Generational differences, changes in giving behavior and noise in the marketplace – not to mention the unknowns surrounding the new tax law – have left the nonprofit sector asking, “How do we maintain relevance with our donors?” How do we continue our mission and create change in our community as we face so many harbingers of a decrease in individual giving?
There is a reality we all must accept as part of the NPO landscape: charitable giving has changed considerably over the past 10 years, and we have one option – adapt.
If we truly believe in our individual missions as non-profits, we must fundamentally change how we approach relationships with donors. We must remain relevant, impactful and seen as a necessity to our community. But how?
Until last year, I worked for a successful retail real estate company that developed open-air shopping centers in major metropolitan areas. You might think that in the age of online shopping, a real estate developer might not be successful making large investments in brick-and-mortar stores, but today, online still constitutes less than 10% of all purchases. This is growing every year and continues to fundamentally alter the relationship between the shopper and the store.
When I took my first job in the nonprofit world last year, it was interesting to find that my new industry is experiencing similar shifts with its target audience: donors. The relationship between donors and nonprofits is fundamentally changing in some of the exact same ways I experienced in my previous life—through demographic shifts and technological advancement.
As a real estate developer, we knew we couldn’t just put up a nice-looking, clean and well-lit shopping center on a busy corner and wait for the shoppers to come anymore. We realized that to be successful, we had to understand the shopper herself—what are her likes and dislikes, what environment makes her feel safe, what are her browsing and buying patterns online and offline? To do this, we used technology, research and close partnerships with our retailers to truly understand our shopper and provide an experience based on sensible design, amenities and a mix of tenants that would engage her so that she would visit more often and stay longer. These efforts led to great success.
You may have noticed I focused on the female consumer. Today, 85% of purchasing decisions made in the household are made by women. What does all this mean? This market was forced to shift its focus to meet and stay ahead of the evolving shopping habits of the female consumer if they wanted to be successful.
So how can we apply those lessons to bring success to a completely different market?”
First, we must ask “Where are we today?” We are in a fascinating time of major transitions.
Online Giving Growth Mirrors Online Retail Trends
According to Blackbaud Institute’s 2017 Charitable Giving Report Key Takeaways, giving through online-only campaigns was just 7.6% in 2017—a fraction of total giving. However, online giving grew 12% in 2017 (plus, 21% of online giving was done on a mobile device). The explosive growth of Giving Tuesday is one of the best examples of this phenomenon: in 6 years, donations have grown over 500%. In the last year alone, Giving Tuesday grew from $168 million in donations worldwide to over $270 million, including 28% growth in online giving, and mobile device giving made up 26% of total online giving.
Technology is Advancing at an Astounding Pace
The Internet has made it even easier for consumers to find information (real or fake) about our organizations with just a few clicks on a variety of devices. And the speed at which technology continues to advance is astounding. Count the number of smartphones you’ve had since the iPhone was introduced in 2004. My score: two BlackBerrys and four iPhones—each one with increasingly fancy bells and whistles. Not only is technology increasing access to organizations, it is also offering donors more channels through which to give. Facebook, for example, began offering the ability to donate to nonprofits online through your Facebook account in 2015. In 2017, Facebook added crowdfunding that mirrors GoFundMe, allowing users to set up personal fundraisers for any cause, charitable or not, and charging 1% less in fees than GFM.
We are in the Middle of a Sweeping Demographic Change: Baby Boomers vs. Millennials
Millennials today outnumber baby boomers, 83 million to 78 million, but with nature taking its course, we are not far away from the population being skewed dramatically to millennials.
However, current data from Fidelity Charitable’s Future of Philanthropy report shows:
- In 2017, the average age of individual donor was 64, their average charitable gift was $2,000 and baby boomers made up 43% of private charitable giving.
- Currently, 50% of household wealth is in the hands of boomers, and projections by Deloitte keep it at that level until at least 2025.
- And what about millennials? They made up just 11% of individual charitable giving in 2017 with an average gift of $1,000. From a pure revenue-generation perspective, baby boomers are still the major source of our organizations’ dollars.
Baby Boomers vs. Millennials
The generational differences between these groups are already transforming the nonprofit landscape Fidelity Charitable reports that baby boomers tend to give to charities and nonprofits that they know well, trust and align with their personal values. Their giving is generally planned, not spontaneous.
- This generation gives to causes, not organizations.
- They want to be influencers with a voice, and shun titles like activist, advocate and even donor. To accomplish this, they use social media to post information and connect with others but not necessarily to protest issues or promote certain points of view—as a group, they don’t like confrontation, but they do like sharing of information.
- When making charitable decisions, they are influenced by current charitable trends, what their friends are giving to, and alternative forms of giving. And, their giving is much more spontaneous and in the moment
These two generations, both of whom we must serve, could not be more opposite! The generation that fits most of our traditional fundraising models makes up the largest share of our donors, yet the generation that doesn’t is the one that is going to quickly take over.
So what do we do? Just like we did in retail real estate, we must get to know our donors first.
What do they like to do? What are they passionate about? Where do they volunteer and how much time do they spend volunteering? Where else do they give money? What causes make them engage, and how do they engage with those causes?
Once we know about our donors, we can present ourselves as a way for them to advance their causes. This may sound like the approach we traditionally take getting to know major donors before a big ask—and if it seems overwhelming to think about trying to get to know a huge group of smaller donors individually, then remember that this is where technological change is on our side. We must harness the data analysis and business intelligence tools that are available to track, analyze and target various donor profiles.
I think we would all say that we are donor-centric nonprofits, and we probably are. But in the rising age of donors giving to causes, following trends and giving spontaneously, the definition of being donor-centric in the future will have business intelligence and data analytics supporting it.
The Bottom Line
We need to leverage technology, research, demographics and close partnerships with community partners to truly understand our donor. We need to provide donors with innovative stories of our work, impact, and initiatives for the future. We need to show how we are specifically improving our communities and connect with donors through shared values and value-added benefits. We need to engage our donors on an individual level with personalized communication, and we need to understand why they support our organizations so we can better enable them to become ambassadors for our mission and influence their substantial social networks.
About Sara Fawcett
Sara Seitz Fawcett joined the United Way of the Midlands as President and CEO of United Way of the Midlands in June 2017. Prior to leading in the nonprofit sector, Fawcett previously served as Vice President of Human Resources for EDENS Investment Trust, one of the largest privately-held commercial real estate development companies in the United States, for over 12 years where she led recruiting and onboarding processes as the company grew by 51 percent over 10 years. Fawcett began her career at Wachovia (now Wells Fargo) where she spent 14 years in a variety of banking and human resources roles in Wachovia’s corporate banking, insurance and wealth management divisions.
is a long-time volunteer and supporter of United Way of the Midlands, having volunteered her time and expertise on both the resource development and community impact arms of the organization. Her roles have included a membership on the Board of Directors, Co-chair of the Campaign Committee, Chair of the Community Impact Committee and Chair of the Financial Stability Council.
As Co-chair of the Campaign Committee she helped lead a team of 30 volunteers responsible for raising $22 million over two years. While Chair of the Community Impact Committee she led a team of 25 volunteers accountable for $4 million in community investment and $2 million in grants and community initiatives.
Sara holds a bachelor’s degree in economics from the College of William and Mary in Williamsburg, Virginia. She has three children, Maddie, Ben and Jon Jon.