, etc). Religion and philanthropy is a whole other topic (one that I spent a great deal of time on writing my dissertation) and it’s a shame that the Chronicle threw out this “potential explanation” in such a cavalier manner.

So, why does any of this matter? While the strategy will look different for each organization, the further concentration of wealth in our country should be considered in every nonprofit’s long-term fund development plan. Do you focus on major gifts from a select few donors at the risk of alienating other relationships? What are the long-term consequences of a “major gifts-only” strategy? What might you sacrifice now if you continue to engage a donor base whose wealth is unlikely to significantly grow?

One thing is certain: donors are not disappearing; rather, they are evolving within new economic norms. As we enter a new age of philanthropy, nonprofits must arm their fund development strategies with the vision, strategy, and flexibility to evolve alongside them.

Click here to read the full Chronicle of Philanthropy story. A subscription may be required to view some Chronicle content.

Click here to read The Washington Post’s article, “Massive new data set suggests economic equality is about to get even worse.”

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