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. 

1. 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.

2. 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.”

3. 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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