Nonprofits Witness Declining Donor Numbers
Following the Republican Tax Cuts and Jobs Act of 2017, commentators in the nonprofit sector expressed alarm over the bill’s impact on fundraising. As data begins to emerge documenting the past two years of Philanthropic activity in the United States, those fears appear to be coming true.
Reports from late 2018 indicate that nonprofits across the United State witnessed a decline in the number of medium and small donors. While the industry saw a slight uptick in the overall amount given by large donors, this increase does not make up for the loss of donors from lower income brackets.
Figures from the Fundraising Effectiveness Project (FEP) suggest that the number of donors in the United States fell by a staggering 4.5 percent. Other numbers from FEP paint a bleak picture of the philanthropic sector: the percentage of new donors last year fell by 7.3 percent and the retention of new donors from the previous year dropped by 14.9 percent.
United Way Worldwide Vice President Steve Taylor succinctly broke down the significance of last year’s poor fundraising numbers: “The reduced percentage of people giving to charities is a huge red flag for the sector, and it ought to be a huge red flag for our entire country.”
Analysts have pointed to several potential causes of these trends. The rise of the gig economy, for instance, has increased the number of Americans working in the “precariat” who lack job benefits and are consequently less inclined to donate from their vitally needed incomes. Among the most commonly acknowledged culprits, however, is the GOP’s 2017 tax bill, which eliminated charitable tax deductions for millions of Americans.
Unfortunately, there is no quick fix for nonprofits struggling in today’s fundraising climate. The sector lacks the resources that other special interest groups enjoy when it comes to lobbying elected officials. As the nation gears up for the 2020 elections, it is vital for advocacy groups working on behalf of nonprofits to engage in public discourse in order to help set the political agenda for the coming years.
In the short-term, nonprofits can deploy a number of effective fundraising strategies in order to cope with declining donor numbers.
These days, building donor affinity is key to success. Nonprofits must demonstrate their impact while highlighting how donors make their vital work possible. By telling a compelling narrative that prominently features donors, nonprofits can forge lasting relationships that are capable of withstanding competitive fundraising climates.
Members of Generation Z now make up 27 percent of the population. Nonprofit messaging must take this demographic into account, and the best way of doing so is by investing more time and resources into digital outreach on mobile devices. Also, while Generation Z hasn’t entered the work force en masse yet, there are early indicators that its members are passionate about volunteering. Nonprofit leaders can take advantage of this knowledge by shaping how they engage young potential donors.
Additionally, nonprofits should focus more on corporate giving, which has actually increased slightly over the past two years. Nonprofits that focus on environmental and social equity causes especially stand to benefit from corporate giving, as business leaders have pivoted towards social issues in recent years.