Happy New Year! There is reason to be encouraged about 2020, with regard to advancement at least, and reason to do some adapting to the challenges the new year will bring.
The 2018 tax law has now been with us for a couple of years and we may be settling into the new normal after declines in giving by individuals. According to the Fundraising Effectiveness Project’s 2019 Second Quarter Fundraising Report, produced by the Association of Fundraising Professionals, charitable giving during the first half fell across all donor levels:
- Gifts under $250 fell by 0.2%.
- Gifts between $250 and $999 fell by 3.5%.
- Gifts of $1,000 or more fell by 8.2%.
- In addition, the total number of donors who made a charitable contribution in the first of 2019 fell by 5.8% from last year.
While your organization’s statistics may be different, these figures do help you to produce a realistic revenue budget for the coming year and points to the clear need to invest in donor stewardship. You need to keep the donors you have because capturing new donors will be increasingly challenging and expensive.
The meteoric rise in the stock market these past years means that investors are sitting on a lot of appreciated securities that they can use to make contributions and to avoid capital gains tax. Be sure you let your donors know this is a tax-wise way to give. You would be surprised how few people know this.
Foundations and corporations have a lot more money to give away. With the strong stock market, foundations’ three-year rolling average is at an all-time high. This makes for a strong argument to invest in grant development and to get in while the getting is good. Corporations, as we know, have benefited greatly from the 2018 tax law and now have on-hand record high amounts of cash. While they are keeping their powder dry regarding business capital investment during this time of trade wars, they are also giving more to nonprofits.
2020 is an election year with a side of impeachment. This free-for-all will likely be quite a distraction for the nation, and people with any kind of wealth are paying attention to see what happens. This may not bode well for new relationship building and donor renewal.
The shrinking donor universe must remain a concern to all of us. It is not unlike drilling for oil, the deeper you need to go to hit oil the more costly it is.
Unlike some industries that are experiencing consolidation (think retail and Amazon), the nonprofit sector is increasingly crowded with new and emerging organizations that are all seeking funds from the same or shrinking pool of disposable income. The IRS approves 80,000 new nonprofits every year, and while some go away, the net gain continues.
According to the Blackbaud Institute, online giving grew 1.2% in 2018, with large organizations decreasing 0.5%, medium-sized organizations growing 3.7%, and small nonprofits growing 0.7%. Since 2016, online giving has grown 17%.
If online giving increased 17% since 2016 and grew just 1.2% in 2018, the trend in online giving is not encouraging. If your online giving program is young or you are planning to start one, understand the headwind this trend represents and that the investment in a successful online giving program will be large.
2020 promises to be quite a ride. Buckle up!
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Excellent article, Larry! Thanks for sharing your insight as to what’s ahead in 2020!
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