The Future Of Fundraising And Philanthropy: What Will Successful Fundraising Look Like In 2030?

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Abstract

In this paper, seven specific questions regarding the future of fundraising will be answered and discussed through outside research. Questions that will be discussed and answered include, Who will replace the Greatest Generation as the most generous benefactors? What ethical challenges will fundraisers face that are the same or different than today? What skills and talents will fundraisers need in 10 years? Today, most major gifts are secured face-to-face. What role will social media, artificial intelligence, crowdsourcing, etc., play in fundraising for significant gifts? Will direct mail—still the #1 way to fundraise from mass audiences—be dead? If so, what will replace it? How will Millennials—all of you—change fundraising practices and donor engagement strategies? What will be the best way to secure gifts and form long-lasting relationships from the largest living generation as they move into gift-making capacity? The number of Americans who contribute to philanthropy is shrinking. What will happen to the nonprofit sector? Will it contract as more nonprofits go after a smaller market of potential donors? Due to technological changes and the rise of new generations taking the lead in becoming the most generous benefactors, fundraising practices are ever changing and there will be an increased need for fundraisers to keep up with the new changes and challenges in the industry.

Who will replace the Greatest Generation as the most generous benefactors?

Currently, Baby Boomers are the leading and most generous benefactors in philanthropy. Baby boomers were born between 1944 and 1964 and they are currently aged between the range of 55 to 75 years old. Based on The Institute’s report, the average American donor is 64 years old and it’s predicted that baby boomers will remain the most generous benefactors for the next several years (Kiger, 2019). According to a poll conducted by Edge Research on behalf of the Blackbaud Institute for Philanthropic Impact, its estimated that the baby boomer generation as a whole donated around 58.6 billion to non profits in 2017 (Kiger, 2018). Additionally, according to a survey (What survey?)of 1,339 donors, it was found that baby boomers contribute the most to charities accounting for 41% of all contributions in 2017 and contribute to four charities on average (Kiger, 2018). This number has declined in recent years from the average baby boomer donating 1,212 in 2013 to 1,061 in 2017 (Kiger, 2018). Although, according to a survey, 60% of baby boomers reported that they plan to contribute at the same rate next year, while 12% said they plan to increase the amount of their donations (Kiger, 2018). “Thirty-five percent of boomers make contributions through charity websites. Some 27 percent give by mail, while 11 percent use social media websites to make contributions. Three percent give via text messaging.” (Kiger, 2018).”

While Baby Boomers are predicted to remain the highest contributing benefactors in philanthropy for the next few years, it is said that Millennials will soon replace Baby boomers as being the most generous benefactors. Millennials were born between the years of 1981 to 1996 and are currently between the ages of 22 and 35. Even though Millennials are not technically in their prime donating years, and won’t be by 2030; Millennials are still predicted to be the leading non-profit contributors in the future. “According to Blackbaud’s “2018 The Next Generation of American Giving” report, Boomers and Gen Xers contribute 41 percent and 23 percent of total giving, respectively, compared to 14 percent by Millennials.” (Smith, 2018). Even though Millennials make up 14% of total charitable giving, Millennials contribute 33% of their donations to caused-based crowdfunding sites (Bourque, 2019). Bourque reports that Millennials are 70% more likely to donate to caused-based crowdfunding than Baby Boomers and Gen Xers (Bourque, 2019). As previously stated, Millennials have not reached their prime donating years and do not yet have the disposable income that Baby Boomers and Gen Xers have. That doesn’t mean that Millennials aren’t willing to contribute on a smaller scale, especially when they know exactly where their hard earned money is going. Eight out of ten crowdfunding donations are made through a mobile platform (Bourque, 2019), which is in line with how Millennials function and communicate. Baby Boomers are not as accustomed to or comfortable with donating through social media or other media based platforms (Bourque, 2019). According to Bourque, Millennials have distinct requirements and expectations that need to be met before following through with a gift. Millennials expect specific facts about the organization, it’s practices and people, as well as the people on the receiving end of their donation. They expect their giving process to be interactive; they want photos, videos, and confirming results pertaining to their donation. Additionally, Millennials are more active in regard to social media and they are far more likely to repost information regarding a fundraising opportunity than any other generation (Bourque). With the rise of crowdfunding, which is growing an average of 40% to 50% annually, with Millennials being the top contributors, it is predicted that not only will Millennials take over the Crowdfunding movement, they will also become the leading and most generous benefactors because of it (Bourque, 2019).

What ethical challenges will fundraisers face that are the same or different than today?

