Wake up call

“U.S. Philanthropy Plummeted $17 Billion As Donors Disappeared.”

“Drop in Giving From 2021 to ‘22 Was Among the Steepest Ever, ‘Giving USA’ Found”

Those unwelcome headlines last week served as a harsh reality check on the current state of giving. According to the just-released Giving USA report “giving by individuals, who typically provide the bulk of all donations, fell by 13.4 percent after inflation.”

It’s a difficult time for fundraising. Either of the above articles or the Giving USA report itself provide the whats and wherefores. Below instead are some personal reflections after 25 years in philanthropy and almost 40 working in nonprofits.

1. Don’t believe the ‘silver lining’ hooey. Some pundits are suggesting it’s not as bad as it seems and things will bounce back as soon as inflation settles. In fact, the decline in giving is systemic and has been happening for years. The Pollyannas are ignoring the fact that the number of donors in America has been falling steadily over the past decade, as have retention rates – the percentage of donors who stick around to make a second gift. According to M+R’s latest benchmark report, only 16% of online donors who made their first gift in 2021 gave again last year. Given that most organizations recruit donors at a loss, that’s a stunning and frightening statistic. What’s been happening in recent years is that giving by ultra-rich megadonors has been replacing fundraising dollars lost by the decline in the donor population. That was masking the overall declines. Megadonor giving fell in 2022, and that helped lay bare the hidden reality — that fundraising has been in a years-long slump.
2. Some organizations are experiencing a preventable crisis. The decline in dollars has triggered budget crises in a number of organizations. It’s a crisis mostly of irrational exuberance. The giving surge in 2020-21 was much like the surge in giving after a natural disaster or after 9/11. It was event-driven, a windfall. Organizations that expected the surge to go on and on are now facing big shortfalls. More than a few are looking at layoffs as a result. Giving surges never last and retaining surge donors is dicey even in the best of times.
3. Organizations facing fiscal crises right now probably ignored their fundraisers. Nearly all the fundraisers I have talked to knew that the COVID surge was a one-time windfall, but higher powers did not listen. Some fingers are pointing to Boards as the source of pressure and magical thinking. It’s telling that even in the past month studies have emerged finding that unrealistic fundraising expectations are a major cause of fundraisers not only leaving their jobs but leaving the profession altogether. Many of the headwinds making it difficult for fundraisers to succeed can be found in organizational cultures that treat fundraisers as bounty hunters and fundraising as a ‘necessary evil.’
4. ‘Donor centrism’ has become an epithet, and that’s unhelpful. What is a problem is that philanthropy is too white. A study we co-authored in 2015 found that the racial and ethnic makeup of American donors reflected the America of the early 1990s, that is, more disproportionately white. Making philanthropy responsive to and accessible by all Americans is without a doubt an urgent priority. That has somehow led to suggestions that ‘donor centrism’ is one cause of the problem. The argument is that organizations catering to the needs and preferences of white donors is perpetuating the demographic mismatch between donors and America at large. I think this may be a little like the calls for ‘defunding the police’ in the wake of George Floyd’s murder – it’s arguably a matter of semantics. Yes, there are very legitimate concerns about language in appeals that fosters a sense of saviorism among donors and a correction is warranted. But to us, donor centrism means something different and more fundamental. It means welcoming donors as partners in the work. To us, donor-centrism is more about promoting a culture of philanthropy that values donors as more than wallets with legs. We very much like the definition of a culture of philanthropy put forth by author Cynthia Gibson:

Generally, a culture of philanthropy is one in which everyone—board, staff and CEO—has a part to play in raising resources for the organization. It’s about relationships, not just money. It’s as much about keeping donors as acquiring new ones and seeing them as having more than just money to bring to the table…

 

 

 

We are 100% in favor of decolonizing philanthropy, just as we are in favor of radical reform of policing. But calling donor centrism ‘bad’ is not in my opinion a step in the right direction.

BREAKING: The day after I posted this blog post, the Chronicle of Philanthropy posted a piece by a donor titled ‘Why I Stopped Giving to Your Organization.’ It’s a thoughtful piece and shares sensible advice on how to treat donors with respect, including prompt acknowledgment of gifts, information on how donations are making a difference, providing accurate receipts for tax purposes and spending more time listening and less time talking at donors. Should be required reading.

The past year has provided a stern wake-up call. Let’s all not go back to sleep.