Donor retention guide: 7 strategies for fundraising success
- Fundraising ideas
- Nonprofits
- Donor Engagement
Giving stayed mostly flat, but corporate giving spiked in 2021 compared to 2020, and non-COVID-related causes rebounded from 2020 decreases—these are just two outcomes from the latest Giving USA numbers. Published for more than 65 years, Giving USA is the longest-running and most comprehensive report on philanthropy in the United States. Giving USA reports allow the whole nonprofit sector to identify trends in charitable giving important to organizations’ success and growth, and organizations can use the data from Giving USA to inform fundraising strategies and allocate resources for the greatest outcomes.
Let’s go over some of the initial findings’ biggest “aha!” moments, plus key takeaways based on these new insights.
The report found that giving by individuals totaled an estimated $326.87 billion, rising 4.9 percent in 2021 but staying flat at 0.2 percent when adjusted for inflation.
Giving by individuals always makes up the largest slice of the pie and represents nearly 70 percent of all giving, which is why nonprofit fundraising experts often advocate for organizations to focus on increasing their individual giving efforts. In 2021, it jumped to 4.9 percent, which is flat when adjusted for inflation.
For over two decades, the nonprofit sector has seen a consistent trend in a declining number of donors, while the total dollar amount given to charities has remained steady—put another way, more and more giving is becoming concentrated in the hands of a smaller and smaller group of individual donors. This is backed up by Fundraising Effectiveness Project data showing that mid-size and larger donor segments have remained relatively sticky and stable throughout the pandemic and represent the majority of dollars raised. The FEP’s fourth quarter report for 2021 also found that the micro donor segment (those who donate less than $100) and small donor segment (who give between $100-$499) are shrinking—micro donors shrank by just over 9 percent, and small donors shrank by just over 6 percent.
During the early days of the pandemic, many organizations experienced an influx of new crisis donors, and what many are still unraveling is whether these were existing donors broadening their gifts because of the pandemic and social justice movements, or whether these numbers represented a boost in net new donors. It’s not hard to imagine how economic fluctuation like we saw during the earlier days of the pandemic could have affected micro and small donors’ disposable income that might have gone to charitable giving.
Giving by foundations is the second-largest piece of the pie and represents over $90 billion. In 2020, giving boomed by 17 percent and according to Giving USA, in 2021 foundation giving increased by 3.4 percent (which is a decrease of -1.2 percent when adjusted for inflation.)
Despite the inflation-adjusted decline, it’s very encouraging to see foundation giving at this level because there has long been an argument that foundations are not giving as much as they truly could to support charity—the argument goes that some foundations have placed a higher priority on reinforcing their endowments, especially when faced with multiple once-in-a-generation crises. Given this criticism, it’s encouraging to see many foundations are voicing the desire to lessen the application and reporting requirements of charities in an effort to make grant management by organizations more flexible, which can enable their grantees to spend more time on mission-related work.
Additionally, there’s growing interest from foundations in supporting capacity building and initiatives around diversity, equity, inclusion, and belonging (DEIB.) When these areas are well-funded, they help organizations sustain themselves beyond pure program delivery. (In fact, operational dollars like those are often what make program delivery, and the resulting social impact, possible in the first place!) We’ll be interested to see whether foundations grant out more funds, and continue to streamline grant reporting requirements, in 2022.
The year 2021 saw a drop in giving by bequest, which totaled an estimated $46.01 billion in 2021. Bequest giving declined by -7.3 percent from 2020, which is actually a decline of -11.4 percent when adjusted for inflation.
This drop is compelling, given that many nonprofits have been anticipating a massive donor demographic shift, and corresponding upswell, in bequest fundraising. For most nonprofits, the largest and most generous group of donors—Baby Boomers and some Greatest Generation members—are exiting their prime giving years as Gen X is entering theirs, with Millennials close behind.
As a result of this demographic shift, many organizations have been preparing for a massive wealth transfer that’s expected to take place between 2018 and 2042. That wealth transfer is estimated to include about $9 trillion in gifts to charities. It’s not clear from these initial numbers whether this reported drop in bequest giving is due to a lack of donor interest in bequest giving, nonprofits’ need to scale up their fundraising infrastructure in order to solicit and accept bequest giving, or a combination of these and other causes, but we look forward to examining this finding more closely when the full report is released in July.
While other findings were flat or represented decreases for 2021, one area saw noticeable growth: giving by corporations is estimated to have increased by 23.8 percent in 2021, totaling $21.08 billion. This is a growth of 18.3 percent when adjusted for inflation. Corporate giving is defined by Giving USA as including cash and in-kind contributions made through corporate giving programs, as well as grants and gifts made by corporate foundations.
