Is the Bottom Falling Out
I hate being correct in this area….
In several podcasts and blogs from this author, plus my voice in calls in most of the last part of 2023, I have been yelling and screaming about the decay, the hollowing out, of the general donor base of philanthropy. Not for one sector. Not for one charity. Not for one state or geographic area. This is an issue across the board with fewer people making any type of charitable gift to any nonprofit. While the trend has been very clear for the last 15 to 20 years, my fear was and is that inflation was having a much larger effect on people's disposable income than the national, industry/governmental sources understand or indicate.
In the last week, an article came out in the Chronicle of Philanthropy that highlighted this issue. One industry leader was quoted as asking, “has the bottom fallen out?”
As a result of more and more nonprofits signaling concerns, particularly after a review of calendar year end giving in December of 2023, many nonprofits and their leaders are deeply concerned about the results for 2024. While I believe the sector is resilient overall, others, including your author here, have indicated that when people's disposable income begins to disappear because of inflationary impacts in the costs of bread, eggs, clothing, gasoline, housing, etcetera, philanthropy will be the first to go. People will make sure the basic necessities of their life are taken care of before they give extra money to a nonprofit.
To combat this, nonprofits are taking a more aggressive effort with communication. More emails. More aspects about impact. A client recently told me about a conversation he had where a company comes in and individualizes, as much as possible, mass stewardship efforts to lower-level donors. And somewhere in this effort lies the answer. Keep the people who support you the best closest to you. Then help them to understand why their donation is so impactful.
I try hard not to write and say the same things over and over. But this issue is going to come up again in 2024. While the national governmental statistics indicate a decrease inflation overall, that is NOT a reduction in prices. That just means the increase isn't going up as much as it was six months or a year ago. Inflation and the pressure on disposable income inside families is NOT transitory. The cost of eggs or milk isn't actually going to go down. It just may not go up as much. And that's going to put immense pressure on lots of nonprofits as they try to figure out what to do next.
