Tipping Point
Aligning with Supporters in a Changing World
Introduction
If you’re not disoriented, you’re not paying attention.
In just the last two years, we experienced the sudden convergence of several drivers of change, any one of which was capable of upending the natural order of nonprofit fundraising. We have faced COVID-19, a long-overdue reckoning with racial injustices, shifts in donor demographics, cultural polarization, post-pandemic worker attitudes, and the great resignation.
COVID-19 was new, but the other trends had been building for decades, like tectonic plates pushing against one another, building invisibly toward a massive earthquake. Yet, in the tumult of now, it would be the ultimate hubris to make any confident predictions of what the future holds for philanthropy in America. Here’s a promise, though: It will be different.
The direct marketing model still widely used by nonprofits today was created by and for the generation that preceded the Baby Boomers. When the first direct-marketing-driven organizations emerged in the mid-20th century, most TVs were black and white with only four channels from which to choose. In the ensuing decades, we’ve made improvements and built fancy new channels, but the basic DNA of the mechanics and fundamentals are the same: We must engage people in the work of improving the world and invite them to participate as donors and partners. But maybe the execution needs a rethink.
For nonprofits, this moment may be remembered as the time when conventional wisdom came crashing down—a conventional wisdom based in part on oversights and risk aversion, and a refusal to really believe that tomorrow is not going to look like yesterday.
And while firm predictions are unrealistic, there are signals in the noise worth teasing out—clues to what the future might look like. This study looks at some of the signals and explores whether they are glimpses of what may be or simply artifacts of topsy-turvy years.
We set out with three big questions:
- How did donor and organization behavior change over the last two years?
- What clues might these insights provide us for the future?
- How do nonprofits need to prepare for the changing fundraising environment?
To gain insight into these questions, we interviewed 1,168 nonprofit professionals and 1,024 donors to a variety of causes. This study presents the findings of those surveys, along with our recommendations for nonprofits who wish to thrive in the brave new world ahead.
We unearthed several provocative insights, including abrupt shifts in donor demographics, some disconnects between organization and donor perceptions, stark differences in organizations’ ability to adapt to the pandemic, and more. We noted the ways in which technologically savvy organizations fared better than their more Luddite colleagues. More on that below.
One interesting meta-finding: Many organizations appear to be out of touch with the attitudes of their donors and were therefore less prepared for the flow of generosity that happened in 2020. This is not a new issue. Especially among those giving at the mid-level and below, donors are rarely asked their opinions and feelings. That is increasingly risky given the speed at which the fundraising environment has been changing.
All that can be said with confidence is that the future will look markedly different than the past. With that in mind, we offer our conclusions and recommendations from this research.
So, welcome to the future. Buckle up.
What We Found
One: Sharp Changes in Donor Behavior and Demographics
In the spring of 2020, when it became apparent that the lockdowns and closings and economic disruptions would not be temporary, organizations seemed to take one of two paths. Many organizations—reasonably—hunkered down, figuring that actively fundraising during this period would be futile or unseemly. Other organizations pressed on, did the best they could, and adapted to the reality of the moment.
It is the latter group whose strategy appears to have been most successful. Across all verticals, nearly 90% of organizational professionals report that they feel the same or better about their organization’s health since the pandemic began.
New Donors and More Diversity
Among nonprofits, those that persevered and adapted had very good years. Roughly half of the respondents say that their income increased during the pandemic, with human services organizations reporting the sharpest increases. Across all verticals, strong majorities say their income either increased or held steady.
88%
of organizations report feeling better or the same about their organization’s health since the pandemic.
45%
of organizations report an increase in the number of new donors.
Donors participating in the survey corroborated the professionals’ accounts. More than one-third of donors say they increased their giving during the pandemic and only 12% say their giving dropped. And bucking a long-term trend of shrinking donor rolls, nearly half of the participating professionals report increases in the number of donors, with only a fifth saying their donor files shrank. These increases are significant as they signal a possible departure from the decade-long trend of diminishing numbers of donor households reported in the Blackbaud Institute’s Vital Signs series.
Click on the right arrow to scroll through the charts below.
