I Told You So: Charitable Giving is Up!

Most charity pundits, mainstream media, and press serving the nonprofit sector got it wrong. Sadly, none of them is admitting their mistake, and many are continuing to advance a false narrative. However, I always told you the truth, and I’ll continue to do so.

I’ve often encouraged you not to overuse statistics in your appeals. But, we can all certainly benefit from reading lots of illuminating statistics.

In 2017 and 2018, most pundits and the media were convinced that the Tax Cut and Jobs Act would result in up to a $21 billion decrease in philanthropic giving. In January 2018, I joined a tiny group of professionals who predicted the decrease in giving would be far less than that and giving might actually increase. This was not a guess on our part, but a well-educated expectation based on research, experience, and observation.

Now, with the release of Giving USA 2019, we know who was correct.

Overall, philanthropic giving in constant dollars INCREASED by $2.97 billion (0.7 percent) between 2017 and 2018, and now stands at $427.71 billion, the highest level of all time. Relative to Gross Domestic Product, giving remained at 2.1 percent, which is greater than the 40-year average of 2.0 percent.

Despite the generally good news, the philanthropy scene is not entirely positive. When adjusting for inflation, giving in 2018 did decline by 1.7 percent, though that was much less than the doom and gloom estimates. Furthermore, giving by individuals as a share of overall philanthropy accounted for 68 percent; this is the first time since at least 1954 that it has fallen below 70 percent. In 2018, individual giving fell by 1.1 percent in constant dollars.

While the new tax code likely had an effect on charitable giving, we need to be careful not to overstate its impact. A number of factors have influenced giving:

New Tax Code. All or part of the decline in individual giving in 2018 could be due to donors taking action in advance of the tax law change. We saw this in 1986 when there was a spike in charitable giving in advance of the Reagan tax cuts in 1987.

In 2017, many donors likely front-loaded their philanthropic giving since they would no longer be able to deduct gifts beginning in 2018. In addition, many donors chose to bundle their philanthropy by contributing to Donor-Advised Funds at record levels in 2017. Together, these two factors might explain the 1.1 percent decrease in individual giving in 2018 compared to a 5.7 percent increase in 2017. If not for the new tax rules going into effect in 2018, some of those 2017 donations might have been made in 2018 instead.

The tax code might also affect giving in other ways that we just don’t see clearly at this point. Just as we had to wait until 1988 to see giving normalize following the Reagan tax cuts, we may need to wait another year or two to understand the full effect of the current tax code.

Decline in the Number of Donors. Since 2001, the percentage of US households contributing to charity has fallen steadily from a high of 67.63 percent to 55.51 percent in 2014, according to data from the Indiana University Lilly Family School of Philanthropy’s Philanthropy Panel Study. In other words, the new tax code is not responsible for a sudden decline in the number of donors. This trend has been going on for years.

9 Hard Truths Every Fundraiser Needs to Face in the 21st Century

In the Oscar-nominated film A Few Good Men, Jack Nicholson’s character famously shouts, “You  can’t handle the truth!”

Well, if you want to be a successful fundraising professional, you better know the truth and be prepared to handle it.

If you want to be successful at anything, you need to face the core truths involved no matter how challenging. Ignoring reality is a certain pathway to failure.

One nonprofit development truth is that authentic, donor-centered fundraising results in more donors giving more money than would otherwise be the case. Penelope Burk wrote about this years ago in her landmark book Donor Centered Fundraising, available October 15 in a new second edition. I wrote about the subject in my own book, Donor-Centered Planned Gift Marketing.

Recently, Greg Warner, CEO of MarketSmart, released his powerful new book that reveals a straightforward, meaningful way fundraisers can embrace the concept of donor-centered fundraising.

In Engagement Fundraising, Greg passionately reveals the 21^st century donor-centric strategy practiced by MarketSmart. Some people might be angered by or afraid of the core message of this book while others will find it to be simple common sense. However, one thing everyone can agree on is that Greg is a disrupter, and that’s a good thing. If it wasn’t for society’s disrupters, we’d still be riding around in horse-drawn carriages, and you’d be reading his book by candlelight. His fresh, technology-driven approach is a powerful way forward for those interested in engaging people to inspire more philanthropic support.

At the end of this post, I reveal how you can download, for free, the introduction and first chapter to Engagement Fundraising. But now, I want to share Greg’s additional insights with you as he outlines nine hard truths every fundraiser needs to face in the 21st century:

 

1.  Competition is fierce and everywhere. Nonprofits don’t only compete with other nonprofits. They also compete with private sector businesses and Uncle Sam (the tax collector) for every donor’s “share of wallet and attention.” Plus they want non-exclusive, polyamorous relationships with organizations. In other words, they will decide when they’ll cozy up to other charities. Of course, you can influence their decisions but you can never control them. You are at a disadvantage. Private sector companies and the government have deeper pockets. In order to win, you better be smart!

