Warning Signs You Need to Know About

While the nonprofit sector continues to raise massive amounts of money, danger lies ahead for fundraising professionals as the coronavirus health crisis leads us further into an economic calamity.

As the COVID-19 pandemic gained traction, individuals, corporations, and foundations have responded with robust giving. For example, individual giving revenue through direct mail, processed by Merkle RMG, has increased 5.8 percent year-over-year even while the volume of donations dropped by 15.5 percent, according to Merkle RMG’s Impact Report, COVID-19: How the Coronavirus Pandemic is Impacting Direct Mail Fundraising (transactions through April 19, 2020).

The initial philanthropic response to the pandemic is not surprising for those who have experienced major challenges in the past. Giving lags changes in economic conditions. For instance, during the Great Recession (2007-09), we also saw a similar philanthropic pattern with revenue initially increasing while the number of donors declined. The following graph from Target Analytics, a Blackbaud company, illustrates the point:

Now, let me just mention that no one has a crystal ball or time machine. Therefore, no one, including me, can precisely predict what will happen and when it will happen. Nevertheless, we do know that during past crises, we saw that charitable giving fell after an initial surge.

The overall economy has a profound effect on philanthropic giving. We know that overall philanthropy correlates with Gross Domestic Product at the rate of about two percent. Furthermore, historical data shows that individual giving correlates with personal income at the rate of roughly two percent. In other words, when the economy is strong, giving will be strong; when the economy falters, giving will slow.

Because the coronavirus pandemic has caused a major global economic disruption, we can anticipate that this will eventually have a negative effect on philanthropic giving. Consider these warning signs:

• The Congressional Budget Office predicts a 5.6 percent drop for 2020 GDP.
• The unemployment rate is expected to climb to 14 percent.
• Goldman Sachs foresees that the global economic impact of the pandemic will be four times worse than the Great Recession.
• The US National Debt is expected to exceed 100 percent of GDP by year-end. The debt has now surpassed $24.7 trillion, which is $74,895 per citizen (as of April 27).

As corporations see profits eroded, as foundations see investments decimated, as individuals see personal income slashed, charitable giving will likely decrease. However, there are some mitigating factors in play:

Raise More Money by Understanding Generational Differences

When you understand the behaviors and motivations of different generations, you’ll be in a better position to build stronger relationships and, ultimately, raise more money. That’s the belief behind the Blackbaud Institute’s new report, The Next Generation of American Giving. Catherine LaCour, Chief Marketing Officer at Blackbaud and Senior Advisor to the Blackbaud Institute, writes:

[T]hese insights serve the core purpose of helping you—the social changemakers—build bridges to those who care most about your causes. Use this information to inform your outreach, but know that the relationships you cultivate are still the key. With this deeper understanding of your supporters and the tools they use, there is no limit to the positive change you can achieve.”

The report identifies eight key findings:

1. Fewer Americans are Giving. Blackbaud is not alone in uncovering this disturbing trend. Among every generational cohort, with the exception of Baby Boomers, there is a decline since 2013 in the percentage of cohort members who say they give to charity. During the same period, total giving has nevertheless increased because those contributing are donating more.

 

2. The Greatest Generation is in Its Sunset Years. Those born prior to 1946 are declining in number. That’s why they are no longer the dominate philanthropic group that they were in 2010. However, they remain a vitally important philanthropic cohort. These individuals give to more charities and give more money than any other generational group.

 

3. Baby Boomers Remains the Most Generous Generation. Boomers donated 41 percent of all money contributed last year. By contrast, Gen X accounted for 23 percent, Matures 20 percent, Millennials 14 percent, and Gen Z 2 percent.

 

4. Generation X is On Deck (and there are way more Gen-Xers than you think). While there are far fewer Gen-Xers than Boomers (65.6 million v. 74.1 million), their population is almost as large as the Millennial generation (67 million). Furthermore, Gen-Xers are approaching the life stage known to be the prime giving years. Given the population size of this cohort and their approaching life stage, they will likely continue to be a growing philanthropic force.

