Donor Giving Trends for Today and Tomorrow, Part 1

[Editor's note: This is part 1 of a four-part series on the session "Trends for Tomorrow — Action Today" held at Fund Raising Day in New York. Check back next week for part 2.]

A key facet to successful fundraising is studying donor trends and understanding how best to act on them — in the short and long term. At the Association of Fundraising Professionals Greater New York Chapter's Fund Raising Day in New York, four fundraising experts discussed donor giving trends and what they mean for fundraisers.

In the session "Trends for Tomorrow — Action Today," fundraising pros Margaret Holman, president of Holman Consulting; consultant Kathryn Slocum; Harry Lynch, CEO of Sanky Communications and SankyNet; and moderator Marilyn Hoyt, a nonprofit consultant, shared donor trends in individual giving, institutional giving and online giving, and what nonprofits can take away from those trends.

The big picture
Hoyt began by laying out the big frame around the fundraising landscape. She said giving comes from investment earning (major donors, foundations and corporate foundations, estates and planned gifts) and current earnings (individuals who feel secure about their incomes, corporations and businesses).

But ultimately, "people give to people," Hoyt said, so you must understand the people from whom you're trying to solicit money.

Right now, 75 million baby boomers are passing through the ages of 50-65, making them prime candidates for consistent giving, Hoyt said. Many of them have completed or are about to complete many major life expenses such as paying off homes and their children's education, etc., and at the same time, they're still earning money. Now is the time they're thinking about giving back. Among this demographic:

• Participation in foundations is growing.
• Active volunteer numbers are growing.
• These boomers are most likely to give major and planned gifts to nonprofits with which they have longer relationships.

So right now, baby boomers are entering the prime giving age, meaning a large pool of donors to target.

However, the outlook is not as bright with Generation X. Gen X has far fewer people than the boomer demographic, meaning there will be fewer donors to work with once Gen Xers transition to matures. That's led to a bit of economic panic as this smaller workforce today is asked to deliver the prosperity and productivity of the much larger baby boomer generation before it, plus sustain Medicare and Social Security benefits as boomers retire, Hoyt said. That has put pressure on them financially as well.

Further, a lot of Gen Xers are not married, and there's more diversity in this demographic. These donors expect to be involved more in an organization's work and want to know what their dollars accomplish perhaps even more than boomers, who expect the same. Thus, communicating with Gen X might take an attitude adjustment on the part of fundraisers.

The good news is that Generation Y is coming right behind that to pick up the slack, with 70 million people currently making up this demographic. Gen Yers are 33 and younger right now. In approximately seven years, they'll start hitting their higher earning years as they enter their late 30s and 40s.

Just like Generation X, many Gen Yers are not married and there's even more diversity. But this is a crop that has tremendous giving potential for the future, so it's vital to start engaging Generation Y now.

What does this all mean?
Given these demographic characteristics, it means the immediate future looks bright for fundraisers. There is a large group of baby boomers primed to give coming of age right now. That's the good news.

The bad news is that after that, there will be slimmer pickings when Generation X takes over, which in turn could mean some difficult and lean fundraising years. But help is on the way with Generation Y with its 70 million charity-conscious inhabitants.

To capitalize on the prolific baby boomer generation, that's where fundraisers should be focusing the majority of their attention. Boomers are the prime candidates for major gifts, volunteering, planned gifts, monthly giving and even cultivating for bequests.

At the same time, fundraisers cannot afford to ignore Generations X and Y. In order to gain the advantage and build those relationships with the smaller Gen X, organizations must build relationships with them now. Get them involved with your mission, and communicate with them regularly. Those who do will have the competitive advantage when they begin to take over where the boomers are now.

As for Generation Y, you should be cultivating your strategy for engaging them today so they become donors in the future. As Hoyt noted, the longer a donor has a relationship with an organization, the more likely she is to provide major and planned gifts.

"Think really hard about how to engage younger donors so they're ready to go with us and give when the time comes for them to give," she said.