Nonprofits Under Pressure to Shore Up Eroding Donor Base

Nonprofits Under Pressure to Shore Up Eroding Donor Base

Faced with an aging and shrinking donor base, some nonprofits are taking steps to explore new fundraising approaches, the Chronicle of Philanthropy reports.

Even as Giving USA estimates show total charitable giving in the United States increasing, the share of households that made a donation fell from 66.2 percent in 2000 to 55.5 percent in 2014, with that share falling across every age group, income tier, and education level. According to the Indiana University Lilly Family School of Philanthropy, the largest drop, from 78 percent to 58.1 percent, was recorded among individuals between the ages of 51 and 60 — a bedrock donor group for many charities. And while those who give are giving more, the concentration of donations at the top of the income pyramid, with charities relying on fewer but larger gifts from the wealthiest donors, does not bode well for the future, the Chronicle reports.

According to fundraising experts, there is a danger in relying on megagifts, in that many come with strings attached, while an eroding donor base will, over the long run, lead to fewer such gifts, in that they often are the culmination of many years of donor cultivation. Indeed, fewer donors making small donations today could equate to a lost generation of major donors later on, with the impact likely to be felt initially at the mid-gift level, said Jeff Martin, senior consultant at EAB, a company that tracks trends in higher education.

At the same time, it's clear traditional fundraising tactics are losing their effectiveness, Dave Strauss, director for global membership at the Nature Conservancy (TNC), told the Chronicle. And while many groups recognize this, they often don't know how to course correct or don't have the money to experiment. TNC, which discovered that the average age of its new direct-mail donors was 69, is investing heavily in digital fundraising efforts, using a mix of search-engine, display, and social media advertising. Smaller charities can't afford to implement the organization's data-driven strategies, however, and few are likely to attract large numbers of new donors online until the fundraising industry overall lands on a reliable method — the number-one priority for small-dollar fundraising over the next five years, said Strauss.

Just as important as acquiring new donors is improving donor retention rates. To that end, some nonprofits are working to secure monthly donors — especially among the credit card-friendly younger donors who will be replacing the aging cohort of boomer donors. Others are adopting a “high-touch” approach, canvassing door-to-door to persuade viewers to become monthly donors, or, as the College of William & Mary has done, recruiting volunteer "ambassadors" to stay in touch with classmates, share university news, and solicit gifts.

The key, said Michal Heiplik, a development official at WGBH in Boston and executive director of the Contributor Development Partnership, is to diversify among multiple sources of revenue. Nonprofits need to be flexible and willing to experiment, and they must be willing to pull the plug on fundraising efforts, old or new, that aren't working based on a rigorous evaluation of the data. 

Nicole Wallace. "Where Are My Donors?." Chronicle of Philanthropy 06/05/2018.