2.  Most of the time donors spend involving themselves with your organization happens without a fundraiser present. More than 99 percent of every donor’s time and energy spent involving themselves with your organization’s mission is done without you. You must accept this new reality and enable your supporters’ self-education and self-navigation of the decision-making process.

3.  The consideration continuum is open-ended. Donors are fickle. Their needs, passions, and interests will change. As they do, they might decide to give more, less, or stop giving altogether. They might involve themselves deeper in your cause or end their involvement (perhaps even by removing your organization from their estate plan). As a result, customer service (stewardship) is more essential now than ever.

4.  Your job is to make them feel good, not ask for money. In order to generate major gifts (including legacy gifts) and inspire high-capacity mid-level donors to give more, you must make your donors feel good by engaging them politely and persistently with offers that deliver value over time. If you do that, your donors self-solicit. They’ll step up to make a difference so they can find meaning in their lives. Then they’ll ask you, “What can I do to help?” Yes! Seriously! If you make them feel good, they will give, give more, refer friends, get more involved, become more committed, and make legacy gifts.

Hang-on to the Holiday Spirit with FREE Gifts and Resources to Raise More Money!

For most of us, whether we observe Hanukkah, Christmas, or just the New Year, the holiday season is an uplifting time full of joy. However, the same cannot always be said of the post-holiday period, according to Linda Walter, LCSW. Her article in Psychology Today cites many reasons for the post-holiday blahs, for some, even depression.

As an antidote for the after-holiday letdown, I want to share several free resources with you that just might help you keep the holiday spirit going while also helping you raise more money in 2018.

The Donor-Advised Fund Widget. For starters, let me tell you about the Donor-Advised Fund Widget created and offered free-of-charge by the generous folks at MarketSmart. This useful, free gift will help you continue to celebrate the season and raise more money for your nonprofit organization.

When it comes to fundraising, a general rule is: Make it easy for people to give your organization money. You probably already do this in a number of ways. For example, your organization probably allows donors to place gifts on their credit card, mail a check in a business reply envelope you supply, give online, or contribute when they buy products (e.g., Amazon Smile).

So, why not also make it easy for someone to recommend a donation from his or her DAF account?

Rather than viewing DAFs as enemies that divert vitally needed funds away from charities, nonprofit organizations should view DAFs as a great fundraising opportunity. Unfortunately, the problem is that nonprofits have not made it easy for people to donate from their DAF accounts…until now.

Greg Warner, Founder and CEO of MarketSmart, says:

Amazon is successful primarily because they make it easy to buy stuff. Similarly, if nonprofits just made it easy to transfer DAF money, the bottleneck would get un-clogged. But no one was stepping up. So I did!”

The DAF Widget goes on your organization’s website. Your donors with DAF accounts then can easily find their account management company from a comprehensive list of over 800 service providers. Then, they simply click to go directly to their DAF management company’s website where they can enter the relevant information to make a donation recommendation for your organization. To see the widget live, visit the Navy-Marine Corps Relief Society website by clicking here.

DAFs are an increasingly valuable source of donations for charities. Consider the following market-wide insights from The National Philanthropic Trust 2017 Donor-Advised Fund Report:

	2012	2016
Number of DAF Accounts	204,704	284,965
Total Assets in DAF Accounts	$44.71 billion	$85,15 billion
Grants from DAF Accounts	$8.5 billion	$15.75 billion
Ave. DAF Asset Size	$218,413	$298,809

To put the above figures into context, non-corporate private foundations gave $45.15 billion to charities in 2016. By contrast, donations made from DAFs totaled $15.75 billion that same year, equating to roughly one-third (34.8 percent) of the estimated amount granted by non-corporate private foundations.

In other words, DAF donations represent a significant and growing source of gifts for nonprofit organizations. However, to get your share, you need to make it easy for people to recommend donations from their DAF accounts. That’s why MarketSmart created the free DAF Widget.

You can learn more about the DAF Widget and claim yours by clicking here.

There is just one catch, if you want to call it that. The DAF Widget is in its Beta Edition. So, MarketSmart is looking for feedback, either directly or through comments below. Then, Greg promises to invest more time and money to make the DAF Widget even better. So, if you use the DAF Widget, please let us know how you think it could be made easier to use and more effective.

Here are seven additional resources for you to help get 2018 off to a great start:

Is a Zombie Video Good for Charity?

