If 2020 has taught us anything, projections are difficult to make.
Individual nonprofits and experts researching donors are still collecting data on how they donated over the past calendar year. The giving was almost certainly better than anyone expected, backed by an emerging stock market, loads of mega-gifts, and growing grassroots support for needs uncovered and amplified by the pandemic.
It was around this time of year that researchers from Indiana University’s Lilly Family School of Philanthropy and advisors from Marts & Lundy would typically publish a report to predict the fundraising landscape for the coming year. This report took into account a wide range of economic indicators, including the stock market, employment growth, wage growth, gross domestic product, and federal tax law.
However, a few weeks after 2021 there is more variability and disruption than ever before, says Phil Hills, president of Marts & Lundy, and the donation experts are skipping the report.
“We don’t want to mislead our customers or the industry and say we know where we’re going,” he says. “I don’t think anyone can reliably say that they have any idea of where things are really going to go.”
Given this uncertainty, The Chronicle spoke to Hills and other experts about their expectations – and advice – for donating and fundraising for the coming year.
Vaccines and Recovery
The big variable continues to be public health, says Una Osili, assistant dean for research and international programs at Lilly Family School of Philanthropy. “The general pace of this recovery will depend on how quickly people can get back to work and how regularly they consume,” she says.
“There will be some economic recovery in 2021, and that’s a good sign for philanthropy, at least to keep up with 2020,” she says. However, the shape of the economic recovery will depend on the launch of vaccines in the coming months.
Some people have saved more money this year by staying home, not traveling or commuting, and not spending money on entertainment. That could have given them more disposable income for philanthropy.
The pandemic caused a “shock” to normal donation patterns that could – at least temporarily – disrupt the long-term trend towards fewer American donations, Osili says. If and when people return to familiar consumption patterns in 2021, many households will form habits as they learn and engage with certain topics or causes.
“For non-profit organizations, the message is to keep these donors engaged,” says Osili. “Some may be able to keep giving.”
Focus on retention
Data from the Fundraising Effectiveness Project found that only 14.2 percent of donors who first sponsored an organization in 2019 would support that organization again in 2020.
If it’s true that a greater percentage of households donated in 2020, it is now up to nonprofits to keep those donors in an excellent manner, says Laura MacDonald, director of the Benefactor Group’s advisory firm and chair of the Giving USA Foundation.
“What I would like to see is a concerted effort across the nonprofit community to really improve the game in terms of donor retention,” MacDonald says.
Companies should think about what they can do to increase the likelihood that a donor will be adequately and promptly thanked, she says. Provide donors with accurate information about the impact of their gifts. Then, in due time, if the organization prompts them to give again, ask them to consider becoming a monthly or sustained donor.
Strong stock market
“Even though the circumstances of 2020 helped democratize philanthropy – and even decolonize philanthropy to some extent – we still need these greater gifts,” says MacDonald.
Unemployment hit record highs in 2020, and gross domestic product saw the sharpest decline in modern American history. Despite the volatility at the start of the pandemic, the stock market had an exceptionally strong year. The S&P 500 Index and the Dow Jones Industrial Average ended 2020 at record highs, and the Nasdaq Composite posted its best annual profit since 2009. Even after the attempted uprising in the US Capitol, the markets remained largely unaffected.
“The upward trend in the marketplace and the macroeconomic growth of certain people have allowed a lot of really big gifts to come in in 2020,” says Hills.
Of course, these mega-gifts could paint a rosier picture for 2020 as a whole than many non-profit organizations. It is an open question whether large donors will keep the same pace in 2021. “Is this bump repeatable? Hills says. “Is it abnormal? Probably is.”
MacDonald urges fundraisers to use caution when chasing the biggest gifts. Some of these donors may be waiting to see how things play out before giving that nine- or ten-digit gift to their alma mater or other organizations that have supported them in the past, she says.
“Officials with large gifts who work with such donors may need to be patient,” she says. See interim measures such as For example, ask for an initial gift equivalent to a pledge for the first year, and keep communicating the implications of their donations to donors. Strategies like challenges or matching gifts can encourage large donations.
