Donor Giving Trends for Today and Tomorrow, Part 2

[Editor’s note: This is part 2 of a four-part series on the session “Trends for Tomorrow — Action Today” held at Fund Raising Day in New York. View part 1 here, and keep an eye out for parts 3 and 4 in the coming weeks.]

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.

Individual giving
Giving by individual donors is still a major source of fundraising despite the economic woes of the past few years. Individual donors continue to be the lifeblood of nonprofits because there are far more individual donors out there than corporations. So it’s vital to understand how today’s individual donor differs from donors historically, and how they’ll evolve.

Donors continue to give but are narrowing their focus to fewer charities where they can make a bigger impact, Holman said. Further, people give most when they have a sense of security and optimism about the future. With the soft recovery of home values, volatility in the stock market and rising health care costs, few American have any sense of financial security, meaning they are even more discerning as to whom they’re giving donations.

“People are very careful now in how they give money and where,” Holman said. “Donors are doing a lot more homework than in the past, doing research on charities before they decide to give.”

According to Russ Reid’s Heart of the Donor report, people research charities in the following ways:

• talk to someone who supports the charity;
• 62 percent of respondents visit the organization’s website, and 56 percent search the Internet for news;
• check with watchdog organizations (i.e., Charity Navigator, GuideStar);
• visit the organization in person.

Despite more research and more demands for efficiency, Holman said, “the No. 1 reason people make gifts is belief in the mission of the organization.” Thus, some traditional trends are still true:

• Lower-income people tend to be more generous than higher-income individuals.
• The most generous donors are more likely to give by mail and less likely than average to give online.
• More generous donors are more intentional about planning their support.
• Giving still happens because donors are involved with organizations — 42 percent of donors volunteer with their organizations, Holman said, and “78 percent of high-net donors still volunteer — often as board members.”

A surprising trend regarding high-net donors Holman shared is that the majority of them consult their accountants on what organizations to which to donate.

Unsurprisingly, however, demographics still matter. There is a “tsunami of baby boomers aging up to 65 and planned-giving territory,” Holman said. “Every day for the next 19 years, 10,000 people turn 65,” so these are the people you should be cultivating toward planned giving.

Then there is the challenge of feeding the younger-donor pipeline. The earlier you engage these donors, the more loyal they’ll be as they approach prime giving age. Increasingly, younger donors look to the Web and social media to research, interact with and donate to nonprofits. Knowing that, a static website is death, Holman said. You must constantly update and intrigue younger donors to keep their attention, and technology is the best way to do that.

Holman said several organizations are now using iPads out in the field to make it easy to educate donors on the spot about their missions and how donors/volunteers can get involved. Look for ways you can integrate the technologies younger donors use to engage them now, Holman said.

It’s a delicate balance, but every organization must find a way to focus on its core donors and simultaneously grab younger donors in order to survive today and thrive tomorrow.

Holman said that even with the shift in donor preferences taking place, some of the old tried-and-true fundraising principles continue to work today. Fundraisers should still:

• Stay donor-focused.
• Keep the message simple.
• Develop relationships — don’t think of your donors as wallets.
• Triage your donors quarterly for contact.
• Don’t ignore the low-hanging fruit — grab it.

“People still give people,” Holman said. “The preferences of donors may change, but in the end, they still give to the organizations they care about and connect the most with.”