Shake Off the Blues and Bring on the Boomers

Are you tired of hearing gloomy reports about the future of nonprofit fundraising? Concerned when you see the latest industry stats that show new-donor acquisition and retention rates heading downhill and out of control — slowed only by the occasional infusion of donors or cash from a natural disaster? We are too. And with good reason. The nonprofit industry faces challenges unlike any we've known before. But, as we learn from the good work of the charitable organizations themselves, there is definitely hope. Let's start with the bad news … before getting to the good!

Per Target Analytics in the chart at right, revenue trends look bad (down 1.3 percent) and donor trends look worse (down 8.8 percent) over the last five years. In fact, according to Target Analytics, the number of new donors is down a whopping 15.1 percent over the same time period (see Figure 1).

So how bad is it really? As it turns out, it's historically bad — and in a big way! Per Giving USA in the chart at right, total individual giving has dropped 13 percent in inflation-adjusted dollars from five years ago and has not yet even returned to 2001 levels, making this the worst giving decade on record by far (see Figure 2).

What's going on? The economy's been in the pits, of course. But it goes well beyond that. The generation of older, check-in-the-envelope donors — yes, mail donors from the Great Generation (born up to 1945) — is quite literally dying out. And its younger brethren, the baby boomers (born 1946 to 1964), have different needs and interests, and are rapidly changing their patterns of media consumption. Sadly, very few nonprofits are meeting their needs, as evidenced by the plummeting levels of new-donor acquisition.

Lest we're tempted to throw in the towel, let's look at the good news: Charitable giving is overwhelmingly driven by seniors. And with the first wave of baby boomers just now hitting retirement, the 65+ population is about to explode, to the tune of an 80 percent increase between 2010 and 2030 (see Figure 3 at right)!

OK, so we know the boomer population is huge, but we also know relatively few boomers donate even though they are hitting prime giving age. So what do the boomers want, and how do we capture and engage them?

The boomers live in a world where Amazon knows their interests (or at least what they bought for their children and grandchildren). They walk around the Gap while price shopping on their iPhones. And companies know just where they are in their life cycles. (Had a baby recently? See what kind of commercial mail and e-mail you get!)

But nonprofits? By and large, nonprofits just continue sending them the same mail pieces they send people 15 years their elder — with the odd e-mail and telemarketing campaigns thrown in from time to time. And few nonprofits talk to them like they know them, recognizing actions they've taken, events they've participated in or information they've provided across channels.

When was the last time a nonprofit thanked you, via a mail piece, for taking an online action? Or started a phone call by thanking you for participating in a recent event? Or recognized why you support that specific charity?

We reported in July on a recent study of donor satisfaction (conducted by Merkle, one of the author's employers) across four charities and discovered that donor satisfaction was shockingly low (38 percent of donors reported their satisfaction as "below average" or "poor"). But after peeling back the onion, analysts discovered that Great Generation donors were far more satisfied than boomers.

Boomers wanted more information about how their donations were used and to feel a closer relationship with the charity. And they weren't getting either.

So, the good news is that the opportunity is huge! We now know what donors want from their relationships with charitable organizations, and we have the tools to give it to them. But as large as the potential benefits are, so is the cost of inaction.

The time to engage with boomers through a multichannel, constituent-centric approach is here. Not all boomers are the same, but they've indicated a strong tendency toward: 1) engagement via multiple channels, 2) desire for more information (yes, explaining what we do with their funds is more important now than ever), and 3) expectation of greater personalization of messages. We won't create that ideal of the holistic, donor-centric approach overnight, but we can certainly start by taking concrete steps in that direction.

Karin Kirchoff is vice president at MINDset direct. Reach her at kkirchoff@mindsetdirect.com. Jeff Regen is general manager of the nonprofit group at Merkle. Reach him at jregen@merkleinc.com