Today, there are many ethical challenges that fundraisers face. According to Hrabik, the number one reason why people don’t donate is because they lack trust in the organization (Hrabik, 2016). Stewardship, an ethical issue fundraisers face today, will be a core requirement to fruitful fundraising in the future. Donors, in growing numbers, continue to expect accountability and assurance that their money is actually going to their chosen cause. And, they need confidence there is no unethical rerouting use of their money for things not reflecting their values, ethics and intended, specific cause. With Millenials predicted to take the lead as the future most generous benefactors, and with caution and discretion at the core of deciding how and where their money is allocated, stewardship will be paramount to future fundraisers as it relates to the values of their donors. Honesty and transparency are among this growing list of ethical concerns facing donors. They seek well-vetted organizations to better ensure legitimacy and integrity. Social and environmental responsibility are also of great concern to Millenials; they don’t want to contribute to any inadvertent harmful side-effects. With technology, crowdfunding and other media platforms becoming more popular, there is a transparency and immediate disclosure of activities that can serve to promote or destroy the credibility of organizations and individual people. Accountability and ethical practices are a growing concern for donors and a growing requirement for fundraisers. Donor money that is exploited and misused and in the news media, is an issue that legitimate fundraisers face today and may continue to have to overcome in the future. According to Tim Burchill, executive director of The Hendrickson Institute for Ethical Leadership at Winona, Minn.-based St. Mary’s University of Minnesota, it is up to the organization to decide what classifies as tainted money (Burchill, 2006). Although, with the rise of technology and crowdfunding, it will be seemingly more difficult for organizations to know exactly where the money is coming from. Another critical ethical issue is privacy, it is important to properly use, distribute and record donor information. One could suggest that Privacy will become an even larger ethical issue in the future considering the use of online transactions for donor contributions. In the future it will be even more important that fundraisers protect donor information, with the already little privacy there is online.

What skills and talents will fundraisers need in 10 years?

With the rise of technology, it will become increasingly crucial for fundraisers to be able to gather, understand and analyze data. According to the JustGiving blog, Amar states that just understanding and knowing how to operate Excel Spreadsheets will not be enough in the future (Amar, 2016). There will be an increased need for donors to understand how to navigate media platforms, collect data digitally and find new ways to reach larger audiences through data collection. According to De Gregorio, ‘In my view fundraisers of the future need to be fully fluent in the basics of community building, measuring response and impact, as well as the classic skills of telling stories to move people to give or take action.” Fundraisers will need to be more well-rounded in order to develop long lasting relationships with donors. Because technology is going to have a huge impact on how fundraising operates, there will be an increased need for developing personal relationships with donors even if it’s behind a screen. According to “Mandy Johnson, Director of Partnerships at Change.org, ‘Regular, personalised communications and access to extensive detail of how the charity is investing each donation used to be a privilege reserved for major donors.” Now with the rise of technology, this information is becoming more readily available and as a result, potential donors expect this kind of information and further communication with their fundraiser. In the future, there is a potential for donors to donate mobily more often which also creates a strong need to create valuable experiences for donors who fundraisers meet with face-to-face.

Today, most major gifts are secured face-to-face. What role will social media, artificial intelligence, crowdsourcing, etc., play in fundraising for significant gifts?

Millennials currently donate the most through crowdfunding, although their donations are usually smaller gifts. With the rise of social media, artificial intelligence and crowdsourcing, it predicted that it will be more common for an individual prospective donor to donate mobily than face-to-face. Although, face-to-face interaction is seemingly going to remain the most popular way to secure significant gifts from donors. In regard to social media, fundraisers can take advantage of this opportunity by leveraging data analytics to better market and reach potential donors. According to Pearman, charities with slim budgets can optimise their marketing efforts and adjust their tactics in real time by what is attracting potential donors (Pearman, 2014). Although, these tactics can be used for any charity and or organization and be used to better reach potential donors. This will allow organizations and charities to receive the feedback necessary to fulfill the needs of potential donors and relay information that is having the most impact. Social media is a great way to reach potential donors, although, one could suggest that face-to-face interaction for large donations will be necessary due to the lack of trust that many potential donors feel when donating significant gifts online. In regard to artificial intelligence, donors want to make fast decisions, although when making a difficult decision like what organization or cause to donate to and how much artificial intelligence can help donors make these decisions. “As Daniel Kahneman argues, brain slows down while making difficult decisions. When information is easily available, AI can offer faster insights, and even faster decisions.” Based on a donors interests, algorithms can match these donors with organizations that fit their values and interests. Potential donors could even help donors find organizations that match the amount of money they want to donate. Kaheman argues that, “They may even set some money aside and let the algorithms figure out the ideal disbursement of the money.” In regard to Conversational UI, a better user interface can be used to help potential donors navigate specific websites, highlight important information and provide a chat bot to answer questions. The chat bot can then transfer the prospective donor to a real-live gift officer who can further help the donor. According to Frankfurt, “Employing technologies with cognitive insight allows fundraisers to better understand data, optimize donor acquisitions, recommend next engagement steps and levels and generate personalized messages to deliver to a large population.” Personally, I believe that artificial intelligence, like social media analytics, can provide fundraisers with information at a faster and more efficient manner while also providing potential donors with quick and easy interface. Although, face-to-face interaction will seemingly still be incredibly beneficial and potentially more common for potential donors seeking to donate significant gifts.

Will direct mail—still the #1 way to fundraise from mass audiences—be dead? If so, what will replace it?

