Donor Giving Trends for Today and Tomorrow, Part 3

[Editor’s note: This is part 3 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 part 2 here. Check back for the fourth and final part next week.]

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.

Institutional giving
Historically, there have been organizations that heavily lean on grants from charitable grant-making foundations. In good economic times, these organizations could thrive on such a model. But institutional giving was one of the areas most profoundly affected by the recession over the past few years, meaning competition for foundation dollars increased greatly. Nonprofits that didn’t diversify their funding streams enough have struggled to stay afloat.

“Foundations had a huge hit in investments — more than half scaled back,” Slocum said. “So what fit a few years ago may not fit today. You have to expect and prepare for shifting priorities and focuses in institutional giving.”

The good news, Slocum said, is that foundation assets are recovering, citing data from the Foundation Center. While most foundations are still cautious and corporate giving remains static, there are fewer “no new applications accepted at this time” directives, and new foundation startups are increasing. In fact, she said, there is expected to be more dollars available by more foundations in 2012. The difference is now grantmakers have reordered priorities and narrower focuses.

One thing that remains the same for organizations seeking funds from foundations is a continued reliance on relationships. With a narrower focus, grant makers will look to fund those nonprofits that they know and with which they have good relationships.

“Relationships between your board and their staff is vital,” Slocum said. “Find a connection. Open doors to new funding. Smart nonprofits are working their networks.”

Developing and sustaining good relationships with institutional funders provide those avenues to new funding and help maintain current support. Ask your board and staff who knows whom at what institutions and how those relationships can be leveraged to gain a competitive advantage, Slocum said.

Beyond relationships, foundations are focusing on results more nowadays than ever before. Funders are looking for measurable outputs that demonstrate success. Funding decisions rely more and more on assessing the value of an organization’s programs, and foundations need to see evidence that what you do works. Find sensible ways to prove your doing good work, demonstrating the effectiveness and efficiency your organization has in carrying out its mission, Slocum advised.

Foundations are taking a more hands-on approach and demanding more transparency from the organizations they’re looking to fund, just like individual donors. Approach them accordingly.

Slocum offered these suggestions to position your organization for institutional-giving success:

• Ask yourself: Are you a top-performing nonprofit? Your case for giving must be strong.
• Keep your ear to the ground. Pay attention to external factors and trends. Stay on top of hot-button topics. And be an early responder.
• Partner up for broader impact, particularly if you are a small nonprofit. “Successful collaborations are most likely to make large-scale change,” Slocum said.
• Stay in touch with your funders, and don’t just ask them for money. Again, this comes back to building relationships, just as you would with an individual donor. The donor/funder-as-ATM model simply doesn’t work today. Give quick updates on your successes. Ask for guidance on new ides and programs. At the end of a grant cycle, see if your program officer can recommend other funders that may be interested in your work. Make the funder feel a part of your organization, your mission and your decision-making.