Among this cohort of newer donors, young people and donors of color figure prominently. Among Generation Z participants, 53% say they increased their giving since March 2020, with just under half of Millennials saying the same. Roughly a quarter of Gen X and Baby Boomer donors say their giving increased. Even among the aging Baby Boomer cohort, only 15% say they cut their charitable giving during the pandemic.
Not only were these donors younger, but many were also non-white. Nearly half (46%) of Black donors say they gave more, with Hispanic (44%) and Asian (38%) donors close behind. Among white donors, only a third (33%) say they gave more during the pandemic. Black and Brown donors were also more likely than white donors to say they gave to a new organization in 2020, with 54% of Hispanic donors representing the high-water mark.
Click on the right arrow to scroll through the charts below.
When asked what prompted their giving, donors of color report they were especially motivated by the need arising from the pandemic itself and from the burgeoning attention to racial and social injustice in the wake of George Floyd’s murder. A higher proportion of Black and Brown donors also report increases in campaign-related giving compared to their white counterparts.
74%
of organizations created COVID-specific campaigns.
32%
of organizations created racial/social justice-specific campaigns.
37%
of donors gave in response to COVID.
29%
of donors gave in response to racial/social justice.
Click on the right arrow to scroll through the charts below.
As we reported in the 2015 study, Diversity in Giving: The Changing Landscape of American Philanthropy, the demographic makeup of the American donor population has been disproportionately white for some time. To see increased participation by donors of color was one of the more encouraging developments emerging from this study. Nascent movements and organizations like community-centric fundraising came into existence during this period and sought to build on the temporary gains in participation by communities of color. The need for steady, long-term efforts in this area cannot be overestimated.
Retention: Challenges and Opportunities
It’s not unusual for giving to increase in the wake of natural disasters or politically volatile moments. Crisis donors and so-called episodic or “rage” donors are historically difficult to retain. While only time will tell as the pandemic’s immediate effects fade, new donors participating in the study offer some reasons for hope.
8 in 10
donors subscribe to a consumer membership service.
29%
of donors who gave to a nonprofit they had not given to previously say they are “very likely” to become monthly givers.
A third (33%) of participating donors say are “very likely” to give again to organizations they first supported in 2020, with only a slightly smaller proportion (29%) saying they would be “very likely” to become monthly sustainers. Notably these percentages are higher than the industry-wide first year retention rate, which hovers around 25%.
Millennials were especially likely to say they are likely to give monthly to new causes, with 40% saying as much. Also, the donors who subscribe to monthly consumer membership services such as video streaming, music streaming, or meal kits are also more likely to become monthly contributors.
Click on the right arrow to scroll through the charts below.
On retention, the survey raises as many questions as it answers: To what extent will donors follow through on their intention to give again or become monthly supporters? Will trends involving younger donors and donors of color continue? To what extent are donors reflecting post-pandemic values and shifts in personal priorities? What will organizations need to do to keep these new donors engaged? And how do those engagement expectations differ from or align with pre-pandemic donors? Only time will tell.
One thing is beyond debate: The surge of new donors and ones from more diverse sources reverses a decade of decline, which makes this a defining moment. Consider this new pool of donors as an opportunity to establish relationships, build more engagement, show impact, and retain donors over time. However, these episodic donors require intentional and focused stewardship if they are to continue supporting your cause once the fervor has dissipated and the immediacy of the disaster has passed.
Two: Rapid Evolution of Donor Engagement Preferences
How did organizations adapt their engagement strategies to meet the needs and expectations of all those new donors? Getting stewardship and engagement right will be the key to keeping new donors and pre-pandemic donors alike. Donor engagement strategies were already in a state of flux before COVID-19, thanks in large measure to the proliferation of digital channels and changing patterns of technology use by donors. Without question, organizations that had failed to invest in technology and the know-how to leverage it were at a profound disadvantage as in-person gatherings became impossible.
Donor engagement during the pandemic and social upheaval of 2020 involved quite a bit of throwing spaghetti at the proverbial wall. Ambitious organizations unleashed or embraced a wide range of tactics to meet the moment. Most visible among these were virtual events, as America flocked to Zoom® and other video services to maintain social ties.
Engagement Tactics
Professionals reported trying or expanding a wide range of tactics in 2020. In some cases, it is unclear to what extent donors picked up on these new opportunities. Large majorities of professionals reported that their organizations increased their investment in virtual fundraising events, use of social media, and sharing of videos about the organization’s work. Most organizations doubled down on promoting online donations, and many made monthly giving a priority as well.
