March 26, 2019
Report Says Nonprofits Should Improve Ties to Donors Now

February 17, 2018 — While donors are figuring out how to respond to recent tax policy changes, nonprofits, especially smaller, local, and basic needs organizations, should take steps to better understand what motivates their donors in order to improve retention rates and increase support, a recently completed report advises.

According to The Philanthropy Outlook 2018 & 2019, developed by the Indiana University Lilly Family School of Philanthropy in tandem with the fundraising and philanthropy consulting firm of Marts & Lundy, the strength of the U.S. economy and recent changes to federal tax policy will be the key forces to watch as the 2018 philanthropy picture unfolds.

Local charities, congregations, and basic needs organizations could be affected by a predicted decline in individual giving as a result of tax policy changes more than large arts organizations and educational institutions that have the resources to more fully engage wealthy donors, said Philippe G. Hills, president and CEO of Marts & Lundy.

"The field still has work to do when it comes to donor knowledge and retention; over the last five years, donor retention rates have consistently been weak—averaging below 50%," the report noted. "This figure underscores the importance of building long-term relationships with donors by understanding donors’ personal characteristics and motivations for giving."

Key fundraising-related trends to watch and respond to, according to the report, include the following:
  • Employee-driven corporate philanthropy is growing – In recent years corporations and their philanthropic arms have begun to recognize the benefits of focusing on the philanthropic interests and goals of their employees, and are expected to increase this focus. Specifically, employers are giving employees the opportunity to volunteer time inside or outside of work or donate to a workplace-specific campaign, or match donations from employees up to a certain dollar amount.

    Fundraisers have the opportunity to build strong relationships with donors that also extend to the donor’s workplace.

  • Impact investment is gaining momentum – This is a growing movement in which investments are made in companies, organizations, and funds for the purpose of creating social or environmental impact in addition to a financial return. Donors are attracted to impact investing by the idea of measuring and reporting on the performance of investments to ensure transparency and accountability.

    Nonprofits that want to tap into the growing appeal of impact investing need to be able to quantify the impacts of investments in their organizations and show how they are making a positive, lasting change.

  • Diversity in philanthropy is growing – Today, unmarried, divorced, widowed, childless, and other single-individual households account for nearly 30% of American households, groups that fundraisers have tended to overlook. By 2030—only 12 years from now—over half of Americans are expected to identify as non-white and 20% of Americans will be 65 or older. Nonprofits are aware of the issues: A recent study of nearly 300 nonprofit professionals revealed that attracting and hiring diverse talent was the most pressing concern for survey respondents.

    It is more important than ever to specialize messaging to ensure organizations are addressing the concerns of different demographic groups. Reaching out to different demographic groups is easiest when there is diversity within the organization’s staff and on the board.

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