4 Easy Fixes that Will Supercharge Your Online Fundraising

Online fundraising brings in a significant and growing amount of support for nonprofit organizations. The Blackbaud Institute’s recently released Charitable Giving Report: How Fundraising Performed in 2017 reveals that 7.6 percent of overall fundraising revenue, excluding grants, was raised online in 2017 representing a new record high.

While the nonprofit sector’s online fundraising performance is noteworthy, the results can be much better. Many things go into a successful online fundraising effort. However, some professionals have found that they can supercharge online charitable giving by making some easy fixes.

Here are just four ways you can enhance your “Donate” button or tab to get vastly superior results:

1.  Express a Value Proposition

Online for Life, now known as the Human Coalition, looked at how a donate tab’s value proposition affects giving. This pro-life organization already had a donate tab that read “Save a Baby,” which became the control in a test to find a better tab label. The organization test a new tab reading “Save a Child” and another stating “Give.”

The results, reported by NextAfter, uncovered a less effective and a more effective approach. The “Give” tab resulted in 30.5 percent less revenue while the “Save a Child” tab resulted in increased revenue of 62.2 percent compared to the control.

NextAfter believes, “This simple change reminded donors of the long-term impact of their gift. We want to save a baby from abortion because of who they will become over time.” In other words, the organization took its value proposition and made the impact more long term. Asking people to “Give” is abstract while asking them to “Save a Child” is concrete.

Building a better button or tab that tells donors the impact their gift will have, rather than simply asking them to give, can raise substantially more money.

2.  Find and Emphasize the Right Call to Action

Jews for Jesus already had a successful online fundraising effort. People could click the “Donate” tab on the navigation bar at the top of each website page. Nevertheless, the organization tested different options to find an even more effective approach.

The control was the existing design with a “Donate” tab. The test involved adding a donation button in the upper right corner of the website header appearing on multiple pages, not just the Home page. One button read “Make my Gift” while the other read “Donate Today!” The buttons were placed in addition to the existing tab.

The “Make my Gift” button resulted in a 306.1 percent increase in total revenue, according to NextAfter.

NextAfter found that the “Donate Today!” button ended up decreasing the amount of traffic being driven to the donation page by 9.6 percent. The group speculates that “by putting the call to action in the context of the donor ‘Make my Gift’ instead of a command ‘Donate Today!,’ the donors were able to align better [to the requested] action and were more likely to click.”

As the Jews for Jesus learned, it’s important to find the right call to action. It’s also important to effectively emphasize that call to action.

3.  Make Finding the Donate Button or Tab Easy

The Dallas Theological Seminary had a “Donate” tab on the navigation bar at the top of its web page. To encourage more contributions, the Seminary tested highlighting the tab in purple, the organization’s signature color. The Seminary also tested a purple highlighted tab reading “Support DTS.”

NextAfter discovered that the purple-highlighted “Donate” tab was the most effective, generating 2,682.3 percent more revenue!

While both of the purple tabs were able to increase revenue significantly, NextAfter believes “the ‘Donate’ tab provided the additional clarity necessary to increase not only traffic to the page but also the subsequent donor conversion. We need to make it easy for donors to find the path we want them to take by being both clear in the messaging and visually emphasizing the path we want them to take.”

Make it easy for website visitors to support your organization by using a prominent, static donate button that can be easily found on every page. The best location for the button is in the upper right-hand corner of the page header. David Hartstein, at Wired Impact, suggests:

Is Online #Fundraising Really Worth Your Time?

For years, nonprofit organizations have invested significant amounts of time and money to build online fundraising efforts that have steadily evolved to embrace more and more sophisticated technologies and methods. But, are those efforts really worthwhile?

The Blackbaud Institute’s recently released Charitable Giving Report: How Fundraising Performed in 2017 can help us answer that question.

