Podcast | Is a “Collapse” in Middle-Class Donors Happening?

A January National Review article declared, “Middle-Class Philanthropy Is Collapsing,” but is that really the case? The article is based on the Fundraising Effectiveness Project’s (FEP) Q3 report, which shows one-time donors and those giving less than $500 have dropped about 7% in the last year alone.

Moreover, the number of donors giving $100 or less has dropped more than 17%. It’s a worrisome report, accounting for nearly 98% of all givers. While the number of donors is declining, gift amounts are increasing. Is it a decline in donors or small-dollar donations?

In this episode, we’re talking with Pursuant’s Kristin Priest and Alyssa Boger about this troubling trend, which amounts to retention issues. They’ll share ways nonprofits can address these challenges to keep as many donors on their file as possible.

Are Middle-Class Donors Giving Less? And If So, Why?

It’s been an interesting time for nonprofits, especially in 2022. The COVID-19 giving bump started to level off just as rising inflation led individuals to pull back on any non-essential spending. Consumer sentiment was also at an all-time low in last year's last quarter. Given these external influences, Alyssa and Kristin argue we’re not seeing a middle-class collapse but a decline of lower dollar gifts. Most of these gifts come from older donors who are likely on fixed incomes and making tough decisions each month.

This drop in donors is more likely a result of several economic trends causing a decline in lower dollar gifts, regardless of the class donors may find themselves in.

An additional study from the Indiana University Lilly Family School of Philanthropy shows the share of American households donating to charity declined from 66% in 2000 to 50% in 2018. The 2008 recession fell in the middle of this period, and fundraisers have been asking ever since how to recover those donors who dropped off.

This study is a little more concerning as it relates to charitable giving in general. Where nonprofits were historically the gateway to philanthropy, vehicles such as GoFundMe and Kickstarter now enable donors to put their funds directly into the hands of those who need them. This is especially appealing to younger generations like millennials and Gen Z, so nonprofits must address how they can tackle this challenge.

Attract and Retain Younger Donors

There are a few ways fundraisers can attract and retain new and younger donors. And the best part is, many of these tips will also help retain or re-engage existing donors.

• Storytelling is critical. How can organizations use social media or digital communications to share more of a boots-on-the-ground impact so individuals feel like they’re giving to someone personally?
• Personal connections will be even more critical. Grab your phone and record a video. It doesn’t have to be perfect; your donors just want to see the effect their gift is having.
• Utilize social media to captivate new audiences. Get creative and, again, show the donors’ impact. 
• Be transparent to build donor trust. Ask donors how they want to hear about their impact — email, text, direct mail — and then honor their request. By doing so, you’ll also be cultivating and inspiring their next gift.
• Keep communicating with donors. Even if they pause their giving, they’ll still feel connected to your organization. When they can start giving again, you’ll be top of mind.
  

Look to Corporate Partners

Nonprofits have long benefited from corporations matching or doubling gifts their employees made. However, most corporations chose the nonprofit. This is evolving, and so should you.

Corporations now allow their employees to determine where their gift goes. So, as fundraisers, you should make it as easy as possible for corporations to match this gift. Educate your donors on this opportunity. Give them forms to pass on to their employers. Contact employers on their behalf to secure the matching gift. All this connects you with the donor, who is more likely to stay with you than the corporation.

In addition, we’re seeing companies go beyond basic employee giving to corporate social responsibility programs. These encourage workers to engage not through giving but through volunteering or engagement with your mission. This also lets you develop a relationship with the employee directly, which is more likely to endear them to your organization.

Retention is the goal. So, you must develop that connection so the donor feels they’re making an impact.

Address External and Internal Challenges

When it comes to keeping donors on your file, fundraisers face external and internal challenges.

External challenges are beyond your control: consumer sentiment, inflation, interest rate hikes, and geopolitical concerns. Understand the context to create a mutually beneficial dynamic. Go back to the crisis plan you enacted during the COVID-19 pandemic. How can you communicate an understanding of the environment they might be in and what they might be feeling?

Internal challenges are within your control. Younger generations want to give and interact with your brand, so identify ways to connect with their motivations. Use storytelling and leverage technology to give them behind-the-scenes insider moments. Move to an omnichannel experience. Utilize donor-advised funds and other forms of complex or planned gifts donors might be more comfortable with. Use your CRM to understand where and how they might be most interested in engaging with you.

Listen to the full episode:

Connect with Kristin Priest

Connect with Alyssa Boger

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