What is less clear is the extent to which donors perceived these changes. For instance, while 72% of professionals say they expanded their offerings of virtual events, only 16% of donors say they were aware of them. And while 59% of professionals say their organization encouraged donors to share content on social media, only 18% of donors recall seeing any such requests from the causes they support.
Going forward, donors expressed an interest in a multitude of digital options to engage with organizations.
Click on the right arrow to scroll through the charts below.
While there may be slight variances in engagement preferences, it is not the most significant disconnect between donors and nonprofits.
Personalization
The theoretical promise of digital communication is the ability to connect with each donor on the topics of greatest interest to them, via their preferred channels, and at the most convenient time. One thinks of the possibly apocryphal time when a Western journalist asked Mahatma Gandhi his opinion of Western civilization. Gandhi is said to have replied, “I think it would be a good thing.” In other words, the full promise of personalization—of speaking to donors as individuals—has yet to be fully realized.
70%
of donors are fine with personalized content, with most younger donors preferring it.
In terms of specifics, many donors say they want to dictate their communication channels, set the frequency of communications, and receive content tailored to personal interests and involvement. Overall, nearly 80 percent of donors say they would prefer to get at least one form of personalized content. Yet, when we probed both organizational professionals and donors on the topic of personalization, we found a diverse array of opinions.
More than a third of donors say they have received personalized content from their favorite charity; yet only 13% of the participating charities say they offer it. Also, a stark generational gap exists among donors when it comes to their appetite for personalized content. While 40% of donors overall say it’s a “great idea,” only 12% of Baby Boomers think so, compared to approximately 60% of Generation Z and Millennials. Just a fifth of donors think personalization is “strange or creepy.”
Click on the right arrow to scroll through the charts below.
Personalization Halo Effect
Donors bestow a halo effect onto organizations that personalize their digital communications. Donors who say they receive personalized content are more likely to give their favorite charity high scores on a wide range of attributes, including the extent to which the charity “pulls on their heartstrings,” creates engagement opportunities, and makes donors feel appreciated. These attributes are widely seen as important elements of a successful retention strategy.
One would think that during times of tumultuous change such as these, organizations would be listening more closely to shifting donor expectations. That, however, appears not to be the case. Organizational professionals say they rely mostly on anecdotal feedback from donors and on social media to glean donor expectations. Only one in four organizations uses surveys, focus groups, or any targeted listening strategies to stay in tune with donors. This is probably a chronic rather than COVID-related phenomenon. Organizations have long tended to pay far more attention to their messaging skills while giving listening skills short shrift. Options for people to engage on the issues that ignite their passion have expanded dramatically in recent years. It’s more important than ever to know your audience and meet their expectations.
Click on the right arrow to scroll through the charts below.
Donors and organizations diverge on some key issues
The parallel studies revealed several places where donor expectations and organizational practices diverge. For instance, 60% of organizations rated themselves as “excellent” at meeting donor expectations for staying true to their mission, values, and goals; only 44% of donors said the same. Organizations also appear to overrate the quality of their reporting on impact and the security of the donation process.
Conversely, donors tend to give organizations higher marks than the organizations give themselves on several measures. Among these are using money wisely, reporting on how donations make a difference, and making donors feel appreciated. It’s worth noting that on these latter three attributes, while donors were more generous in their assessments, fewer than half the donors would rate them as “excellent.”
When looking only at those organizations that donors considered to be early technology adopters, however, most of those discrepancies disappear. In fact, when compared with organizations seen as early-majority or late-majority adopters, the early adopters earn higher ratings across the board.
Click on the right arrow to scroll through the charts below.
About Technology
53%
Organizations Who Have Done a Major Website Update or Redesign Since March 2020
83%
Organizations Who Accelerated their Technology Adoption
87%
Organizations Who Increased Their Volume of Digital Outreach and Engagement with Donors
The Technology Halo Effect
Technology not only facilitated pandemic engagements and other rapid innovations, but it also helped drive overall perceptions. Overall, 45% of donors categorized their favorite nonprofit organizations as early adopters of technology. Professionals were more self-critical; only 30% would categorize their organizations as early adopters.
