The left-leaning Institute for Policy Studies crunched the data from Giving USA Foundation’s annual philanthropic survey to figure out who was giving what. Here’s what they determined:
- Itemized charitable donations increased +104% between 2003 and 2013 (10 years) from households with earnings of at least $10 million/year.
- Similarly, donations increased +57% during the same period from people making $500,000 or more (the top 1%).
- Donations also increased +40% from low-six-figure earners (households earning at least $100,000)
- But contributions declined by -34% from those folks earning less than $100,000.
Yep, the rich are getting richer and they are increasing their giving while regular folks are giving less.
So, what should you do? Should we fret? Pound our fists on our chests? Hold up signs and march? No!
- First I think you’ve got to assess your fundraising strategy. Are you focused on events and low-dollar donors? Or, are you focused on the 80/20 Rule (Pareto Principle)? Face it, approximately 80% of your donations will come from just 20% of your supporters. And that includes planned gifts! About 80% of your planned gift revenue will come from only 20% of the planned gifts. If you’re not focused on major donors with capacity, it’s time to alter your strategy. Populist fundraising will sink your ship.
- Next, you’ve got to place an emphasis on your value proposition. Remember that an exchange of money will only occur if your value proposition is fair and makes your donors feel good. In order to get people to give (whether they are regular folks or rich ones), nonprofits must deliver value. Here are 10 ways to do that.
More about value.
I talk about value a lot because so many in the sector keep fretting about retention rates, the number of small donations on Giving Tuesday, lapse rates, etc. But meanwhile Netflix has grown substantially at a “cost” (donation) of about $10/month (the same amount as a monthly donation). Plus, people still shell out money (make a donation) for $4 drinks at Starbucks every day to the tune of $20+/week or $80/month. And finally, this year’s Black Friday online sales were 21.6% more than last year.
In other words, people have money (and it’s not just the rich people).
The money is out there. The question is, “What are you doing to get it?”
- Start by focusing on people with capacity. That’s just plain smart.
- Increase the value you provide to them. Make those supporters feel good! It’s too time-consuming, tedious and expensive to provide the same level of value to your small donors.
- Invest in planned gift marketing especially focusing on people with capacity. Planned gifts are big! It would take hundreds of years for a monthly annual fund donor to equal just one planned gift. Plus, remember, 80% of your planned gift dollars will come from just 20% of your legacy donors.
- Once you’ve got your strategy redesigned, the money will be there for you to re-invest in smaller donors if necessary. This will be particularly appropriate for nonprofits that require an advocacy component. In that situation, you definitely need a lot of committed supporters. A small cadre of wealthy people won’t be able to pressure congress (legally).
- Do all that and everything else will work out just fine.
Bottom line: Focus on big donors first. You can’t swim upstream against macro-economics.