More Money, Fewer Donors, and What You Can Do About It

19 Nov More Money, Fewer Donors, and What You Can Do About It

By David Allen, Development for Conservation

A few years ago, I added my speculation to everyone else’s about how the Tax Cuts and Jobs Act (TCJA) would affect charitable giving in the U.S. (See How will Tax Reform Affect Donor Giving in the Future?)

We don’t need to speculate anymore. The numbers are in.

• Total giving increased from $410B to $427B (Source: GivingUSA)
• Total giving as a percentage of GDP decreased from 2.2% to 2.1% (Source: Social Capital Project)
• Total percentage of money given to charity from individual donors went down from 70% to 68% (Source: Giving USA)

It’s tempting to look at the first number and conclude that TCJA had no effect. It’s also tempting to look at the last number and conclude that TCJA resulted in fewer Americans giving.

Neither conclusion is actually supported by the data.

The total amount of money increased after TCJA, but not as a percentage of GDP. The first number continues a trend of strong growth since 2011 and an even longer trend since the mid-1970s. The decrease in giving against GDP is more related to the rise in GDP than to charitable giving patterns – giving as a percentage of GDP has fluctuated between 1.9% and 2.2% since the mid-1990s.

And the fact that a smaller and smaller percentage of charitable giving is coming from individual donors actually continues a trendline that dates back to 1970s as well. (If you include bequest gifts, gifts from family foundations where the donor is still living, and gifts from donor directed funds – all as individual gifts, the data is somewhat less conclusive.)

It IS true that fewer and fewer Americans are giving at all. A University of Michigan study publicized by the Chronicle of Philanthropy concluded that the percentage of households giving to charity steadily decreased from 66% to 56% between 2000 and 2014, though I could not find data more recent than 2014.

So how do we make sense of all this?

I have four suggestions for your 2020 planning:

1. Pay attention to your donor communications. People stop giving because their giving doesn’t seem relevant. It’s not making a difference, it wasn’t acknowledged, other charities seem more deserving. Nine percent of donors who stop giving report that they have no memory of giving beforehand. Yikes! This is all in your control.
2. Restart your paper communications. Email and social media are cheaper and more efficient means of communication – for the organization. But they’re not more effective at building relationships with donors. And organizations with stronger relationships with donors have less attrition. This is trackable – so track it. Use the year-over-year renewal rate. The number of donors who gave money in one 365-day period divided into the number of those donors who gave again in the 365-day period immediately following. If your rate is lower than 70%, you can do better using paper.
3. Thank donors immediately. Within 48 hours is considered best practice. Let people know right away that you noticed that they gave. As Roger Craver (The Agitator) says, “Failure to thank a donor properly is bad manners and horrible fundraising.”
4. Start a major gift development program. Sure, it would be nice to pay the same level of personal attention to every donor, but not if that means paying less attention to everyone. Fundraising is about building relationships with donors. Most organizations need to prioritize. Forget about being efficient here. You need to be in the same space with donors to build relationships with them, and you’ll need a program that is designed to create those opportunities. (See How to Start a Major Gift Program in 2020.)

Has your land trust been affected by TCJA? What trends are you seeing? And what are you doing about it?

Cheers, and Have a great week.

-da

Photo by Linnea Sandbakk courtesy StockSnap