Navigating the Changing Donor Environment: Strategies for Success in the Post-COVID Era
The COVID-19 pandemic fundamentally transformed the world we live in, including how nonprofits are funded.
Nonprofits must embrace innovative strategies to succeed in this new and dynamic environment.
By Ben Delaney © 2023 ImmersivEdge Advisors
AI Illustration by NightCafe.Studio
The COVID-19 pandemic has fundamentally transformed the world we live in, including the way nonprofits engage with donors and raise funds. Traditional methods of fundraising that relied heavily on in-person events and face-to-face interactions have been disrupted, making it necessary for organizations to adjust their strategies to meet the changing landscape.
Nonprofits must recognize these changes and embrace innovative strategies to succeed in this dynamic environment. Using the same old appeals and expecting better results is a recipe for development disaster. The evolving philanthropic attitudes of different generations are changing the donor environment. From recurring giving and memberships to matching grants and donor advised funds, new social media and online technologies, all the way to rapidly-evolving artificial intelligence (AI) there are numerous factors that impact the way donors engage with organizations. Let’s delve into these changes and explore strategies for nonprofits to flourish in this shifting landscape.
Donor fatigue is real
The pandemic led to an increased demand for charitable support, requiring more funding. But many organizations are seeing slowing donation flows, and reduced response to their appeals. What’s more, inflation has reduced the value of every dollar received. According to a recent report, Giving USA 2023: The Annual Report on Philanthropy for the Year 2022, created by the Indiana University Lilly Family School of Philanthropy, in 2022 nonprofits raised $499.33 billion — a 3.4% year-over-year drop in current dollars and a 10.5% downturn when adjusted for inflation.
Thanks to this confluence of increased need and reduced funding, donors are being inundated in requests for support, and they are overwhelmed, and shutting down. Nonprofits need to recognize and address this by being mindful of the frequency and intensity of their fundraising appeals.
Nonprofits should invest in building strong relationships with supporters by sharing compelling stories, showcasing the impact of their work, and expressing genuine gratitude for contributions. Providing regular updates on the progress of projects, demonstrating the impact of previous donations, and showing empathy for the challenges faced by donors can help alleviate fatigue and maintain donor engagement.
Tailored communication, such as personalized emails, video messages, or handwritten notes, can go a long way in fostering donor loyalty. These more personal communications, with strong stories and limited asks, will have a positive long-term impact.
Different strokes for different folks
Your donors are not a homogeneous demographic, and ignoring that will reduce the effectiveness of your appeals. Different generations have distinct attitudes toward philanthropy, and nonprofits must adapt their strategies accordingly. Millennials and Gen Z, for instance, are often driven by causes they can personally connect with. Engaging these generations requires authentic storytelling, leveraging social media platforms, and creating opportunities for active participation. Meanwhile, Baby Boomers, known for their wealth and propensity to give, may respond well to legacy giving and establishing donor-advised funds.
Post-COVID attitudes have highlighted the importance of community and collective action. Focus on building strong communities around your cause, facilitating peer-to-peer fundraising, and encouraging supporters to become ambassadors for their mission. Engaging donors as active participants rather than passive contributors can foster a sense of ownership and long-term commitment. But remember that the way you talk to Boomers is likely going to need to be different from how you talk to Gen-Z, which will be different from how you talk to Millennials.
Recognize also that donors have varying capacities and motivations. Your organization should adopt a flexible approach to giving levels. By offering different tiers or suggested giving amounts, organizations can accommodate the preferences and financial abilities of their diverse donor communities. Additionally,
Donors today are more discerning and seek transparency from nonprofits. Communicating financial stewardship, impact metrics, and demonstrating accountability are essential in gaining donor trust. By being transparent and clearly communicating how each giving level contributes to your mission, you will instill confidence in donors about the allocation of funds and the outcomes achieved and strengthen their commitment.
Recognizing that your supports come from many different tribes also makes it easier to diversify your revenue stream. We have seen that organizations which relied solely on a few traditional fundraising methods were left vulnerable during these challenging times. It is crucial to diversify revenue streams by exploring alternative sources such as grants, corporate sponsorships, earned income models, and collaborations with other organizations. This approach not only mitigates risks but also opens up opportunities for sustained funding and greater financial stability.
Encourage less common ways to give
When it comes to supporting nonprofit organizations, donors have a range of options beyond traditional cash donations. Nonprofits can benefit greatly from non-traditional forms of giving, which allow individuals to leverage their assets and maximize their impact. Let's look at some of these less-common ways donors can support their favorite organizations.
