Implications

American donors of all types contributed an estimated $373.3 billion to approximately 1.2 million U.S. charities in 2015,39 amounting to 2.1% of U.S. GDP.40 American philanthropy is estimated to have grown 18.7% between 2011 and 2015, or at an average rate of 4.7% each of those years.41 The peak of giving in this time span was in 2012 when total giving rose 9.2% over 2011.

Projected growth in total giving in the years 2017 and 2018 is likely to continue to outpace predicted growth in U.S. GDP.42 These increases mean that philanthropy will continue to stake a larger share of the U.S. economic landscape in years to come. Average annual giving is expected to increase $15.34 billion per year between 2014 and 2018, much larger than the average increase of $1.70 billion seen during the years 2009 to 2013.43 Nearly $30 billion in inflation-adjusted dollars will be raised by charities in 2017 and 2018 beyond the 2016 total.

In 2017 and 2018, giving by individuals/households and estates will comprise 79% of total giving. Giving by individuals/households will maintain its share of giving at 71% of the total in 2017, as compared with the years 2014 to 2016, but will drop to 70% of the total in 2018. Estate giving will also remain consistent with prior years, at 9% of the total share of giving for the years 2017 and 2018.

Between the years 2014 and 2016, giving by foundations is estimated to have shifted between 15% and 16% of total giving. Foundation giving is expected to comprise 16% of giving in both 2017 and 2018. Corporate giving will maintain its share of 5% of total giving for these years.

Education giving is expected to grow as a percentage of total giving, from an estimated 15% in 2014 to 17% in 2018. During this same period, giving to health will remain stable at 8% of total giving through 2017 and will grow to 9% of total giving in 2018. The share of giving to public-society benefit is also expected to grow, from 7% in 2014, 2015, and 2016, to 8% in 2017 and 2018.

As discussed earlier in this report, today’s donor environment is one in which donors are seeking more control and engagement in their philanthropy. This trend demands a donor-centric fundraising approach. Specific areas of the philanthropic environment that have helped to cultivate increased donor-centric behavior, and therefore contributions are outlined in the following sections. Understanding what drives today’s donor can help nonprofit organizations of all types ensure a strong relationship with current and prospective donors and proactively plan for the years ahead.

The Rising Role and Visibility of Donor-Advised Funds

Donor-advised funds* have gained rapid traction in recent years for donors of varying financial means. In just one 5-year period, contributions to the largest donor-advised fund provider grew nearly 200%.44 During that same time, total philanthropic giving grew just 21%.45 In recent years, the average amounts donors have held within both community foundation and national-sponsor accounts have grown substantially: 71% and 116%, respectively.46

In general, these funds provide donors with more flexibility, as compared with contributing directly through foundations or other types of giving vehicles.47 As an example, donor-advised funds allow donors to grow the funds tax-free while simultaneously allowing for immediate grantmaking by the fund sponsor. Moreover, donors are able to contribute a wide variety of assets to these funds and to take an immediate tax deduction on their fund contributions. While donors do not have ultimate legal control over their funds, they do have the right to make suggestions about where and when grants are made.

Donor-advised funds have become so popular that Fidelity Charitable Gift Fund claimed the top spot on The Chronicle of Philanthropy’s annual Philanthropy 400 list for the year 2015 and is now the second-leading grantmaker of all types (just behind the Bill & Melinda Gates Foundation).48 Reporting $4.6 billion in charitable revenue, the fund raised nearly $1 billion more than the second-ranked United Way. The ease with which donors can make donations through Fidelity’s online platform has been identified as one top reason why the fund has grown so large.49

  • “Nonprofit organizations should view DAFs as friends, not enemies,” says one nonprofit advisor.50 Whether or not your charity sponsors donor-advised funds, you can encourage donors to utilize these funds to support your organization. Be explicit about the fact that your organization will accept grants made from donor-advised funds and educate donors about the flexibility of giving to these funds.
Making Giving Personal

Research consistently demonstrates that donors give because of the values they share with recipient organizations and the mutual desire to solve a specific problem. According to the 2016 Donor Loyalty Study, released by the Association of Fundraising Professionals (AFP), surveyed donors were most likely to give because they were “passionate about the cause.”51 Other top reasons that donors give include the perception that organizations depend on them and knowing someone specifically affected by the organization’s cause.

