Fundraising Outlook Depends on Vaccines, Stimulus, Equity, Other

  • Published January 25, 2021

Published on The Chronicle of Philanthropy online:
January 25, 2021
By Eden Stiffman

If 2020 taught us anything, it’s that projections are hard to make.

Individual nonprofits and experts who study donors are still collecting data on how they gave during the last calendar year. Giving was almost certainly better than anyone had projected, bolstered by a surging stock market, a slew of mega-gifts, and a swell of grassroots support for needs exposed and intensified by the pandemic.

Around this time of year, researchers at the Indiana University Lilly Family School of Philanthropy and consultants at Marts & Lundy would typically release a report to forecast the giving landscape for the year ahead. That report took into account a broad range of economic indicators including the stock market, job growth, wage growth, gross domestic product, and federal tax law.

But a few weeks into 2021, there’s more variability and disruption than ever before, says Phil Hills, president of Marts & Lundy, and the giving experts are skipping the report.

“We don’t want to mislead our clients or the sector saying we know where we’re going,” he says. “I don’t think anybody could reliably say that they have an idea of where things really are going to go.”

With that uncertainty in mind, the Chronicle spoke with Hills and other giving experts about their expectations — and advice — for giving and fundraising in the year ahead.

Vaccines and Recovery

The big variable continues to be public health, says Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy. “The overall pace of that recovery will depend on how quickly people are able to go back to work and regular patterns of consumption,” she says.

“There will be some economic recovery in 2021, and that does bode well for philanthropy over all at least keeping pace with 2020,” she says. But the shape of the economic recovery is going to depend on the rollout of the vaccines in the coming months.

Some people were able to save more money this year by staying home, not traveling or commuting, and not spending money on entertainment. That may have left them with more disposable income for philanthropy.

The pandemic created a “shock” to normal patterns of giving, which could disrupt — at least temporarily — the long-term trend of fewer Americans’ giving, Osili says. If and when people start going back to familiar patterns of consumption in 2021, she says, many households form giving habits when they learn about and get involved in particular issues or causes.

“For nonprofits, the message is to continue to engage those donors,” Osili says. “Some may be in a position to continue to give.”

Focus on Retention

Data from the Fundraising Effectiveness Project found that just 14.2 percent of donors who supported an organization for the first time in 2019 gave to that organization again in 2020.

If it’s true that a larger share of households gave in 2020, it’s now up to nonprofits to do a stellar job of keeping those donors in the fold, says Laura MacDonald, principal of the Benefactor Group consultancy and chair of the Giving USA Foundation.

“What I’d love to see is a concerted effort across the nonprofit community to really up the game when it comes to donor retention,” MacDonald says.

Organizations should think about what they can do to increase the likelihood that a donor will be thanked appropriately and promptly, she says. Give donors accurate information about the impact of their gifts. Then, at an appropriate time, when the organization asks them to give again, ask that they consider becoming a monthly or sustaining donor.

Strong Stock Market

“Even though the circumstances of 2020 did help to democratize philanthropy — even decolonize philanthropy to some extent — we’re still reliant on those bigger gifts,” MacDonald says.

Unemployment hit record highs in 2020, and the gross domestic product had its sharpest contraction in modern American history. Meanwhile, despite volatility early in the pandemic, the stock market had an exceptionally strong year. The S&P 500 index and Dow Jones Industrial Average ended 2020 with record highs, and the Nasdaq composite had its best annual gain since 2009. Even in the wake of the attempted insurrection at the U.S. Capitol, the markets have remained largely unfazed.

“The upside of the market and the overall economic growth for certain individuals made it possible for a lot of really big gifts to go through in 2020,” Hills says.

Of course, those mega-gifts might paint a rosier picture for overall 2020 giving than many nonprofits experienced. It’s an open question whether big donors will keep up the same pace in 2021. “Is that bump repeatable? Probably not.” Hills says. “Is it abnormal? Probably is.”

MacDonald urges fundraisers to exercise caution as they pursue the largest gifts. Some of those donors might be waiting to see how things evolve before they make that nine- or 10-figure gift to their alma mater or other organizations they’ve supported in the past, she says.

“Major-gift officers working with those kinds of donors may need to be patient,” she says. Look at interim measures, like asking for an initial gift equivalent to a first year’s pledge payment, and continue to convey to donors the impact of their giving. Strategies like challenge or matching gifts may encourage big donations.

Read the full story here.