2020 has been a year filled with new challenges and heartbreaks. The coronavirus has impacted every part of our lives. At the same time, we are experiencing increased economic uncertainty as a result of the virus as well as other global shocks. We’ve also seen the rise in social movement concurrent with a presidential election.
Nonprofits across the US have been hit hard as arts organizations had to close their doors and rethink their offerings while other nonprofits, like food pantries and other human service organizations, have seen increased demand for their services.
What has changed?
We’ve seen a significant change in the way that most people do work. While telecommuting had been increasing over the past few years, the shut-downs across the country have caused more people to telecommunicate than ever before. Nonprofits and employees had to learn quickly how to work remotely, use new (to them) technologies like Zoom, while potentially having to deal with other family members — spouses, children, siblings — who may also be working or learning from home. While there are advantages to working from home, such as eliminating a potentially costly and time-consuming commute, there are definite and potentially unseen costs — security, home office costs, and mental and physical costs.
For fundraising, these changes in work habits are profound. We’ve been saying that fundraising is all about relationships; most fundraisers get to know their prospects through face to face meetings over coffee, meals, events, and more. Since social distancing is a necessity to help reduce infection, fundraisers and other nonprofit staff have had to pivot how they cultivate and solicit their prospects. Organizations have had to cancel key events or try to adapt them for the virtual environment, with varying success. Some prospects may also have had to pull back their giving due to economic uncertainty.
With the economic uncertainty, there’s been an increased focus on organizations holding funds for distribution to nonprofits, notably foundations and donor advised funds (DAFs). Advocates, nonprofits, and donors have called on foundations to reduce reporting and grant requirements to allow quicker dispersal of much needed money to nonprofits as well as reducing the onerous cost (in time and money) of fulfilling requirements.
DAFs are seeing increased scrutiny over the past few years given the increase of giving to and giving from DAFs. Fidelity Charitable reported that they made $7.3B in grants in 2019. Many critics of DAFs are concerned with how much money is being parked in these funds that should go to nonprofits. One California couple, David and Jennifer Risher, started the #HalfMyDAF challenge to encourage people to use their funds held in DAFs. Others are advocating for legislation that requires minimum payouts from DAFs and even increasing minimum payouts for foundations from 5 to 10 percent.
Other people are concerned about the anonymity of DAFs and related LLCs. Some are concerned that these giving vehicles reduce transparency about who gives and where, which is especially concerning during these times of political factions and crises. Some proponents of DAFs say that the number of anonymous donors is small compared to named donors.
There’s reason to believe that DAFs are stepping up in the crisis. In June, Fidelity Charitable noted that their account holders made $2.4 billion in recommendations to give to charities in the first four months, a 16 percent increase in comparison of the prior year. The Boston Foundation saw DAFs fund grants totalling $43.8 million in March and April, representing a 246 percent increase for the time period last year! Others note that DAFs will step up to meet the funding gap if an economic downturn does occur, as evidenced by DAF performance and giving patterns in prior recessions.
Philanthropist John Arnold and Boston College law professor Ray Madoff have started The Initiative to Accelerate Charitable Giving to reform DAF and Foundations, which may influence how we talk about DAFs and Foundations in the future. No doubt the future of DAFs and requirements remains an open question for the upcoming years.
Wealth reports are also seeing the rise of new generations with different values and ways of thinking about wealth and philanthropy. Younger high networth individuals are volunteering at earlier ages, giving to fewer organizations, and have an interest in sustainability, equity, social issues than ever before. Nonprofits will have to appeal to these new generation of prospects by appealing to their interests.
We’re also seeing the rise of collaborative and/or peer group giving. While this is not a trend specific to 2020, there is a rising trend for people to give collaboratively, talking with their families, or even participating in peer group giving, such as giving circles. Fundraisers need to start thinking of prospects more holistically, not just individuals, but as a part of larger circles of people who want advice and input on philanthropy. Fundraisers not only need to deal with this change in decision making but may want to consider giving opportunities for pooled resources.
What has not changed?
With all of the profound changes that 2020 has brought, there are key elements that have not changed. While some prospects have seen their economic fortunes diminish, such as people with their fortunes tied to air travel and travel, others may have seen an increase in their wealth, especially in key fields such as insurance, healthcare, and consumer goods. Asa recent Boston Consulting Group’s Global Wealth 2020 report points out, wealth is resilient.
While reaching out to prospects is always critical in fundraising, it’s especially critical now. Nonprofits need to reach out through phone calls, letters, emails and social media as appropriate, to check-in with their constituents to let them know what they are doing and/or what nonprofits can do for them. A Gravyty webinar “Fundraising During A Crisis 2.0” recommended adding a “humanity step” to the pipeline.
Even more important, there are prospects that want to support their charities monetarily and otherwise. We have seen some nonprofits surpass their fundraising goals for the year! This suggests that not only is there wealth but there are prospects who want to support charities and see them succeed during these important times. Fundraisers should not be afraid to ask their prospects for gifts. We should be giving prospects the opportunity to make a difference in these uncertain times!
We’ll see what the future holds for fundraising in 2021!
- The Initiative to Accelerate Charitable Giving | The Initiative to Accelerate Charitable Giving 2020
- Philanthropist Urges Congress to Force More Giving From Donor-Advised Funds and Foundations | Chronicle of Philanthropy 2020
- Fidelity Charitable 2020 Giving Report: Inside Donor Advised Funds | Aspire Research Blog 2020
- The Hidden Costs of Work from Home Part 1 | Jennifer Filla Blog 2020
- Your Career: The Hidden Costs from Working From Home Part 2 | Jennifer Filla Blog 2020
- Your Physical Health: The Hidden Costs Part 3 | Jennifer Filla Blog 2020
- Your Mental Health: The Hidden Costs Part 4 | Jennifer Filla Blog 2020
- Your Resiliency: The Hidden Costs Part 5 | Jennifer Filla Blog 2020
- Fundraising Prospect Research Support in a Crisis | Aspire Research Group 2020
- Fundraising insights from BCG’s The Future of Wealth Management | BCG 2020
- Fundraising in a Crisis | Gravyty 2020