Halloween has passed, but zombies are still with us!

While checking my email Inbox recently, one subject line in particular caught my eye:

Zombie overpopulation video for Halloween by Population Matters.”

Halloween season or not, I like zombie films and television shows. For example, my favorite TV show of the moment is iZombie. If you haven’t seen iZombie, don’t judge me; instead, checkout an episode. Then, thank me.

Anyway, I quickly opened the email from a fundraising professional who I respect greatly. Her message piqued my interest even more:

I can’t believe that any communications or development department ok’d this! Horrible.”

Normally, “horrible” might be a good word to describe a zombie video, but that clearly was not the case in this situation. My fellow fundraiser believes that the video is problematic for the charity even if, on a superficial level, it might be mildly entertaining. So, doubly intrigued, I clicked on the link to the video by the UK charity Population Matters. You can watch it here:

On a superficial level, I kind of like the video. It isn’t great, but it is a bit fun while raising awareness about an important issue. I also acknowledge a few key points:

1.  The video is a British production for primarily (though not exclusively) a British audience. The British sense of humor and use of humor is very different from the American. What works in one country might not be appropriate in the other.

2.  Adults are not the primary target audience. The organization says “young people” are. I can understand how a zombie-themed video could capture the attention of the intended target audience.

3.  The video is bound to attract plenty of eyeballs that will achieve the objective of creating awareness for the issue of over population.

It was not until I thought about the video more deeply, viewed it again, and discussed it with colleagues that I began to see the problems with it.

Racism. At worst, the video is seen by some as racist. At best, it’s considered racially insensitive. The problem is that when mentioning the explosive population growth, only children of color are shown. No white babies or children are shown to illustrate the growth in population. Here’s what one colleague at an international social-service agency had to say about the video:

From our perspective, when people talk about overpopulation, they are often referring to black/brown folks in the global south and Africa. There can be a strong undercurrent of racism there, so connecting ‘too many black and brown people’ with zombies has an extremely negative connotation. In the human rights world, this kind of video is considered to be pretty racist. It got a uniformly negative response from the folks here in our office. So, even if millennials would like it, it’s very much out of step with the way family planning/population issues are framed in the human rights world, and makes it harder for groups like ours to even approach the overpopulation issue without being called racist.”

Overwhelming Use of Statistics. The video provided a number of interesting statistics. The trouble is, the use of statistics was overwhelming and abstract. As a result, even after watching the video three times, I cannot remember a single statistic cited. I suspect casual viewers will experience the same thing.

No Emotional Pull. While the video is somewhat fun, it lacks emotional pull. Greg Warner, of MarketSmart, pointed that out to me along with the next two points.

So What? This is one of my favorite questions when evaluating something. As Greg told me, “There’s nothing to answer the question any individual would ask while viewing it: ‘What’s in it for me?’” Yes, the video attempts to point out how the world and our species would be better off by reducing population growth. However, those “benefits” are abstract, particularly to young people who have some sense of immortality and narcissism.

Weak Call to Action. There are two calls to action in the video. Neither is compelling. First, viewers are encouraged to have smaller families. This is not immediately relevant to the target audience of teenagers. The second call to action is to go to the organization’s website for more information. As Greg mentioned to me, “[The call to action] is not all that exciting.”

Given my own thoughts about the video and the comments I received, I had questions about the production. So, I emailed Population Matters. I received a quick response from Simon Ross, the organization’s Chief Executive:

Top Ten Posts of 2013, and Other Reflections

As 2013 draws to a close, I thought it would be interesting to look back briefly before we march into the New Year.

Happy New Year!

For starters, let’s look at which of my posts have been the top ten most read in the past year:

1. Can a Nonprofit Return a Donor’s Gift?

2. 6 Ways to Raise More Money without New Donors!

3. 5 Words or Phrases that Can Cause Donors to Cringe

4. 5 Things Never to Do in Your Phone Fundraising Calls

5. 5 Tips for Giving Donors What They Really Want

6. How NOT to Run a Capital Campaign

7. Prospect Research v. Invasion of Privacy

8. 7 Magical Words to Earn Respect, Trust, and Appreciation

9. Do You Make Any of These Mistakes When Speaking with Donors?

10. Do Not Let This Happen to Your Organization

I invite you to read any posts you might have missed by clicking on the title above. If you’ve read them all, thank you for being a committed reader.