The news about overall philanthropy in 2017 is good. Blackbaud reports:

A convergence of economic, political, technological, and philanthropic trends helped boost giving in 2017. The 4.1% increase in giving during 2017 was a substantial jump compared to relatively flat growth in 2016. A strong stock market, spikes in giving in response to political issues or disasters, and the continued shift to digital giving all influenced giving in 2017. This growth was also fueled by a 5.1% increase in giving during the final three months of 2017. The potential implications of new U.S. tax laws may have contributed to this late surge in charitable giving.”

The news about online giving is also good. Blackbaud has found:

• 7.6% of overall fundraising revenue, excluding grants, was raised online representing a new record high.
• Online giving grew 12.1% in 2017 compared to 2016.
• 21% of online transactions were made using a mobile device in 2017.
• The average online donation is $132.
• 20.1% of online giving happened in December.

Online is an important source of donations for nonprofit organizations of every size as the following chart illustrates:

3 Powerful Ways to Get Your Monthly Donors to Give More

A few weeks ago, I published the post “How to Get Last Year’s Donors to Give More this Year.” Guest blogger Joe Garecht shared some great advice for increasing giving. However, the post did not specifically address the issue of monthly giving. That led to a reader comment.

Larry Little, President of Guardian Angel Basset Rescue, raised some important questions:

Our revenues are in the $300k range but approximately 30% of that comes through our monthly giving program. My question is about asking monthly donors to increase their amounts. How often should that be done? And should you segment your list and ask that segment every 18 months?”

First, I want to congratulate Little for having a robust monthly-giving program. Well done!

Second, I thank Little for inspiring this week’s post. While I could have given him a quick, brief response, I realized the topic deserves more attention and that it would likely be of interest to many of my readers. So, I invited expert Erica Waasdorp, President of A Direct Solution and author of the best-selling book Monthly Giving: The Sleeping Giant, to share her wisdom to help us better understand how to inspire greater giving from monthly supporters. I thank her for her insights:

 

It’s wonderful to see how much the focus is shifting to monthly giving, and it’s starting to really pay off for nonprofit organizations. Here are just two recent statistics from the most recent Blackbaud Luminate Online Benchmark Report:

Expanding relationships with existing supporters was the name of the game this year as we saw a 20.4% growth in sustainer revenue.”

Viewing online revenue as one great big pie, we saw a larger slice of the pie—8.4% more—coming from sustainer gifts in 2017.”

Today, I’m not going to write about how to convert your donors to give monthly. Today, I’m going to focus on how to generate more money from your existing monthly donors.

Just because they’re now giving more money than as single-gift givers doesn’t mean it ends there. Oh no! There are three ways you can actually ask your monthly donors to give more money:

1.      Ask for a monthly upgrade.

2.      Ask for an additional gift.

3.      Ask for a legacy gift.

Ask for a monthly upgrade.

People typically ask me two questions: A) How soon after a donor starts giving monthly can I ask for an upgrade? B) How often can I ask for an upgrade?

Before I address the timing questions, let me just point out that donors upgrade because they have been stewarded effectively. Totally true. And this also pertains to monthly donors. That’s why I always “hammer” on the importance of sending a hard-copy thank-you recognition letter even if the monthly donor came in online.

So let’s assume that you’ve done this part right. And let’s assume that your donor gives monthly through his or her credit card. And let’s assume that you send the donor a quarterly newsletter with some great stories and updates on how the donor’s giving makes a difference.

I’ve seen organizations that started to upgrade right away. I’ve seen organizations that started to upgrade three months after a monthly donor joined. Frankly, I think that’s just too soon. Yes, you may get some donors to upgrade when you ask, but I think you’d also come across as much greedier than you may wish to. That could alienate some supporters.

Your donor has just started to get used to giving monthly. They’re just getting acquainted with your stewardship efforts. They have just started to realize the convenience of giving this way.

