The nonprofit sector has an unfortunate secret. While not a well-kept secret, it is nevertheless something that receives too little attention. So, let’s take a moment to shine a spotlight on the issue.
Overall, American philanthropy has remained at approximately two percent of Gross Domestic Product for over six decades, with the percentage bouncing between 1.6 and 2.3 percent, according to Giving USA. Every year when the amount of money donated to charities goes up, the nonprofit sector pats itself on the back even though it is merely keeping pace with GDP.
Despite the massive growth in the number of nonprofit organizations, the significant increase in availability of educational materials, the production of helpful research, the professionalization of the fundraising field, and the rise of new technologies, the nonprofit sector has failed to budge philanthropy relative to GDP.
Now, as a committee convened by The Giving Institute begins to consider ways to grow philanthropy beyond the two-percent-of-GDP mark, I’ve written an article for the Association of Fundraising Professionals magazine, Advancing Philanthropy, that explores the challenge: “What Will It Take to Dramatically Increase Philanthropy?”
To answer that question, we need to understand how and why past attempts to do so have come up short, such as the insightful work of the Commission on Private Philanthropy and Public Needs in the 1970s.
We also need to understand the broad societal cultural factors that are affecting philanthropy so that we can develop strategies for inspiring cultural change and/or adapt to factors beyond our control (e.g., decline in religious affiliation, erosion of social capital, drop in volunteerism, etc.). Furthermore, we need to understand the cultural issues within the nonprofit sector that block change and, ultimately, greater success.
We also must set a realistic, consensus goal for moving the philanthropic needle. While that goal should be bold, it should also be based on something other than a dream. A credible target mark will give us all something to shoot for.
As Henry David Thoreau once wrote:
In the long-run, [people] hit only what they aim at.”
While it will likely take at least a couple of years for The Giving Institute’s commission to do its work, you and I do not need to wait. There are things we can do now to begin to move closer to a more vital philanthropic mark, something greater than two percent of GDP:
1. Talk. This one is painless. It doesn’t cost anything. We’re doing it right now. We need to have more conversations among nonprofit managers, fundraising professionals, researchers, and philanthropists about what we can do to grow giving. By asking more questions, exploring the issues, kicking around ideas, we just might be able to begin to make greater progress. I encourage you to join the conversation here with a comment below. You can also join the nearly 24,000 people who use “On Fundraising — The Official Group of the Association of Fundraising Professionals” on LinkedIn.
2. Master the Fundamentals. I’m a huge fan of innovation. It’s even part of my company’s name, ML Innovations. However, we really don’t need novel solutions to increase philanthropy. For many nonprofits, simply mastering the fundamentals will lead to more and larger donations. By the way, this is true for nonprofits of any size.
3. Retain More Donors. Previously, I’ve reported on how pitifully low donor-retention rates are. You can search my site for “retention” to read more on the subject. For now, I’ll just point out that happy, long-term donors make vastly superior major and planned gift prospects compared with one-time donors who flee.
4. Create and Grow a Monthly Donor Program. Again, you can search my blog to find great information about “monthly donor” programs. Just realize that a monthly donor program is a powerful way to turn small donors into mid-level donors, enhance donor retention, and identify more major and planned giving prospects. Electronic, easy to manage monthly giving systems have been around since the 1980s. There is no excuse for not having a robust monthly giving program.
5. Invest in Major and Planned Gift Fundraising. Truly large contributions are more likely to come in the form of stocks, personal property, real estate, retirement accounts, life insurance, and other assets rather than from someone’s checkbook. However, to get such gifts, you actually need to ask for them as part of a proper, strategic program. Checkout my book, Donor-Centered Planned Gift, Marketing, to see how easy it is to implement or enhance a planned-giving program.
One of the reasons we do the work we do is to make the world a better place. In 2016, overall philanthropy totaled $390.05 billion (Giving USA). What if we could have doubled that? What if we could have raised $780.1 billion instead? That would have been just 4.2 percent of GDP, that’s not a crazy percentage. Now, imagine how many lives could have been saved or enriched as a result of the additional charitable giving.
What’s stopping us from increasing philanthropy relative to GDP? What can we do to increase philanthropy? What are you doing to dramatically increase giving to your organization?
Let’s keep the conversation going. Read my article in Advancing Philanthropy magazine. Read Roger Craver’s summary of my article for The Agitator along with the comments it received. Be sure to share your thoughts with a comment below.
That’s what Michael Rosen says… What do you say?
