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What everyone is missing about the 2018 $410 billion giving figure from Giving USA
$410 billion. Hooray! Right?
Not so fast! Lots of folks are not so happy. So today I’m going to tell you what they are missing that makes them all wrong for being so salty.
First, here are some of the downers I recently read and heard after the $410 billion figure was announced.
- Holding pens. The biggest surge was in giving to holding pens such as foundations. Many philanthropists gave their money to their own foundations and donor-advised funds, not directly to charities. Case in point, Mark Zuckerberg and his wife, Priscilla Chan, put $162.4 million in their DAF.
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Fewer households giving. Washington Post: “Una Osili, a dean and economics professor at the Lilly Family School of Philanthropy, says the school’s research shows that the percentage of U.S. households making charitable donations has declined steadily in recent years, from about 67 percent in 2000 to 56.6 percent in 2015 — the latest year for which data is available. She said giving rates for lower- and middle-class families had dropped significantly since the 2008 recession, while the giving rate for the wealthiest 20 percent of households was relatively steady.”
- Retention rates stink. Nonprofit Times: “The stiffest challenge for nonprofits might be one that they’ve been grappling with for years: retaining donors.”
So what’s wrong with these complaints? What are they missing?
The reason why wealthy people put money in their foundations and donor-advised funds…
the reason why fewer households are giving…
and the reason why retention rates are in the toilet:
CHARITIES ARE FAILING TO DELIVER ENOUGH VALUE
WHEN COMPARED TO COMPETITORS VYING FOR DOLLARS.
Yep! I said it! Charities are not delivering enough value! So, they are getting their asses kicked by the competition.
They think they are doing so much good that supporters should just fork over their hard-earned money without question.
They think they are so awesome that supporters should just ‘figure it out’ as they struggle through a nonprofit’s online navigation trying to determine how to give or volunteer.
They think they are too busy to answer the telephones politely and return calls promptly, and supporters should just understand.
No! No! No! No! No!!!
Donor-advised funds.
People with money absolutely love their donor-advised funds. Using them, they get a tax write-off right away as they take a measured approach to their pursuit of meaning in their lives. And besides, they generally don’t trust charities to do good with the money anyway. So, having a DAF (or a foundation) allows them to first give the money away to a holding pen as they do their due diligence. And finally, with a DAF or foundation, they get two doses of good-vibes for the price of one. In other words, they get to feel good when they give the money to their DAF or foundation and they get to feel good again when they finally recommend it goes to a charity. Tons of value!! Who wouldn’t want that?!?
Dunkin’ Donuts delivers value.
Can you think of a more ‘middle-American’ brand? I can’t.
Their revenue was up almost 4% in 2017 ($828.89 million in 2016 to $860.50 million in 2017). Seems like they got some money out of the middle-class thanks to their menu innovation, unit (store) expansion plans, and digital marketing initiatives.
Hmmmmm. Could they be winning against charities for share of wallet? I think so. They aren’t losing donors (Oops! I mean customers) because they deliver value!
How about Walmart, Apple, and Netflix? They deliver value too!
- Walmart: $478.61 (2016) to $481.32 (2017)
- Apple: $215.64 billion (2016) to $229.23 billion (2017)
- Netflix: $8.83 billion (2016) to $11.69 billion (2017)
Are you getting the point? It’s all about the value proposition.
Simply stated, you should never try to come up with any other reason why people (especially in the mid-class people) are giving less. The reason is clear. People want value. And, if you won’t give it to them, they’ll find someone else who will.
VALUE! VALUE! VALUE!
Nonprofits need to ask themselves, “How can we make the giving experience better so we can compete with Dunkin’ Donuts, Walmart, Apple, and Netflix?”
Sorry folks. Don’t kid yourselves.
Until charities provide more value, their supporters/donors will continue to spend their money somewhere else or park their money in donor-advised funds or foundations.
The truth is a jagged pill but it needs to be swallowed.
Related Posts:
>>Donor Offer Value Checklist
>>Value
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Great information Greg!! This is so on point, and such a struggle for non-profits in this day and age!
We must consider so many variables to set our annual fundraising strategies, goals and objectives…
What should be our targeted messages? What works best for the varying generations? How often to approach & communicate with our constituents without being intrusive; and with what and how ( email, social, snail mail, the phone.. etc..)? How should we recognize our donors when they don’t want charities to use funds to provide gifts of acknowledgement etc… New generations don’t want to be listed pubically on a wall somewhere…they want more hands on experience. They want to involve their children at an earlier age to be philanthropically minded, how does a charity steward the entire family? The old tried and true just doesn’t resonate anymore. We all have to start thinking outside of the proverbial box! Thank you for reminding us to include “value” as a new strategy and critical component of our fundraising programs!
Thanks for commenting Lisa. The bottom line is that most charities are small businesses. Small businesses have these same challenges competing against bigger ones. Usually the answer is to FOCUS.
You can’t be all things to all people. First, pick the ‘battles’ you can win that will yield the greatest return on investment. Don’t try to be all things to all people.
Do what you do well. Provide stewardship to the audience that deserves it most. And so on….
FOCUS. 🙂
Fantastic perspective, Greg (as usual). When I work with nonprofits on fundraising / donor retention projects, they are aghast that I insist on a “go-giver” or “giving first” attitude. But that’s how the best salespeople in the world make so much money – adding value to the prospective client / supporter first in a way that is meaningful to him/her . . . Nonprofits need to come down from their ivory towers of moral superiority and be of service to donors before they ask them for anything (and I don’t mean a rubber chicken dinner at the end of a golf outing where the donor sponsored a hole.)
Yes! No more chicken dinners!
Thanks Laura.
Absolutely right on the money Greg! (Pun intended!) Thanks for the courage (or should I say audacity!) to speak the truth about this. Charities need to wake up and realize that their “competition” is NOT the other thousand or so charities all out there beating the bushes for the donations (well maybe a little- there are a plethora of them out there!) but really it is the other opportunities and value added places they can choose to spend their money! People can choose to spend their money in a multiple of ways and have been “trained” by modern marketing to have high expectations of getting value for their money- and they have come to expect that from charities also! I say, good for people and it is time charities step up to the plate here!
Thanks for that ‘attaboy’ Kelley. Much appreciated.
Agree! All of charity is a value-for-value exchange. We need to think a LOT more about the value donors seek; then, deliver it. Sadly, giving isn’t always it’s own reward. It’s our JOB to reward donors, again and again, if we want them to continue their support. It’s definitely not their job, or obligation, to give to our cause. As long as we sit back and expect them to give simply because “we do good work,” we’re missing the whole point of philanthropy (aka “love of humankind”). When they show the love, it’s incumbent on us to return it. They need us as much as we need them.
Thanks Claire!