You pay taxes typically once a year; you update your budget once a year, so I suggest asking for an upgraded amount once a year, ideally between 10 to 12 months after the donor gave monthly for the first time. That’s when you can make a legitimate case for the increase in cost for xyz service, and ask the donor if he can “give just a few dollars more a month” to help the children/client/animals.

And, as Joe Garecht mentioned in his earlier post, the four elements of asking monthly donors to increase their monthly gift are indeed:

Was 2016 a Good Year for #CharitableGiving? Will 2017 be Better?

We’re rapidly approaching the close of what has been a tumultuous year. In 2016, the USA experienced an unusually bitter presidential campaign culminating in the unexpected election of Donald Trump. In the UK, voters chose to exit the European Union; the surprise Brexit vote sent shockwaves around the globe. The civil war in Syria continued to spin out of control resulting in a massive wave of refugees. Terrorism continued to be an international problem.

Uncertainty, fear, and stress are all words that one might use to describe the atmosphere in 2016 given much of the news. However, at least for fundraising professionals, there has also been much good news:

• The third-quarter 2016 annualized Gross Domestic Product growth rate is 3.5 percent, according to the US Commerce Department’s Bureau of Economic Analysis. This is important because philanthropy closely correlates to GDP with overall giving being approximately two percent of GDP.

• Personal income has modestly increased in 2016, according to the BEA. Individual giving correlates to personal income at the rate of about two percent.

• The stock market has been achieving new record highs since the election with the Dow approaching 20,000. Increased stock values mean foundations will have more money to grant and individuals will have more appreciated securities they can donate.

• The price of crude oil is the lowest it’s been in more than a decade, according to Macrotrends. This means lower gasoline and heating oil prices for consumers thereby providing them with more disposable income.

• Third-quarter 2016 corporate profits were up, rising to the highest level since the first-quarter of 2015, according to Trading Economics and the US Bureau of Economics Analysis.

• The nonprofit sector saw #GivingTuesday philanthropic support worldwide grow at the rate of 44 percent, reports NonProfitPRO. While this might not reflect an increase in philanthropy, it does reveal the public’s philanthropic spirit at a time of year historically defined by commercialism.

• Blackbaud, which analyzes more than $18 billion in charitable giving, sees a 3.5 percent increase in donations in 2016 compared with 2015, reports MarketWatch. You can read my comments in the article as well as additional information from Blackbaud.

• Some progressive charities have seen dramatic increases in philanthropic support since the election, reports MarketWatch. It remains to be seen whether this represents an increase in philanthropy or merely a shift in giving priorities. In any case, it reveals that contributions are often driven by philanthropic passions.

• In a Harris Poll survey for CARE USA, 15 percent of respondents say they have or will increase their charitable giving in 2016. While I have a number of problems with the survey methodology, the results are nevertheless somewhat hopeful.

Taking all of the positive news together, we can expect to see that philanthropic giving has increased in 2016. To learn how much growth we have experienced, we’ll need to wait until all of the data has been compiled and analyzed. While I don’t expect a massive growth rate, I do expect good growth. Furthermore, I expect the good news to continue into 2017:

Will the Election be Good or Bad for #Fundraising?

[Publisher’s Note: This is not a political or partisan post. Instead, this post will explore the affects the recent presidential election is likely to have on fundraising and philanthropy in the short-term and beyond. As always, civil and on-topic comments are encouraged, whether or not you agree with the points covered in the post. However, overtly political or partisan comments will not be published nor will the rants of internet trolls.]

 

Donald J. Trump appears to have secured enough electoral votes to become the USA’s 45th president. His election will become official when the Electoral College votes on Dec. 19, 2016.

After a bruising, though not unprecedented, election cycle, the nation remains deeply divided and emotionally raw. What does this mean for fundraising and philanthropy?

Impact of Election Donations on Charitable Giving:

At the 2016 Association of Fundraising Professionals International Fundraising Conference, research from Blackbaud was presented that looked at the impact of political giving on charitable donations in the 2012 election cycle.

