Pay Attention…..Things Are Not Changing
With the release of the 2022 philanthropic numbers from the Giving Institute and the Lily School of Philanthropy, it is well known that philanthropy saw a dramatic drop not only in total dollars but as a percentage of gross domestic product last year. We're now getting indications of the same in 2023.
The Fundraising Effectiveness Project reported that donor participation has dropped 10.8% in the first part of 2023. And even more concerning is that donors who have given more than $5000, contributing a strong majority of all donations for a nonprofit in the last decade, have dropped significantly. Even more so, the number of donors participating in an annual giving program is down as well, both in the acquisition of new donors and lower retention of existing donors.
All of this is to say that as the number of donors across the United States continues to drop, gift officers’ dependency on single large donors becomes more volatile if those one or two donor scenarios don't come to fruition this year, In terms of a gift. At the same time, the overall dollars for philanthropy still seem to be driven by incredibly large donors, which is pushing gift officers to consider and concentrate on a lower number of individuals to make their metrics work. This concern also then rolls up into a challenging scenario for the nonprofit and its philanthropy overall.
What are we supposed to do?
First and foremost, having a deep meaningful relationship that is mutually beneficial with individual donors is critical. Gift officers who do this will know when a potential donor might not give this year because they're in regular contact and having meaningful conversations about a donor’s engagement. This will allow gift officers to find other opportunities if necessary. Also, we most likely are going to have to start to shift toward more planned giving metrics and acceptance as donors who still want to make a difference but are concerned about their current individual financial situation may still want to give after those personal resources aren't needed to live day-to-day. But are our nonprofit leaders in finance and in strategic planning ready for this shift? Is the organization overall ready for this shift?
Adjustments are going to have to be made. With the current economic situation, more and more people are feeling financial pressure coming out of the pandemic and with increased costs from inflation. It's most likely that previous donors will continue to pull back to take care of family rather than give charitably. This is a tough situation we're all going to have to adjust to.