Suggestions and incentives
With a new government in power and democratic majorities in the House and Senate, further federal incentives are likely. That could be good news, says Osili.
President Biden’s $ 1.9 trillion stimulus proposal would not only allow nonprofits to participate in a new loan program and raise $ 3 billion from an economic development fund, but also direct payments to Americans of 1,400 Allow US dollars. Fundraising drives should be careful – some people donated portions of previous stimulus checks to charity.
Major legislative changes, such as large tax hikes for the rich, are unlikely, given the razor-thin room for maneuver for the Democrats in the Senate and the reduced majority in the House of Representatives. Looking ahead, nonprofit advocates hope for long term changes in the charitable allowance.
The Tax Cuts and Jobs Act of 2017 reduced Americans’ ability to benefit from their donations to charity through the tax code. Temporary regulations in tax years 2020 and 21 designed to encourage donation during the pandemic allow individuals to deduct up to $ 300 and couples up to $ 600 in charitable donations, even if they do not provide disclosure .
While MacDonald and others are pleased that the universal charity deduction has been extended, it may not result in a significant increase in the total donation, she says. “The upside is that it might increase the conversation about the importance and value of giving to charity.”
Some wealthy donors are taking advantage of the option to write off cash deposits for up to 100 percent of their adjusted gross income – a provision that has also been extended for the 2021 tax year. The previous deductible limit was 60 percent of adjusted gross income.
Companies are seeing some of their biggest donors taking advantage of the opportunity, MacDonald says. Fundraisers have targeted discussions with individual donors, board members, or campaign committees and have some success when they or a trusted advisor highlight examples of donors who have made use of the provision.
It is wise to discuss this option as many donors are unaware of the change. “I’ve heard a lot of donors that you can imagine sophisticated financial advisers expressing real disappointment for not hearing this from them,” she says. “They heard it from fundraising advisors and development officers instead.”
According to experts, it will continue to be important for companies, foundations and individual donors to act with a view to justice – be it in economic, gender-specific or racist terms.
In the past, companies weren’t necessarily at the forefront of racial and social justice, says Osili. “We’re seeing all of these changes.”
Corporate donation in the coming year will depend on how particular industries and companies are doing in that economy. For example, overall technology was very strong during the pandemic, while sectors like transport did not do so well.
“Fundraising campaigns need to be very well informed about the impact of Covid on a company’s assets and plan their request accordingly,” says MacDonald.
While racial and social justice is increasingly supported, nonprofits of all kinds should think about social and racial justice in relation to their mission.
“It will be up to the organizations to recognize if and where they have contributed to the privilege of whites and then have an honest conversation with their donors about the steps they are taking,” MacDonald says.
Fundraisers would be wise to partner with affinity groups on their largest corporate donors. These affinity groups, for example for black or LGBT workers, have an increasing influence on how their employers give. Corporations are likely working with employee affinity groups to think about the best ways to implement a justice lens in their donations, she says.
Nobody knows exactly how long it will take for the health and economic crisis to subside. Nonprofits, however, should seize the moment to prepare for the light at the end of the tunnel. “Now is a good time to do a lot of strategic planning and campaign planning when we get this out,” says Hills.
Managers who fundraise should also think about how they position their employees for the future. “When will the development officers be on the road again? How soon do you want to get people back on board? ” he says. Now is the perfect time to ask and plan these questions.
MacDonald expects an increased focus on effective diversity, equity and inclusion efforts in donation teams. There could be more workforce development efforts with organizations recruiting and training young fundraisers, she says, and this can help increase diversity and retention. MacDonald also expects the pandemic’s flexibility to work from anywhere to continue.
Even with a vaccine, nonprofits must continue to make it easy for donors to donate online. “We’re not necessarily assuming that some of the big events and fundraisers that may have happened in the past will happen like the pre-Covid economy,” she says. “Digital engagement and opportunities will continue to be important in 2021 and are expected to grow.”