There are a lot of positive’s to fundraising through direct mail. Direct mail is an effective and low-cost way for fundraisers to reach their target donors. It is also an effective way to weed out those who have no interest in donating. According to Garecht, “In a 2010 nonprofit fundraising study called Heart of the Donor, 61% of all people who said they donated to charity in the past year reported making at least one of those gifts through direct mail.” This is a high number considering the fact that most people communicate online, through social media and more interactive platforms. A con to direct mail is that it is becoming increasingly common for people to feel like direct mail consists of mainly bills and junk mail (Garecht, 2011). According to Garecht, “The 2010 Campbell Rinker Donor Confidence Survey showed that 37% of people who gave to charities online did so because they received a direct mail letter from the charity, looked them up online, and made a donation on the nonprofit’s website.” It seems that the best way to communicate with Millennials, who are the next generation to become the most generous benefactors, is to mainly communicate through online platforms and through face-to-face interaction. Communicating to donors through social media and other online platforms is also an easy, cost effective way to reach donors and may have a chance of taking the lead over direct mail. According to Nick Ellinger, VP of Marketing Strategy, DonorVoice, states that “…31% of first-time offline donors will retain information from direct mail. While Only 25% of new online donors will.” MRI’s also found that physical materials like receive physical mail, leaves a deeper footprint on the brain creating a more emotional response leading to a better ability to retain the information received. Direct mail should still remain one of the most effective ways to reach donors considering that people who received direct mail were more likely to go online to do more research and continue their donation process from there. Especially because of the emotional response that donors receive as a result. The real question for fundraisers in the future will be how they want to go about the direct mail process and seek whether or not it benefits them. Direct mail doesn’t work for everyone but it has proved to be an effective way to reach donors for years and it is not dead yet.

How will Millennials—all of you—change fundraising practices and donor engagement strategies? What will be the best way to secure gifts and form long-lasting relationships from the largest living generation as they move into gift-making capacity?

Millennials are tech savvy and use digital platforms to engage with others. Many Millennials use media platforms to stay updated in the news, learn about new causes and are especially intrigued by what their peers post on social media. They are also more likely to trust their own experience as well as what their friends and family value, and or post on social media. They also value speed, efficiency and an easy transactions. According to the 2016 Millennial Impact Report, “More than one-third of millennials surveyed had donated to charity within the past year. Nearly all had used social media to research or post about social causes within the past month. However, they tended to avoid conflict when researching or discussing social causes.” Fundraisers will have to focus on staying up to date on their social media platforms and focus on fundraising campaigns centered around social media apps and other online platforms. To build long-lasting relationships with Millenials, fundraisers will need to focus on creating a trust worthy presence. Millenials are more likely to trust their friends and family over traditional experts (TechSoup Staff, 2018). Fundraisers will need to provide an easily accessible visual experience that can be reached on many different platforms (TechSoup Staff, 2018). Fundraisers will also need to provide specific information regarding the organization along with specific information about where exactly their money is going. Another important factor in building relationships with Millenials is to have the ability to create meaningful experiences for potential donors. Millenials are less interested in formal dinners or auctions to gain their attention. It would be beneficial for fundraisers to focus on value experiences such as a half-marathon, a sporting event, musical event or a dance.

References

Will Millennials Be the Most Generous Generation? (n.d.). Retrieved from https://www.waccamawcf.org/news/will-millennials-be-the-most-generous-generation/
Kiger, P. (2018, May 07). Boomer Generation Is The Most Charitable, Study Finds. Retrieved from https://www.aarp.org/money/budgeting-saving/info-2018/boomers-most-charitable.html
Smith, E. (2018, June 06). Are You Ready for the Next-Generation Donors? Retrieved from https://www.nonprofitpro.com/post/are-you-ready-for-the-next-generation-donors/
Santicola, A. (2006, September 12). Seven Ethical Challenges for Nonprofits. Retrieved from https://www.nonprofitpro.com/article/seven-ethical-challenges-nonprofits-36563/all/
The Direct Mail Fundraising Debate: Does it Still Work? (n.d.). Retrieved from http://www.thefundraisingauthority.com/fundraising-by-mail/the-direct-mail-debate-does-it-still-work/
Ways Artificial Intelligence Will Disrupt Nonprofit Fundraising. (2018, November 27). Retrieved from http://nandeshwar.info/data-science-2/ways-artificial-intelligence-will-disrupt-nonprofit-fundraising/
Pearman, I. (2014, January 23). How social media can change the face of fundraising. Retrieved from https://www.theguardian.com/voluntary-sector-network/2014/jan/23/how-social-media-can-change-fundraising
Frankfurt, T. (2018, April 03). What Does Artificial Intelligence Mean For Nonprofit Organizations? Retrieved from https://www.forbes.com/sites/forbestechcouncil/2018/04/03/what-does-artificial-intelligence-mean-for-nonprofit-organizations/#4e4034718dd4
Staff, T. (2019, March 15). 7 Steps to Fundraising from Millennials: Getting Them to Give. Retrieved from https://blog.techsoup.org/posts/7-steps-to-fundraising-from-millennials-getting-them-to-give

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