Chuck Longfield, Senior Vice President and Chief Scientist at Blackbaud, observes:

Fundraisers have long debated whether or not political fundraising affects charitable giving and, for decades, important fundraising decisions in election years have been based largely on the conventional belief of a fixed giving pie. The study’s overall assertion is that political giving during the 2012 election did not, in fact, suppress charitable giving. Donors to political campaigns continued their support of charitable causes.”

According to the study, donors who gave to federal political campaigns in 2012 gave 0.9 percent more to charitable organizations in 2012 compared to 2011. By contrast, donors who did not give to political campaigns reduced their giving to charities in 2012 by 2.1 percent. These data findings held true across all sub-sectors as well as the demographic segments of age range, household income, and head of household gender.

The research only provides us with a snapshot. It is not predictive. More research will need to be done to identify whether or not the results will be consistent over multiple election cycles. However, based on the analysis of the 2012 campaign cycle, we certainly have room to be cautiously optimistic about 2016.

Year-End Giving:

If history is an indicator, the 2016 election will have little or no impact on overall year-end philanthropy, according to Patrick Rooney, Ph.D., Associate Dean for Academic Affairs and Research at the Indiana University Lilly Family School of Philanthropy.

At times, elections have had an effect on the giving of some individuals. For example, in 2008 when Barack Obama was elected, some major donors feared that he would secure a 28 percent cap on tax deductions.

Out of fear that the cost of giving would, in effect, be going up in 2009, some of these individuals front-loaded their 2009 philanthropic support to 2008 year-end. Nevertheless, the impact on overall giving was modest.

While Trump has promised major tax reform, it’s doubtful that donors will expect significant changes to the tax code to be enacted and go into effect in 2017. Therefore, it’s equally doubtful that major donors will shift 2017 giving into 2016.

Given that the 2016 election was unusual in many ways, it is certainly possible that year-end giving will deviate from the historical norm. For example, the stock market reached a record level following the election. If stock values continue to grow, we could see an increase in year-end gifts of appreciated securities. However, regarding overall philanthropy, I think the smart bet is on history.

Giving to Individual Charities:

It is very likely that certain individual charities will see an uptick in donations as a result of the election outcome.

Many years ago, Richard Viguerie, a pioneer of conservative direct response fundraising and Chairman of ConservativeHQ.com, said that people would rather fight against something than for something. We’ve seen it before; we’re seeing it now.

For example, when Obama was elected, the National Rifle Association received significantly more contributions as some feared that the new president would impose more stringent gun control measures.

Now, Kari Paul, of MarketWatch, reports:

Will #CharitableGiving Suffer Because of the Election?

[Publisher’s Note: This post is part of a series highlighting some of the sessions from the 2016 Association of Fundraising Professionals International Fundraising Conference. This week, I focus on “Giving in an Election Year – How Political Giving Impacts Nonprofit Support” which was presented by Chuck Longfield, Senior Vice President and Chief Scientist at Blackbaud, and Sally Ehrenfried, Blackbaud’s Community Relations Manager.]

 

Since the end of February 2016, the US Presidential candidates and their allied Super PACs have raised close to $1 billion. Some pundits believe that the candidates could spend up to $5 billion before the November General Election. And that’s just looking at the Presidential candidates. Candidates for other offices will also raise enormous sums of money.

The question for the nonprofit sector is this: Will charitable giving suffer because of the election this year?

Blackbaud researched the question and presented the findings of its report in the session “Giving in an Election Year – How Political Giving Impacts Nonprofit Support” at the 2016 AFP International Fundraising Conference.

The study examined the giving behavior of over 400,000 donors during the 2012 campaign year when Barack Obama and Mitt Romney battled for The White House. Researchers looked at giving data about those who did and did not contribute to political campaigns in 2012 and compared the information with charitable giving information from 2011.