This is meaningful stuff. In 2020, giving by corporations was down 6.1 percent, as many businesses were affected by the pandemic. However, with this awesome resurgence of nearly 24 percent in 2021 (18 percent when adjusted for inflation,) it shows the growing importance of corporate social responsibility (CSR,) and it could be an important cue to nonprofits to begin exploring corporate grants and partnerships if they’re looking to diversify their fundraising streams.
Five cause categories experienced either flat or negative growth for the year 2021, according to the Giving USA report’s initial numbers: unallocated giving, education, human services, international affairs, and giving to individuals. However, readers might find bigger “aha!” moments in the cause categories that experienced meaningful growth in their donation revenue for 2021.
Giving increased for cause categories like religious organizations; health; environmental and animal organizations; public-society benefit; arts, culture, and humanities; and giving to foundations. For many of the causes on this list, this growth could be attributed to a normalizing effect after donors paid special attention in 2020 to organizations and causes more directly related to natural disasters and the pandemic.
To us, the greatest “aha!” moments in these Giving USA initial numbers appear around public-society benefit organizations and arts, culture, and humanities organizations.
Giving to public-society benefit organizations increased an estimated 23.5 percent between 2020 and 2021, to $55.85 billion. Adjusted for inflation, giving to public-society benefit organizations grew 17.9 percent.
This giving includes social justice charities, where giving in this space has been increasing for years. We expect this growth to continue, given the vibrant ongoing organizing, advocacy, and fundraising efforts at local, state, national, and international levels around civil rights, climate justice, workers’ rights and wealth inequality, reproductive justice, LGBTQ+ rights, and more issues like them.
Giving to arts, culture, and humanities is estimated to have increased 27.5 percent between 2020 and 2021, to $23.50 billion. Adjusted for inflation, giving to the arts, culture, and humanities subsector increased 21.8 percent.
During the start of the pandemic, many arts and culture organizations struggled with whether they should fundraise at all when so many other organizations needed critical funds to do disaster relief and COVID-related direct service. Some arts and humanities organizations closed their doors; others got creative in their approach to service delivery. Even though many fundraising experts encourage organizations to keep fundraising through good time and bad, some stopped. 2020 was a difficult time for many, and the result was a decrease of 7.5 percent in arts-related giving.
However, this year, the sector has seen a resurgence of 27.5 percent, the largest of all gift areas. Adjusted for inflation, that’s still an impressive 22 percent. As we think about arts and culture organizations in terms of their membership programs, we have more proof of the rebound. The M+R 2022 Benchmarks report found that membership-related revenue dropped in 2020 but came back majorly in 2021. This means nonprofit membership-related revenue saw an incredible 81 percent year over year increase, which is very encouraging for these funds.
We’re living in a moment of constant change. As we, our communities, and our world evolve, our fundraising will need to respond.
Traditional practices, even the metrics that organizations use to evaluate progress, need to be revisited. For some, all this change seems overwhelming, even scary. For others, it’s exciting and not happening fast enough. But we’ve grown so much these last few years that this change is doable—the more we lean into it, the better we will be. As nonprofit staff everywhere absorb these Giving USA insights and those that will be released mid-July, take a moment to review your fundraising plans: are you aligned with where donors are going?
For many, now is the time to invest in creative and engaging messaging across content formats and channels to connect with individual donors. Whether you’re a large or small nonprofit, you have options for how you can optimize the work you’re doing to build relationships with your donors. As you re-evaluate your donor communications, this could also be a critical moment to build new partnerships and strengthen your organization’s commitment to DEIB across every administrative and program area.
This moment could also mean it’s time to modernize your fundraising techniques. It might be time to refocus your recurring giving program on Subscription GivingSM; or to revitalize your donor retention strategies to retain more support across every segment, from major to micro. It could also be a reorganization of your time to block out a few hours each week dedicated to proactive rather than reactive fundraising approaches.
As you build your strategic fundraising plans with new research in mind, it makes sense to ask yourselves what investments your organization needs to make in order to manage this change and support the staff carrying out the work to advance your mission. For some, it might necessitate additional software or technology; especially if, like many in the sector, your organization has been seeing greater demands for your services while struggling to add additional human resources.
No matter your role at a social good organization, we support doers with the intuitive technology they need to make a bigger difference in their day-to-day work. From connecting clients to the services they need to pulling complicated data into a clear report for funders, from rallying employee donations faster for urgent causes to reaching new donors with compelling stories of impact, we help the doers make progress toward their ambitions. Learn more about the ways our tools can support your work.
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