I’m honored to know that I have readers from around the world. (I love the Internet!) While I appreciate all of my readers, I thought it would be interesting to look, beyond the United States, to see my top ten countries for readership:

1. Canada

2. United Kingdom

3. Australia

4. India

5. Netherlands

6. Philippines

7. France

8. Germany

9. New Zealand

10. Italy

Overall, Michael Rosen Says…, has seen a 20 percent increase in readership in 2013 compared with 2012. I thank everyone who made that possible by dropping by to read my posts. I especially want to thank those who have subscribed.

When you subscribe for free in the column at the right, you’ll receive email notices of new posts, including “Special Reports” which are not otherwise widely publicized. Beginning in 2014, subscribers will also receive exclusive bonus content and a limited number of subscriber-only special offers directly from me. So, if you’re not already a subscriber, sign-up now.

Just as I value all of my readers, I also greatly appreciate those who take the time to “Like” my posts, share my posts, Tweet my posts, re-blog my posts, and comment on my posts. In particular, I want to recognize the following people who have commented most often in 2013:

Free, Electronic Bequest-Potential Calculator Unveiled

Smart fundraising professionals realize the value of understanding their nonprofit organization’s planned giving potential. Unfortunately, it has not always been easy to quantify that potential, until now.

Charities that do not have a planned giving program will want to know how much money their organization can raise through such a program before they decide whether a budget investment would be worthwhile.

Nonprofit organizations that already engage in planned giving will want to know whether their program is achieving all it can or if there is room for significant growth.

Nonprofit Chief Executive Officers, Chief Financial Officers, and board members, will want to know the potential of planned giving before they agree to invest scarce budget resources in a program to acquire planned gifts.

To help fundraising professionals gauge their organization’s planned giving potential, I included a “Bequest Potential Worksheet” in my award-winning book Donor-Centered Planned Gift Marketing. Now, I’ve collaborated with Greg Warner and his team at MarketSmart to develop the free, electronic Bequest Potential Calculator.

15 Common Planned Giving Myths Debunked (Part 2)

Last week, I presented eight planned giving myths that were identified and debunked by fellow fundraising professionals from the Smart Planned Giving Marketers Group on LinkedIn.

This week, I’m presenting the seven additional myths I promised along with a bonus myth.

Continuing to embrace planned giving myths can be harmful. Doing so will make you less helpful to your donors, less able to raise money, and less able to realize your career aspirations. That’s why I felt it important to identify and debunk some common gift planning myths.

Judging from the large number of readers Part 1 attracted, I know plenty of folks around the world agree with me. While I have numbered the myths, strictly for reference purposes, I am presenting them here in alphabetical order by contributor:

Michael J. Rosen, CFRE, President, ML Innovations:

In my book, Donor-Centered Planned Gift Marketing, I go into detail when debunking five planned giving myths which I’ll summarize here:

MYTH 9 — Planned giving is very difficult.

Gift planning can certainly be challenging, However, for the most part, it involves fairly simple gifts: Bequests, CGAs, appreciated property (i.e.: stock).

MYTH 10 — One needs to be a planned giving expert to be involved in gift planning.

Nope. While it would be helpful to be a planned giving expert, it’s not necessary. The vast majority of planned gifts will come from Bequests. CGAs and appreciated property are two other simple, popular types of planned gifts. You don’t need to be an overall planned giving expert to master those planned giving vehicles. However, you should be familiar with other gift planning options and know who to call for assistance when a donor wants to talk about those other options.

MYTH 11 — All planned gifts are deferred.

No, they’re not. For example, a gift of appreciated stock is a current gift. Even with a deferred gift such as a Bequest, depending on the age of the donor, you might not need to wait all that long for the gift to be realized.

MYTH 12 — Good marketing focuses on organizational needs.

Nope. Good marketing actually involves being donor centered.

MYTH 13 — Planned gift marketing should be passive.

Many development pros think it is inappropriate to actually ask for a planned gift. However, 88.7 percent of donors say otherwise. So, why have only 22 percent of Americans over the age of 30 been asked to make a planned gift?”

Charley Shirley, CPA, Senior Consultant, Donor By Design Group LLC:

15 Common Planned Giving Myths Debunked (Part 1)

Sadly, many myths about planned giving continue to exist. Some of these keep nonprofit organizations from engaging in gift planning. Others lead development professionals to make terrible, costly mistakes.

All planned giving myths are dangerous.

Statue of Athena, Greek Goddess of Wisdom.

That’s why I believe that debunking common planned giving myths is important. In fact, I feel it’s so important that I addressed five of them in the very first chapter of my book, Donor-Centered Planned Gift Marketing. I’ll summarize them next week in Part 2 along with some other myths.

For now, I’m going to share eight myths identified by the members of the Smart Planned Giving Marketers Group on LinkedIn. The remaining seven will be featured next week.