Chuck Longfield, Senior Vice President and Chief Scientist at Blackbaud, observes:

Fundraisers have long debated whether or not political fundraising affects charitable giving and, for decades, important fundraising decisions in election years have been based largely on the conventional belief of a fixed giving pie. The study’s overall assertion is that political giving during the 2012 election did not, in fact, suppress charitable giving. Donors to political campaigns continued their support of charitable causes.”

According to the study, donors who gave to federal political campaigns in 2012 gave 0.9 percent more to charitable organizations in 2012 compared to 2011. By contrast, donors who did not give to political campaigns reduced their giving to charities in 2012 by 2.1 percent. These data findings held true across all sub-sectors as well as the demographic segments of age range, household income, and head of household gender.

The report acknowledges that the data paints a picture of 2012 without providing a prediction for 2016. More research is needed. Nevertheless, based on the Blackbaud report and multi-decade data from Giving USA, it’s likely that political giving will not negatively affect the nonprofit sector this year.

In the Foreword to the report, Andrew Watt, President and CEO of AFP, wrote:

What we are looking at is the giving of individuals who prize [civic] engagement — who see community action as a positive and who are interested in the full political and social spectrum of how we go about achieving change.”

The report supports Watts’ point:

We would expect that nonprofits involved in missions and programs touched by prominent campaign issues would benefit from political discourse on those themes. We would also expect that nonprofits focused on public policy advocacy would benefit most. These expectations are fulfilled in the increased giving to Public and Society Benefit, and Environment sub-sectors.”

However, increased giving was not limited to those two sub-sectors. Most other sub-sectors also saw gains, though those gains were not as large. This is a positive sign for the nonprofit sector in general.

For 2016, the report offers five key recommendations for the nonprofit sector:

The World Giving Index Reveals Good & Bad News

As a result of continued worldwide economic turmoil in 2011, the news about giving around the globe is mixed:

 

• The good news is that the world gave more in 2011 than it did in 2010, taking into account money donated, volunteerism, and helping a stranger.

 

• The bad news is that the number of people donating money worldwide has gone down. The overall increase in giving came from the increase in volunteerism and helping a stranger.

 

• The news for Americans is very good. The United States moved from a fifth place ranking in 2010 to the top spot in 2011 making it “the world’s most giving nation.”

 

• The news is also good for Asians. As a region, Asia has seen the largest growth in overall giving.

 

World Giving Index 2011 -- Map with Country Rank

 

These insights come from the World Giving Index 2011, published recently by The Charities Aid Foundation, an international charity based in the United Kingdom. The report, compiled from survey data provided by Gallup, ranks charitable behavior in 153 nations. The ranking is based on three measures:

Have you done any of the following in the past month?:

• Donated money to a charity?
• Volunteered your time to an organisation?
• Helped a stranger, or someone you didn’t know who needed help?”

The global average of the three giving behaviors in 2011 was 32.4 percent, up from 31.6 percent in 2010. More specifically, there has been a two percent increase in the global population “Helping a Stranger” and a one percent increase in people “Volunteering.” Unfortunately, the sluggish worldwide economy might be to blame for a one percent decrease in the number of people who gave money to a charity.

In 2011, the top ten most giving countries were:

Special Report: Blackbaud Acquires Convio

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

Blackbaud announced this week that it has acquired rival Convio for $312 million. Blackbaud, with 25,000 customers, is recognized as the leading back-end technology solution for nonprofit organizations. Convio, with 1,500 customers, is best known for its web-based relationship management systems, particularly for advocacy and peer-to-peer fundraising.

It remains to be seen what the impact of the deal will be on the nonprofit sector and how long it will take the sector to feel the impact.

For more information about the sale itself, you can read the news article from The Statesman, the newspaper from Austin, TX, home of Convio. 

For a terrific analysis of what the acquisition might mean for the nonprofit sector, you can read the post at Your Part Matters, the blog site of Jeff Shuck, President and CEO of Event 360.

That’s what Michael Rosen says… What do you say?