Stepping beyond shared values, today’s donor “expects you to ‘know’ them.”52 As consumers in the larger world of commerce have become accustomed to personalized experiences, such as through the development of consumer-generated content and technology, donors expect the same.53 According to Jay Ferro, chief information officer at the American Cancer Society, “The capability to truly understand your constituent from a ‘360’ view, build lasting relationships and effectively communicate mission impact that is important to them will set many nonprofits apart.”54

  • Be sure to incorporate elements in solicitation materials that speak to the shared values held by your organization and constituents. Also, consider how your organization can get to know current and potential constituents through various personal and technological mediums in developing more meaningful and impactful relationships with supporters. For current supporters, consider personalizing communications in ways that recognize the specific contributions your constituents have already made to your organization using those communication channels in which constituents are most likely to positively respond.
Connecting Digitally

Digital media has become a primary means in which people connect with one another and with organizations, such as through social media and websites. Moreover, the online environment has sped up the delivery and retrieval of communication, whether in the form of informational content or direct person-to-person communication. Today, nearly 90% of Americans engage in online activity—such as social media, commerce, and managing personal accounts—and two-thirds of all Americans own a smart phone.55 Taken together, roughly 60% of all online activity is conducted using smartphones (or, what are alternatively called “handheld computers”).56 While most Americans are online, many nonprofits struggle to stay ahead of the tech curve. Research indicates that nearly 8 in 10 nonprofits could improve their technology in the area of fundraising.57 Further, when it comes to technology, many organizations struggle with staffing and budget shortfalls. While a 2016 study estimated that online giving through charity via smartphones increased 80% between 2013 and 2015, more than 80% of donors have not used this method.58 Conspicuously, 80% of fundraising webpages have not been optimized for smartphone viewing.59 Despite the relatively slow adaptation into the online environment by many nonprofits, trends suggest that online giving is consistently growing.60 In 2015, 7% of all nonprofit revenue was estimated to have been given through online methods.61 Among all online donations, 14% were estimated to have been given through mobile devices. Evidence suggests that larger organizations and those organizations that were strategic about enhancing digital fundraising were the most successful in generating increased online revenue in 2015.

  • A “donate now” button simply is no longer sufficient in capturing online donations. Invest in upgrading your organization’s website and online giving environment, ensuring that the website is modern and mobile friendly. Consider how your organization is not only initially drawing donors to your online site, but how it is keeping donors engaged over the long term. Small- and medium-sized organizations might consider modeling their online giving programs after their more successful large-sized peers.
Peer-to-Peer Fundraising: Crowdfunding

Beyond giving to organizations via their websites or fundraising platforms—where most online donations are generated—donors are increasingly turning to crowdfunding to support people and causes. Crowdfunding refers to the act of raising contributions, typically cash, from a large number of people to fund a specific cause, project, or venture. Crowdfunding is largely conducted online through specific fundraising webpages and portals. Current estimates suggest that crowdfunding reached between $17 billion and $34 billion in 2015.62 The majority of funds that cycle through crowdfunds are made for investments in for-profit startups or person-to-person lending. However, not insignificant are the roughly $6 billion in contributions made to individuals or organizations for cause purposes.

A 2016 Pew Research Center survey found that 22% of Americans have contributed to a crowdfunding campaign on such sites as GoFundMe, Kickstarter, or YouCaring.63 The vast majority of individuals who have contributed to a crowdfunding campaign have given to five or fewer campaigns and $50 or less. More than two-thirds of donors supporting crowdfunds have given to a specific person in need, while a third have supported a school. Nearly 9 in 10 crowdfunding contributors reported that crowdfunds help people to feel more connected to the causes they support.

  • Crowdfunding has likely been exceptional in raising funds for individual causes because of the emotional appeal behind the stories told.64 Crowdfunding may or may not be appropriate for your organization;65 however, you can harness the power of storytelling to invoke within potential donors recognition of the values that you share with them.
Instantaneous and Flexible Collaboration

Today’s consumers have become accustomed to instantaneous results and seamless service. As a result, the on-demand economy requires that donations to nonprofits be “friction free.”66 Yet while donors want giving opportunities to be effortless and smooth, they do not want to engage passively with the nonprofits they support. Rather, flexible collaboration is what they seek—flexibility around all of the demands for attention and time that today’s fast-paced world places on them. Today’s donors, especially within the younger set, crave opportunities to make change. They seek to integrate social impact into the broader scope of their lives, whether it is through fitness, consumer purchases, work and career, or socializing.67

  • Consider how you can provide supporters more opportunities to give and interact with your organization in friction-free yet meaningful ways. Options to ‘give on the spot,’ such as through texting, point-of-sale donations, one-click giving, and other methods may be ideal.68 To facilitate meaningful connection with others, provide donors with the option to share their experience of giving with others via a number of social media platforms.69

* Within The Philanthropy Outlook, contributions to donor-advised funds are implicitly counted on the donor side under individuals/households and foundations (for those contributions granted by community foundations), as well as the recipient side under public-society benefit (for national/commercial funds) or under the recipient categories (for sponsoring charities). The Philanthropy Outlook does not separate contributions on either the donor side of giving or the recipient side of giving.