As we begin a New Year, we reflect on the wonderful generosity of so many individuals, corporations, and foundations whose charitable giving in 2015 enriched and saved lives through the arts, education, healthcare, environment, human services, and religion.
In 2015, we learned that philanthropy had reached a new high, reaching $358.38 billion, a 7.1% increase in current dollars (5.4% in inflation-adjusted dollars). This is reported to be the fastest recovery on record for the past 40 years of tracking charitable giving and surpasses the 2007 pre-recession peak in giving. Along with a return to pre-recession giving levels, we have also seen a return to pre-recession giving priorities as evidenced by the growth in giving to environmental causes and arts and culture nonprofits.
So, with this level of record generosity, what philanthropy trends should we be watching in 2016?
- Effective altruism – A researched-based approach to charitable giving is growing among donors – both small and large. These donors are evaluating a nonprofit’s performance before they give, much like they evaluate financial investment opportunities. Donors are using evaluation methods of deeper volunteer engagement, site visits, and even participating in collaborative efforts to effectively evaluate nonprofit impact.
- Attention economy – The attention economy treats our attention as a scarce commodity and characterizes attention transactions in the same realm as financial transactions. The principle of the attention economy is “Where the attention goes, the money goes.” In the midst of the growing attention economy, capturing a person’s attention is the first stage in acquiring new donors, members, sponsors, clients, and volunteers. Thus, capturing a greater share of the attention economy is key to positioning your nonprofit to grow its share of the philanthropic marketplace.
- Mega gifts – In 2014 and 15, we saw several ultra high net worth donors give transformational gifts to charities. The rise of these “mega gifts” is countered by slower growth in giving at the middle and lower gift levels. This dichotomy in giving is partially indicative of the economic recovery which has not been consistent across all levels of household income, with upper income households recovering from the recession more quickly than middle and lower level households. Fundraisers should consider how do we engage donors at all levels, spurred by the generosity of these mega gifts, to join at whatever level of gift is comfortable for them?
- Donor advised funds – The growth of giving through donor advised funds (DAF’s) has certainly been a growing trend in philanthropy. DAF’s are not as impacted by economic environment and remained steady during the great recession. While nonprofits need to understand the variety of giving vehicles available to donors, like planned gifts or DAF’s, in the end it still boils down to the personal relationship with your donor and having a program that supports long term donor relationships.
- Online giving – Online giving currently comprises approximately 10% of all charitable giving; however, it is outpacing the growth of charitable giving overall at a growth rate near 9%. A spike in online giving comes at the end of the calendar year and is made via nonprofit websites. In addition to these trends, the growth of days of giving along with Giving Tuesday are all indicators of the continued impact online giving can make in supporting your nonprofit, especially at the annual giving and donor acquisition levels.
- Corporate partnerships – Along the lines of impact investing, corporations are more and more focused on creating corporate partnerships with nonprofits that reinforce the corporate mission and strengthen employee satisfaction and goodwill. A corporate sponsorship offers nonprofits the opportunity to create a mutually beneficial relationship with its corporate donors yet goes beyond corporate giving to require additional time and stewardship on the part of the nonprofit.
- More campaigns – In the first half of 2015, approximately 46% of nonprofits in a recent report were in a campaign, up from 12% in the first half of 2011. Clearly, the increase in fundraising campaigns is tied to the economic and charitable giving post-recession recovery. This increase means that more donors are being asked to make transformational gifts to nonprofits which gives nonprofits the opportunity to tell their story and create an environment for increased major and planned gift investments.
- Generational differences – For the first time in history, there are 4 generations in the workplace and in the philanthropic market place – silent/great, baby boomer, gen x, and millennials. These 4 generational views and societal influences create very different approaches to philanthropy. The opportunity, and the challenge, for nonprofits is to create meaningful ways to engage with the gen x and millennial generations to build major donor and volunteer leadership for the future while continuing to nurture and grow investment from the baby boomers and silent/great generations.
These nonprofit fundraising trends, and others that will develop as the year unfolds, are important to watch especially in the midst of a U.S. presidential election year. Happy 2016!