4 Fallacies of Year-End Giving
Have you ever heard of this holiday story? A person cooked a Thanksgiving turkey and threw away the legs. When asked why they did that, the person cooking replied that it was how their parents cooked the turkey. When the parents were asked, they said that's how their parents did it. When the grandparents were questioned, they said they cooked the turkey with no legs because, in their day, the oven was too small for the turkey with its legs attached.
So, what does it have to do with year-end giving as we know it and the fallacy that it's what we need to continue to do? Just like capital campaigns are not always the solution — neither is year-end giving. Organizations often look to the past and repeat it — even when it no longer serves them.
As the end of the year approaches and we enter the holiday season, many nonprofits ramp up their efforts to encourage people to give back. There’s a perception that donations tend to spike this time of year. The idea of Giving Tuesday only lends to the thought that the holiday season is essential. However, the aim of Giving Tuesday isn’t to suggest that nonprofits should take their foot off the fundraising pedal for the rest of the year. It was created to help promote year-round fundraising efforts.
Unfortunately, many marketers and nonprofits use year-end giving as a strategy to increase donations. Look closely at nonprofit’s marketing materials or websites and you’ll likely see phrases, such as “last chance to give” or “end-of-year giving.” Apparently, repeating it over and over convinces leaders to think people will feel pressured into contributing. However, year-end giving is not only unnecessary, but it’s also counterproductive.
There’s absolutely no reason why donations should be higher at the end of the year than at other times. No seasonal trends indicate that the need for donations changes significantly during the year. Further, there are several reasons why it's a bad idea to use year-end giving as a significant fundraising strategy.
1. Fundraising Is Year-Round
First and foremost, it's essential to recognize that fundraising is not a race. It’s a long marathon and, as such, it takes place across the continuum of the year — not in the final three months of the year. It’s almost tragic to see nonprofit leaders trying to squeeze in as many donations as possible before the year ends. It makes me wonder where they’ve been in the preceding months.
Some nonprofits indeed receive many gifts during this time of year, but it could be the culture and tradition of their donors, or that they place a lot of money into making every part of the year a big fundraiser, like St. Jude Children’s Research Hospital does.
There's also no objective evidence that donations received at the end of the year are any different than those obtained at any other time. People who give to your organization will do so regardless of when they receive the request. So there’s no need to try and time your fundraising efforts to happen at the end of the year. This is particularly true for major donors. By the holiday season, they had already made the decisions they were going to make about fundraising, and if you waited, then you missed the boat.
2. Year-End Doesn't Help Your Brand or Cause
Year-end giving doesn't help your brand or cause since it doesn’t allow donors to plan for their donations in a meaningful way that aligns with their philanthropic values. Donors must be allowed to select their donation timing based on their unique situation and needs. If donors are encouraged to give at the end of the year, they’ll either feel pressured to give more than they can afford or guilty if they don't provide the recommended amount.
These feelings aren’t conducive to positive feelings about your organization or a donor's conscious decision to support your cause. Your donors want to give because they want to, not because someone is pressuring them. By pushing for donations during a specific time of the year, you're telling donors you don't trust them to do what's right for your cause on their own.
3. The Timing Is Incorrect
Your donors want their gifts to make a difference, and donations in November and December are unlikely to impact your organization's efforts until the following year. There's a chance that you won't receive and spend those donations when you need them. By pressuring donors to give during the year-end, you’re missing crucial periods for support. For instance, many organizations operate with a fiscal year starting on July 1, yet they let the summer go without asking for money.
Year-end giving is an ineffective strategy because it's based on pretenses. By that, I mean that you're artificially creating a point in time when you absolutely need to make sure donors support your cause. But, they might be tapped out by the end of the calendar year (and tax year), or they might not be interested.
4. Year-End Harms Long-Term Relationships With Donors
Ideally, you want to build long-lasting donor relationships that are formed on trust and a mutual understanding — with you and the donor having a vested interest in continuing the relationship. However, this is not the case with year-end giving if it becomes the central focus of fundraising. Donors want to feel appreciated and acknowledged for their contributions. One of the worst things you could do is make donors feel as if they're obligated to provide during a specific time of the year.
By making a case for your donors to give now instead of thanking them for their past donations and encouraging them to give again in the future, you may damage your chances of getting repeat donations later. Donors do give to genuine urgency, but not to scarcity.
It seems more nonprofits focus on year-end fundraising, and then they compete for donors. Instead, the best approach is to consider fundraising a year-long effort. Overall, looking at every season as a special time for fundraising increases the chances of cash flow and nonprofit sustainability.
I believe the premise of year-end giving’s strength started with the tax deductibility of gifts, but now, that may not even apply because of the standard deduction the IRS defined. But as with all things, that opportunity is not as strong as when it starts at the beginning of the tax year.
I remember waiting in a development office on Dec. 31 one year as donors called to get their year-end gift in for the write-off. Now all they need to do is give to a donor-advised fund and wait to spread their contribution over time. So, year-end giving is no longer what it used to be, and it's time for a change.
Related story: Don’t Make Year-End Giving a Transaction
Paul D’Alessandro, J.D., CFRE, is a vice president at Innovest Portfolio Solutions. He is also the founder of High Impact Nonprofit Advisors (HNA), and D’Alessandro Inc. (DAI), which is a fundraising and strategic management consulting company. With more than 30 years of experience in the philanthropic sector, he’s the author of “The Future of Fundraising: How Philanthropy’s Future is Here with Donors Dictating the Terms.”
He has worked with hundreds of nonprofits to raise more than $1 billion dollars for his clients in the U.S. and abroad. In addition, as a nonprofit and business expert — who is also a practicing attorney — Paul has worked with high-level global philanthropists, vetting and negotiating their strategic gifts to charitable causes. Paul understands that today’s environment requires innovation and fresh thinking, which is why he launched HNA to train and coach leaders who want to make a difference in the world.