Organizations viewed by donors as early tech adopters appeared to benefit from a halo effect in which donors attributed a range of good qualities—which may or may not be tech-related—to the organization. For instance, donors who rated their favorite cause as a technology early adopter also gave higher marks for keeping them informed, making donors feel appreciated, and offering more engagement opportunities, among other qualities. By comparison, organizations considered late adopters received significantly lower scores on these and other attributes. (See Chart 20 above.)
None of this is to suggest that technology is the key to everything. At its best, technology can enhance and simplify the work of compassionate and committed people working to improve their world—but it does not replace the human factor.
Despite the outsized role tech played during the height of the pandemic, organizational professionals express caution regarding continued investments. Going forward, donors say they want as many or more opportunities to connect virtually with the causes they support. More than half of the donors (56%) say they want a virtual or hybrid relationship with their causes. Nearly half the Millennials (50%) say they would prefer organizations engage exclusively or mostly virtual; only 17% of Baby Boomers expressed a similar view.
But the professionals appear less willing to keep up the pace of virtual gatherings as in-person options return. (See Charts 21 and 22 above.) No more than 20% of pros say they are “very likely” to upgrade their donor relationship management technology or other technology solutions in the coming year.
They express significant concern about costs, the ROI of new improvements, and the ability to measurably improve the donor experience.
Top 10 Reasons Organizations Are Concerned about Implementing New Technology
- Ongoing Cost of New Technology
- ROI from New Technology
- Ability to Impact the Donor Experience
- Staff Being Able to Use New Technology
- Ability to Integrate Legacy and/or Multiple Platforms/Solutions
- Ability to Customize Solutions to Your Organizations’/Donors’ Needs
- Donors Being Able to Use New Technology
- Adoption and Integration Across Multiple Departments
- Ability to Build More Sophisticated Communication Strategies (Social, Email, etc.)
- Ability to Facilitate Recurring Gifts
Takeaways
Only time will tell what the new reality—the so-called “new normal”—will look like when the dust settles, but that’s not a reason to sit on our hands. Here are some practical suggestions for acting now to better secure your organization’s fundraising future.
- Pay much closer attention to your donors’ expectations. Direct marketing is, at its core, a one-way communication funnel. The organization speaks to the many and some of the many send money. The idea of spending significant sums to really understand what’s on your donors’ minds was just not in the original equation. That needs to change. Invest in more rigorous testing and formal listening strategies like surveys, focus groups, insight panels, and other ways to give donors a real voice at the table.
- Pursue “philanthropy for all” with deliberate speed. The study suggests that under these circumstances, people of color are more apt to participate. We need to spot more of those promising signals and seek to amplify them. Rebuilding philanthropy to reflect the true diversity and breadth of the country is an immensely complex undertaking and an immensely important one. It will not yield to an engineered approach, such as DEI checklists or one-off training workshops. If you are not feeling confused and uncomfortable as you pursue these efforts, you’re not doing it right.
- Don’t squander this moment. The surge in new donors could be a blip, or it could be the start of a new, larger, and more diverse fundraising era. The outcome is in part up to organizations with the vision and the courage to welcome and bond these newcomers to their cause. Extra attention on retention will also help with pre-COVID donors. Everyone knows it’s more efficient to keep a donor than to find a new one, yet little has happened to plug the leaks in the fundraising bucket. Make retention a core KPI, and let your fundraisers find the right strategies and tactics.
- Invest in technology with the long-term in mind. Technology laggards floundered when COVID-19 struck. While you shouldn’t bankrupt your organization for the latest gimmicks, this is a time to take some well-reasoned risks. Invest in technology that facilitates a rich two-way conversation with donors and that provides the tools for evolving with shifts in donor expectations.
- Develop leaders with new capacities. Technology exists to support human endeavors, not to replace them. COVID-19 appears to have led to wholesale shifts in workers’ priorities. Today’s leaders expect to engage in new ways, to have ongoing growth opportunities, and to understand where they fit into the larger organizational picture. The complexity of now requires new leadership skills. Investing in lifelong learning is the price of worker retention, and it’s the key to long-term success.