· Recurring giving: Recurring giving has emerged as a crucial pillar of sustainable support for nonprofits. It allows donors to contribute a predetermined amount on a regular basis, providing a steady stream of funding. To encourage recurring giving, emphasize the impact of consistent contributions and make the donation process seamless and convenient. By implementing robust donor management systems and establishing personalized communication channels, nonprofits can build lasting relationships with recurring donors, fostering a sense of loyalty and commitment.
Vehicle Donations: Donating a vehicle, such as a car, truck, boat, motorcycle, or even an airplane, can be a meaningful way to contribute to a nonprofit. Many organizations have vehicle donation programs in place, where the donated vehicles are sold, and the proceeds are used to support their mission. Donors can benefit from a tax deduction based on the fair market value of the vehicle. A number of brokers handle vehicle donations as a service, making these programs fairly easy to implement.
Real Estate Donations: Donating real estate, such as a home, land, or commercial property, can have a substantial impact on nonprofits. Nonprofits may choose to use the property for their programs or sell it to fund their initiatives. Real estate donations can provide significant tax benefits, including deductions for the fair market value of the property and potential avoidance of capital gains tax.
Appreciated Stocks and Securities: Donating appreciated stocks, bonds, or mutual funds is a tax-efficient way for donors to support nonprofits. By gifting appreciated securities instead of selling them, donors can avoid capital gains tax and may be eligible for a charitable deduction based on the current market value of the assets. Nonprofits can sell the securities and utilize the proceeds to further their mission.
Estate Planning: Including a nonprofit in one's estate planning is a powerful way to leave a lasting legacy. Through wills, trusts, or beneficiary designations, individuals can allocate assets or a percentage of their estate to be donated to a nonprofit upon their passing. Estate planning allows donors to support causes they care deeply about, ensuring that their philanthropic values continue to make a difference even after their lifetime.
Matching grants: This type of giving enable donors to add a bit of pizzazz to their philanthropy, and helps to create excitement among all donors. Matching grants act as catalysts for increased giving by leveraging the generosity of others. Nonprofits can forge partnerships with high-value individuals, corporate sponsors or foundations to create exciting matching grant opportunities. Such initiatives not only incentivize donors to give more but also amplify the impact of their contributions. Clear communication about matching opportunities and the tangible outcomes they enable can motivate donors to seize the chance to double their impact.
Donor-Advised Funds (DAFs): Often managed by local community foundations, donor-advised funds are philanthropic vehicles that allow individuals to contribute assets to a fund dedicated to charitable giving. Donors receive an immediate tax deduction when they contribute to the fund, and they can direct grants to their favorite nonprofits over time. DAFs offer flexibility and convenience, enabling donors to support multiple organizations through a single fund.
In-Kind Donations: Nonprofits often have specific needs beyond monetary contributions. In-kind donations involve gifting goods or services that directly benefit the organization. This can include items such as office supplies, equipment, furniture, or professional services. In-kind donations provide nonprofits with valuable resources while allowing donors to contribute in a tangible and specific way.
·Volunteering and Skills-Based Giving: While not a financial donation, volunteering and skills-based giving are vital forms of support for nonprofits. Donors can offer their time, expertise, or professional skills to assist organizations in various capacities. This can include serving on boards, providing pro bono services, mentoring, or sharing specialized knowledge. Nonprofits greatly appreciate the contributions of volunteers, as they provide critical support for their operations and programs.
Innovation will take you far
The key concept that nonprofit leadership needs to focus on while working through the current challenging moment, is innovation. Nonprofits must foster a culture that embraces innovation and adaptability. Encouraging staff to think creatively, experiment with new fundraising techniques, and adapt to emerging trends will help organizations stay ahead of the curve. Embracing new technologies, exploring innovative fundraising models, embracing new messages and communication strategies, and collaborating with other sectors can lead to fresh ideas and approaches that resonate with donors.
Successful nonprofit organizations will proactively adapt their strategies to ensure their long-term stability. This includes educating their donors about the new options and providing guidance on the processes and potential benefits associated with each form of non-traditional giving. By embracing and facilitating these less-familiar methods, nonprofits can diversify their support base and build stronger relationships with donors.
Consider building new programs by synthesizing some of these ideas to make your appeals fresh and exciting to a base of fatigued donors. By embracing change and innovative approaches, nonprofits can thrive in this dynamic environment, create lasting connections with donors, and make a significant impact in advancing their missions. The key lies in building meaningful relationships, demonstrating impact, and adapting to the evolving needs and preferences of donors. And remember to thank your donors and volunteers frequently. Be sure they understand how much your organization appreciate what they do for it. By doing so, nonprofits can not only survive but also thrive in the ever-changing donor landscape.