The annual report on philanthropy in the United States as compiled by Giving USA was released this week, and serves as one of the helpful barometers informing development strategy for many nonprofits.
As previously stated, charitable giving in the United States often correlates to overall market vitality. Said another way: people feel more generous and likely to give philanthropically when their stock market portfolio is doing well.
And to no surprise, the bear market of 2022 which included some of the worst market performance since the 2008 financial crisis appears to have negatively influenced charitable giving to nonprofits. Elevated inflation likely played a role as well.
The depressed market may have affected giving from those of greater means more than smaller-sized donations which were more likely influenced by 2022’s higher inflation rate.
And yet at the same time, there is tremendous generosity occurring across the nation. Let’s not forget, Americans gave nearly half a trillion dollars to charity in 2022!
64% of giving in 2022 came from individual donors, 21% from foundations, 9% from bequests (estate gifts) and 6% from corporations. This is a cleareyed reminder that individual giving remains a key source of contributed income for many organizations.
We would encourage many organizations to consider the following three prompts:
Retaining your donors is not just the right thing to do, it is good for your bottom line. For many organizations, the cost to secure a first-time donation is considerably higher than that of securing a renewed or repeat donation. Track your annual donor retention rate and set a goal to increase your retention rate each year by a certain percentage - perhaps a 3% increase each year.
Listening to your donors is a vital way to learn what areas of your organization interest them. For example, if you are a hunger relief organization and rescue food from groceries and restaurants, provide career training in the culinary and hospitality industry, and also need to update equipment in your industrial kitchen…well, do you know which area(s) of your mission speak to each of your donors? Getting to know your donors better strengthens your case for support when it is time for their solicitation, while ensuring you are helping them realize their charitable priorities as well.
Utilize multi-channel solicitation whenever possible. While some board members or highly-engaged donors may occasionally feel “over-solicited” for contributions, so many institutions are, broadly speaking, under-soliciting their larger donor pool of donors. We attribute much of this under-solicitation to the outsized reliance on email solicitations. Rather than rely exclusively on soliciting your donors via email, consider also using phone calls, direct-mail, postcards (often more affordable), digital platforms, and never overlook in-person solicitations. It is human nature to need to be reminded, and sometimes to be reminded multiple times, to take action on a given request.
In summary, the findings by the 2023 Giving USA report on philanthropy in the United States illustrate a contraction in giving to nonprofits from the year prior, only the fourth time since 1956 this has occurred. The stock market and inflation both factored into this.
At the same time, Americans continue to be generous, responding to the needs of communities, the nation, and beyond.
Nonprofits will be wise to redouble their development efforts, to build meaningful relationships with their donors and prospective donors, and to leverage their compelling case to grow the base of contributed support.
Cape Fletcher Associates