- Foster a future-proof culture. New strategies and technologies are only as good as the culture and training that supports them. A culture that rewards risk, genuinely encourages innovation, manages change well, and develops its leaders will be essential to ensuring your organization thrives and evolves with the times.
Conclusion
So, what are we to make of the present moment? Which of these findings are harbingers of post-pandemic philanthropy and which are just temporary phenomena caused by the virus? Looking at broader societal trends, such as the great resignation, demands for racial justice, and evidence that a growing number of people are rethinking how they want to live their lives, our best guess is that many of the changes may be lasting. Then again, these are unpredictable times. That fact alone suggests organizations need to do a much better job of listening to their donors.
We’ve entered a period of great complexity. By definition, where complexity rules, predictions are little better than guesses, and control is mostly an illusion.
Viewed one way, the pandemic was a needed wake-up call. It has served as a stern reminder that the sand has been shifting beneath our feet for some time now.
Complexity will rule the day now and in the future. In complex situations, most things are unpredictable and specific outcomes are beyond one person’s—or one organization’s—control.
Anything that involves human behavior is, by nature, complex. Your organization is a complex system. Your department is a complex system. Philanthropy is a complex system. Our nation is a complex system. It is audacious to think anyone can understand, much less direct, the dance of variables involved in predicting or controlling the future. The good news is, while we cannot control complexity, we can navigate it.
We are not wired for complexity thinking; we evolved in a simpler world. We need to train in new and more sophisticated sense-making in order to navigate the multidimensional world we have created. It means seeing systems. It means bringing in new perspectives. It means bringing deep humility to our planning processes. And it means learning how to listen better.
- We need a new kind of leadership. Complexity demands new leadership skills. It will demand curiosity, empathy, and humility. Traditional “command and control” models of leadership are going to be increasingly ineffective, if not downright counterproductive. The mentality of working to hit certain targets may need to take a backseat to fostering conditions for success.
- Nonprofits need to design and plan for complexity. The nonprofits who had invested in becoming more technologically savvy and built their infrastructure before the pandemic ruled the day once the virus struck. Technology will not, by itself, be the answer to future complex challenges, but it might be the price of admission.
- Embrace the discomfort of reinventing philanthropy for all. There’s change that we can’t control at all and change that we can. The emergence of organizations like community-centric fundraising may signal the beginnings of a massive shift in how philanthropy happens in America. Philanthropy has been too white for too long, and the ideal of philanthropy for all is going to ramify in how organizations fundraise, how power is shared, who is sitting at the table, and what is being said.
As we embark together on the journey to whatever comes next, perhaps it’s best to leave things on an encouraging note. Fundraising as we know it gets a lot of things right. Done well, it’s about relationships and building communities of caring folks committed to making a better world. After all, the literal translation of philanthropy is “love of humankind.” The ultimate message of the pandemic might be that the real challenge is less about going forward and more about revitalizing these timeless core ideals. Let’s rededicate ourselves to these principles along with a commitment to make fundraising as diverse and welcoming as the nation itself. Then the future might not look so scary after all.
About the Study
About the Study
Unless otherwise noted, all figures were derived from online surveys of 1,168 professionals at nonprofit organizations and 1,024 donors commissioned by the Blackbaud Institute and conducted by Edge Research. The nonprofit professional survey was fielded using a list of current Blackbaud contacts, and participants were incentivized to minimize self-selection bias. The donor survey used an established industry sampling partner, consisting of opt-in research participants (non-probability/convenience sample). Quotas were set to ensure incoming data (prior to screening for charitable donations) was census representative in terms of age and gender, region, and race/ethnicity. Edge follows Insights Association/industry best practices. Data is self-reported, not transactional. The survey was in the field June 28 to July 23, 2021.
Acknowledgements
We are deeply grateful to the talented colleagues who led this work: Mark Rovner of Sea Change Strategies who penned this report in partnership with Ashley Thompson; Pam Loeb, Jillian Kirsch, Gayle Vogel who conducted the research; and Lindsey Salmony who guided the project end to end.
A special thanks to Brooke Hansel, Kelsey Bowden, and Mike Simmons who contributed their perspectives on the survey and its findings. Finally, we’d like to extend our gratitude to our stellar creative team including Lisa Bayne, Amanda Phagan, and Lex Stress for managing the careful editing, design, and production of the report.
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