Greg Warner, President of MarketSmart, started the Group which now numbers 577. If you have any interest in planned giving, you should join.

Recently, Greg started a terrific discussion to identify and debunk common planned giving myths. So far, the Smart Planned Giving Marketers Group has identified and debunked 15 planned giving myths. While I have numbered the myths, strictly for reference purposes, I am presenting them here in alphabetical order by contributor:

Ronald Blaum, Director of Gift Planning, Church World Service:

MYTH 1 — The Estate Tax is a mandatory tax.

To stimulate conversation in a group setting, I’ll often ask this question: ‘Paying estate taxes are voluntary, right?’ And, of course, people say, ‘No, they are not.’ Then, I proceed to show how the use of charitable gifting strategies and other techniques can make most, if not all, estates tax-free. With the higher estate exemption, the far greater concern for most people should be minimizing the negative impact of Income Tax on qualified plans, not estate tax. Think about what assets to use for gifting, not just the dollar amount or percentage of an estate.”

Reeve Chudd, Partner, Ervin, Cohen & Jessup:

MYTH 2 — My kids will resent me doing it.

I’ve been handling estates with charitable bequests for 34 years, and not once have I heard the heirs doing anything but enjoying the recognition their parents receive posthumously from charitable recipients. Further, when a name appears on a building or a program as a permanent memorial of a deceased donor, I see their children relishing their name connection to such philanthropy.”

Greg Lassonde, CFRE, Legacy Giving Specialist:

MYTH 3 — Age is an important factor in list segmentation.

The reality is that sometimes age is an important secondary factor in list segmentation. One example of this is Charitable Gift Annuities. If your organization’s minimum age for issuing a CGA contract is 70, you might want to mail only to those older than 55 (going that low for deferred CGAs).”

As Greg notes, while age can be an important secondary factor, the reality is that planned gift opportunities exist at every age level. For example, while it’s best to make a CGA appeal to older prospects, Bequests should be marketed to a broader age band, particularly those in their 40s and 50s. The points here are that while age is certainly of some importance, it is more important to recognize that the quality of the relationships is what is critically important, and that virtually everyone is a prospect for some type of planned gift.

Hazel Lloyst, CFRE, Capital Campaign Manager at Loyalist College:

MYTH 4 — [You can] judge a donor by their outward appearance.

From experience, I have found that many of my most frugal donors turned out to be the most generous, altruistic donors upon their passing. It was a pleasure to work with them over the years and hear their stories. It was always with tremendous gratitude that I was able to ensure their wishes were followed upon their passing while helping to ensure the timely transfer of their estate.”

Phil Melberge:

MYTH 5 — It costs too much.”

Is it Time to Dump “Planned Giving”?

As we all work to promote planned giving, many in the nonprofit sector have questioned whether or not the very term “planned giving” can be replaced by something more effective.

Greg Warner, President at MarketSmart, started an interesting discussion a couple weeks ago on the Legacy/Estate/Gift Planning and Planned Giving Professionals Group on LinkedIn. Warner asked:

Since most donors are not familiar with the term ‘planned giving,’ what other terms or phrases should we use to market planned gifts?”

The question stimulated a lively discussion.

The nonprofit sector has grown tired of the term “planned giving,” thinks of it as inelegant, or recognizes that very few people understand what the term means. As happens periodically, the nonprofit sector is searching for a new, more comfortable descriptive label. And, there is some validity to the concerns the sector has about the term.

The Stelter Company conducted a survey that I cite in my book, Donor-Centered Planned Gift Marketing, that found only 37 percent of Americans over the age of 30 have a familiarity with the term “planned giving.” We have no way of knowing what percentage of those claiming familiarity really, in fact, know what the term means.

Those who responded to Warner’s question suggested several alternatives to “planned giving.” However, none of the suggested replacement terms represents a perfect solution. So, what should the nonprofit sector do? Should we keep or dump the term “planned giving”?

My friend Viken Mikaelian, Founder of PlannedGiving.Com, has done a comparison of the terms “planned giving” and “gift planning.” He discovered that, on Google, the words “gift planning” are out-searched 100-to-1 by the words “planned giving.” In a search of Google’s digital library of over 13 million books, “planned giving” is far and away the more popular term when compared to “gift planning.”

Mikaelian concludes, “So if you believe in search engine optimization (SEO) for your planned giving website, ‘planned giving’ is a better choice.” You can read Mikaelian’s full report here.

I decided to conduct my own test. I Googled the various terms suggested by those who responded to Warner’s question. I wanted to see how many results would be found for each term. Here’s what I discovered: