The 2023 Giving USA Annual Report on Philanthropy is out! Taken at face value, the findings are a bit disheartening. But don’t get discouraged by the state of giving just yet. There are also myriad opportunities for you to set your nonprofit on the right course.
In this episode of the Go Beyond Fundraising podcast, we’re joined by Matthew Mielcarek, Pursuant’s Senior Vice President of Analytics & Insights Strategy. He’s hitting the highlights in this exciting report that looks at calendar year 2021–2022.
We strongly encourage you to go through the report at your organization and rationalize it against your local economic situation. Remember, this national report is a smoothed-out average. So, as you consider these findings, tap into your local associations and networks to bring additional power to your data.
Individual and Overall Giving Are Down
Perhaps the leading headline in the Giving USA report is a 13.4% decline in giving by individuals. What’s more, overall giving declined by about 10.5% when adjusted for inflation. Now, 2022 was a complex year for nonprofits, and the declines can likely be attributed to three specific factors:
- In 2022, we saw an estimated 8% inflation rate, which hit most families hard.
- There were also uncertainty and losses in the stock market — especially toward the end of the year — that threatened donor portfolios.
- COVID-19-related gifts weren’t renewed, likely due to pandemic fatigue.
These factors have impacted for-profit businesses as well. For instance, Target and Walmart have shifted their marketing to focus on the savings shoppers can get on everyday essential items rather than promoting big-ticket or luxury purchases. To sidestep further inflation-related losses, nonprofits should do the same.
As donors reevaluate their finances or spend more cautiously, we’ve seen them reduce both the amount they give and the number of charities they support. Instead, they’re focusing on the organizations they consider to be the most important or essential. So, it’s incumbent on nonprofits to remind individuals that the need is greater now than ever. The services you provide are essential, and donor participation is required for you to continue to deliver on your mission.
The Consequences of Staff Shortages
Nonprofits are also experiencing staff shortages amid a strong labor market. This doesn’t just mean more work for fewer people; it’s literally inhibiting your ability to grow as an organization. Your programs are disrupted, which might mean you’re unable to host an event. Or you may not be able to steward donors through personal thank-you messages.
Ultimately, staff shortages disrupt your relationship development. There’s no way to identify your next most valuable donors to move through the pipeline.
The typical response to a staff shortage is to focus on major donors, whose gifts are lucrative. You’re going after the easy dollars. But because you’re only seeking a short-term return, you’re neglecting the ability to build a broader general file with tomorrow’s donors. As a result, you’ll have no base for further engagement and support.
To counter this challenge, there are some strategies and technologies you can lean on. For instance, mass market fundraising and engagement, such as direct mail pieces, can help you stay relevant and top-of-mind with your supporters. What’s more, putting your organization in front of people will position you as a charity of choice.
In addition, tools like GivingDNA can help you look more closely at unique constituent segments and identify who you should be targeting with your outreach so you can be more efficient. What’s more, prioritize technology you can use to generate data-driven insights that can guide the direction of your efforts.
There’s Hope for the Long-Term
While the declines in giving and staff are certainly dramatic year-over-year, it’s worth it to zoom out and look back over five, 10, or even 20 years. Historically, giving has increased more than it has decreased. So, short-term trends might look scary, but there’s hope in the long run.
A long-term lens should be applied when thinking about philanthropic growth. Look at the trend line of your program over the last decade. You’ll obviously see the disruption of the pandemic, but otherwise, you’ll likely see growth. In fact, compared to 2019, giving was up almost 9% in 2022.
The takeaway? Despite the pain we’re seeing in the large decline from 2021–2022, giving is growing. You just need to know where to look.
Listen to the full episode:
Connect with Matthew Mielcarek
Read the Giving USA report
Get more Go Beyond Fundraising Podcasts