Everyone knows staying in contact with your donors is a good thing. But if you're an executive...
As Make Philanthropy Work celebrates our 5th year in business, we look back on the last five years of fundraising and five major trends that we have noticed taking place. No doubt, Covid-19 and the civil rights movements of this year have changed the world, including fundraising. Other more subtle and more slowly emerging shifts, have also been accelerated.
While some influences on these shifts have remained steady and noteworthy, here are the top five shifts that we’ve seen over the last five years that have had the biggest impact.
1. Online Engagement and giving has taken off
Over the last five years, nonprofits acceptance of technology has grown exponentially, and the Covid-19 pandemic has sped up the adoption of digital fundraising. Today there are countless tech offerings available in the market to assist organizations in creating greater donor experiences, engagement, and giving.
According to Blackbaud Institute’s 2019 Charitable Giving Reports, online giving has grown 10% over the last three years. Though the numbers are still being crunched, we’re certain 2020 will demonstrate record numbers for online giving because the pandemic has made this channel a necessity for fundraising.
Five years ago, donor research, websites, text-to-give, and email were the main technology tools that most nonprofits utilized for donor engagement. Crowdfunding and peer-to-peer platforms were just starting to be a recognized way of funding and social media was viewed as a place for engagement and providing updates, but not fundraising. AI was barely mentioned or even considered as a tool for fundraising.
Today, a majority of organizations are utilizing a variety of digital engagement tools:
- digital-based fundraising campaigns (In 2019, $34 billion was raised globally across more than 6 million campaigns)
- marketing automation tools
- social media advertising
- SEO enhancement
- text outreach to inform and create calls to action
- chatbots to initiate engagement and answer urgent questions or requests
And... the more sophisticated ones are beginning to integrate artificial intelligence into their campaign strategies. These powerful tools for donor research and engagement are rapidly growing in acceptance.
Finally, let’s not leave out Facebook fundraising campaigns. They are prolific, and most organizations are utilizing social media advertising to promote events and campaigns.
2. It seems like everyone has a Donor Advised Fund these days
The Donor Advised Fund is one of the fastest-growing tax vehicles in use by donors. Over the last five years, DAFs have flourished. From 2010-2018, DAFs have increased 300%. Grant-making from DAF’s has tripled in the last five years, according to the National Philanthropic Trust. Contributions to DAFs totaled $37.12 billion in 2018, representing an 86% increase in contributions over the past five years, NPT reported.
Donor Advised Funds continue to increase at 50% growth rate per year. It’s safe to say that more and more people will create these investment vehicles, which can be done for as low as $5,000 -- which is significantly more accessible than typical fund minimums of $50,000. Furthermore, there were an estimated $121.42 billion in donor-advised funds by the end 2019, according to the 2019 Giving USA report.
As one of the most popular vehicles for donors to invest in, are DAFs an indication of donors losing trust in nonprofits? Is it that nonprofits are not earning the respect and trust of donors? Is it that greedy banks and community foundations are vacuuming up all of our needed dollars? Or is it that DAFs are an efficient and effective vehicle for investing in multiple organizations with tax benefits and accuracy now available to a majority of major gift donors? Most likely, it’s the last point. Regardless, DAFs are here to stay.
3. New models of fundraising are taking root
Impact investing and Program Related Investments have tripled since 2012. Additionally, PRIs have been embraced by numerous foundations because of the leverage and credibility they provide.
Our takeaways from The New Normal: Trends in Ultra High Net Worth (UHNW) Giving 2019, notes there is a significant shift taking place in philanthropy with donors moving to impact investing, and this is very much the case with UHNW donors. The instruments of impact investing and impact bonds have grown substantially, and donors now realize that returns are similar to other portfolio investments.
Venture philanthropy is also on the rise. This type of philanthropy is the utilization of venture capital finance applied to philanthropy, where the fund invests in the capital and works with the organization to scale and measure impact.
While fundraising purists might cringe at these investment tools being considered philanthropy, donors are embracing them, and that’s what counts. Along with DAFs, we expect these new models to proliferate over the next several years.
4. Storytelling & demonstrating impact rules the day
Storytelling has been around for… well, since the earliest humans. However, until five years ago, we did not see much use of it in fundraising or in the marketing of nonprofit organizations.
Over the last 10-15 years, there’s been a significant shift in how we engage donors. It used to be hand out, speaking of need, and asking for help. Over the last five years, there’s been a sea change. Organizations are now leading with impact and inspiration - realizing that they need to know how donors want to make an impact through them and respond accordingly.
Today’s donor is much more sophisticated than those of twenty years ago. They have higher expectations of how nonprofits communicate and engage with them. People are searching for meaningful stories and reasons to engage and give, they expect their voices to be heard, and they want to understand how they can impact THROUGH your organization.
There are now several platforms/tools on the market to help you tell your organization’s story. I’m sure you have amazing stories of impact to tell. Don’t hold back; start inspiring today!
5. We are now putting donors first
Development shops are keying in on donors’ interests and how best to communicate and engage with donors. A majority of organizations now know how important it is to demonstrate the impact of giving by putting the donor first. Often referred to as being “donor-centric,” this mimics the retail world of being consumer-centric.
Most importantly for nonprofits, there is a shift away from a place of scarcity - “we need funds to pay for supplies”, to a place of abundance - “through your investment, improve/change/create…a positive impact can be made today.”
This movement toward making “donor first” impact-based asks is about understanding where the donor wants to invest and intentionally to highlight the impact that their giving will create. Donor-impact driven communication has proven wildly more effective and engaging than the traditional methods of simply requesting general operations funding.
Additionally, development and marketing operations are spending the time and resources to connect with donors where they live. They are putting donors first - inviting them in and responding to their interest and communications preferences, instead of utilizing a one-size-fits-all approach of email blasts and/or event invitations. Whether that is social media, email, or just plain old-fashioned mail, organizations track how donors respond and then respond to them via that same channel.
Donors now want and expect to be very involved in the process. They not only want to be engaged as a volunteer or board member, but they want to co-create. This is accompanied by a desire for accountability and an understanding of how funds are utilized and the impact of their giving. Measuring impact is more important than ever.
We’ve also seen a significant uptick in organizations actively building a culture of philanthropy. Five years ago, the idea of building a culture of philanthropy was a work in progress and something that was only achieved by a small number of organizations. Now, a large portion of organizations are actively working towards building a philanthropic culture. You can learn more about it here.
A lot has changed in the last five years. As you make your fundraising plans for the next year or years ahead, we want you to be mindful of these big shifts in thinking about engagement, and how technology facilitates a better donor experience. What was once only available to a few of the most sophisticated organizations is now within reach for us all.
Make Philanthropy Work offers an array of services to effectively and sustainably identify, recruit, retain, and grow support in today’s changing environment. We help our clients tap into their innate talents, capabilities, and passion by infusing best practice with innovative thinking from both inside and outside of the philanthropic sector.
Let us know how we can work with you towards making your next five years of fundraising more successful.