Taking cues from past research showing the need for additional investment in technology, staffing and strategic planning, the nation’s nonprofits have made strides in these areas that experts say are critical to successful fundraising. Unfortunately, new challenges—including demographics and job churn—have kept fundraising revenues stagnant for nearly half of nonprofits, according to SEI Inc., an investment management firm.
Per the company’s recent report, “Answers to Key Questions about Managing Nonprofits,” only 54 percent of nonprofits have seen their fundraising revenues—as a percentage of total revenue—grow over the past three years. That’s despite the fact that 61 percent said their organizations made “good” investments in resources, technology and culture to support fundraising success; 58 percent believe the organization spends enough on advertising and awareness campaigns; and over half—56 percent—have five or more staff members dedicated to fundraising efforts.
According to Mary Jane Bobyock, it’s a good sign that nonprofits are investing sufficient resources and feeling more confident in their fundraising plans. But it’s not enough to address the retirement of baby boomers and the influx of millennials, who don’t give at the same rates and levels. Per the report:
- Gen Y, with 32.8 million donors in the United States, represents about 11 percent of total donations. About 60 percent of this group gives to charity, with the average gift size of $481.
- Gen X accounts for about 39.5 million donors, representing about 20 percent of total giving. About 59 percent of Gen Xers give to charity, with an average gift size of $732.
- Baby boomers, with some 51 million donors in the United States, account for about 43 percent of total giving. Nearly three-quarters of them—72 percent—give to charity, with an average gift size of $1,212.
- Matures—those born before 1946—account for about 26 percent of total giving. There are about 27.1 million mature donors in the United States. Roughly 88 percent of this generation gives to charity, with an average gift size of $1,367.
As boomers age, it’s possible that their giving levels will change to reflect those of the generation before them—the matures—which would mean slightly higher percentages of them giving to charity, and giving a higher dollar amount to boot. But that giving is largely spoken for, Bobyock said.
“Boomers already have formed relationships with the organizations they want to support. There is potential for them to increase their commitments, but it’s likely to go to the same groups,” she said.
Meanwhile, in terms of raw numbers, the true fundraising prize lies in deepening the giving levels of millennials and Gen Xers, which represent some 72 million people combined. And these groups are just hitting their strides in terms of job security, professional accomplishment and financial health.
“There’s a lot of upside potential to these two groups,” Bobyock said. “If you can cultivate relationships with them, that’s a lot of new money coming in” that nonprofits could vie for, she said.
Aside from demographics, turnover in the fundraising department is also taking a toll on nonprofits’ fundraising revenues. According to the SEI report, nearly half of nonprofits surveyed reported turnover in their fundraising departments within the last six months.
“Most of that is due to the usual reasons—lower pay and benefits compared to the private sector,” Bobyock said.
But another driver is a narrative that’s been put forth in the media that money spent on fundraising is somehow wasteful spending, she said.
“It’s perceived as taboo if funds don’t go entirely to purpose-related expenses,” she said. “In reality, there are many other things that need to be done within the organization that aren’t purpose-related.”
Addressing that—and thus enabling charities to spend more on their fundraising departments—will take a collective effort on the part of the philanthropic community, she said.
“The sector has got to raise awareness about the need for unrestricted donations,” she said.
Nonprofits with corporate supporters have another option—appealing to them and making the business case for unrestricted funds.
“Businesses inherently understand these things—the need to spend money to grow revenues,” she said. And, they are also likely to be savvy when it comes to some of the technology, communications/marketing and other things that form the basis of a successful fundraising operation. Thanks to the increasing interest in skills-based volunteerism and pro bono services, many companies might be willing to put their human resources to work along these lines as well as, or in lieu of, contributing on a cash basis.
“There are more and more corporate giving strategies in play every day,” Bobyock said. “Companies leverage employee volunteerism as part of their engagement strategies as well. You could be looking at a clear win-win where the company, its employees and the nonprofit all benefit.”