In late June, the Giving USA 2013 report was unveiled across the nation, and its findings created both hope and concern among the fundraising community.
Robert Evans, founder and managing director of EHL Consulting Group, was one of four panelists at the Philadelphia unveiling of the report, and recently I spoke with Evans in further detail on what the findings mean for fundraisers moving forward.
"The results of charitable giving in 2012 showed donors still have a definite interest in supporting the nonprofit world in our country and the world, but they have done it in a relatively lackluster fashion," he says." There have been steady increases over the last three years in giving as the economy is recovering. That's the very good news. And historically, giving has been a lagging indicator in terms of recovery from a recession or depression, which is holding correct again as we come out of the great recession of 2008 and 2009."
That's the good news, but it doesn't mean fundraisers can rest on their laurels, content in the fact that giving is on the rise.
Concerns
One of Evans' biggest concerns is nonprofits don't seem prepared to provide answers to the types of questions donors are now asking.
"The nonprofits of America don't seem particularly prepared or positioned to provide the vision and information that will move donors to make really good gifts," he says.
Donors these days are increasingly looking for impact and good use of their gifts. They no longer just implicitly trust that an organization will use their money wisely. They want to see it in action, how it furthers the mission and helps the cause.
"The challenge for all nonprofits is to start asking questions differently of themselves — like: What do we think it is that will really tantalize donors and show donors how they can make an impact?" Evans says. "Donors increasingly want impact on their gifts, and they're not prepared to do business as usual in terms of the types of giving that perhaps characterized the nonprofit world in the '80s and '90s.
"… The teams — not just the development director but the director of the organization, volunteers, staff, board members, etc. — need to put their heads together and tweak the cases for giving to show impact, inspiration and excitement. There's some repackaging that's going to be required in order for giving to really catch up with the wealth of America," he adds.
Another big concern is the decline in giving to religion. In two of the last three years, Giving USA has recorded a decrease in giving to religion, and this is troubling because people of faith are generally the best donors regardless of which faith, Evans says.
"Now one of the reasons I believe there is a decrease in giving to religion is that the organizations that make up this category — churches, synagogues and mosques — are generally the least sophisticated in terms of fundraising techniques and expertise, and they're slow to change," he says. "So we don't see a lot of directors of development at houses of worship, although generally some of the midsize and bigger houses of worship have started hiring people with this expertise. This is a wake-up call for houses of worship."
It's also troubling that while there was a significant increase in corporate earnings in 2012, it was not followed by a comparable increase of corporate giving. Evans admits that it's "unrealistic of nonprofits to expect corporate America to respond at the same level of their profits," but it sill is concerning that nonprofits and corporations aren't partnering even more.
Encouragements
However, it's not all doom and gloom. After all, giving did increase last year, and there are still lots of dollars out there for fundraisers. In fact, the increases in giving to arts and culture, environmental, and animal-welfare groups show that donors realize the importance of these organizations in our culture and are starting to invest with gifts in those areas even further. That has Evans heartened.
He also pointed out the enormous increase over the last few years of giving to donor-advised funds.
"[The increase in donor-advised funds] shows me that donors want to be generous. They want to give, but they're setting up a bank account for themselves to fund future projects when things come along that sizzle," he says, which makes the case for support that much more critical.
Another good thing is that many donors today realize the need for an organization to build an endowment so it can survive and thrive down the road. Thanks to the merging of business practices in the nonprofit world, the understanding of future need is becoming more commonplace.
"We want to make sure that the organization that we're supporting is going to be around for a long time. Some of its missions may change. Obviously staff may change. Programmatic priorities may change. But an organization that is doing good work today should hopefully still be around five, 10 or 20 years from now or longer and be around with strength," Evans says. "And the only way to do the tis to build financial integrity or security through restricted and unrestricted endowment."
Evans adds that as the result of the downturn five years ago, EHL Consulting has changed the guidelines for how much endowment a nonprofit should have. With financial difficulties becoming even more challenging, EHL recommends organizations strive to have three to five times their annual budgets in restricted and unrestricted endowments.
Takeaways
So what does this all mean for nonprofits? Here are a few takeaways Evans offers:
- "We need to use technology to keep going back to the people who did give and keep returning. Be thorough about former donors. Also, there needs to be a plan about retention. How do you keep your existing donors? What do you write to them? What do you say to them? What do you call and offer them to make sure that they stay happy and involved?"
- "Nonprofits also have to be savvy about technology, especially the new technology, about how you keep people involved and how you reach out to them. Sending out a newsletter once a year just won't do it. Sending out an e-mail every now and then just won't do it. What's the plan?"
- "From a purely practical point of view, nonprofit offices — development offices — need to start retrofitting their record-keeping to note who has a donor-advised fund so you can reach out to them intelligently. It sort of goes back to the old days when we had to retrofit our record-keeping to include a fax number. This is a new dimension."
- "We can't overlook how important personal touches are. If it's a personal call form a board member, if it's a personal call from a director of development, if it's a personal phone call from even a recipient of services — whether they know the donor or not — it doesn't matter. We're in an impersonal world today, and we need to do everything we can to let donors know how important they are to our cause."
- "Sweat the small stuff. Don't overlook some of the most minute details because that will impact how even some of our biggest donors respond or not respond to the types of situations that donors are called upon."
- "Many times, it's back to basics. We become so enamored with getting the million-dollar or multimillion-dollar gift that we put blinders on about anything and everything else, and then ultimately we get in trouble."
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