Amid all the year-end giving and holiday celebrations, the new year is also a time for reflecting on the previous 12 months. And using that knowledge to plan for the next 12.
If you’re looking for Pantone’s Color of the Year, this isn’t the article for you. (I’ll save you a click and tell you it’s Classic Blue.)
No, we’re looking at the biggest trends happening in the fundraising world and the impact they will have on nonprofit organizations. So, grab a cup of coffee and find a nice place to relax as you read through our list of seven trends that will affect fundraising in 2020.
1. FEWER DONORS AND MORE COMPETITION
We’ll start with the biggest – and frankly most troubling – trend facing nonprofits across the U.S. And this one has been building for a while.
A decade ago, there were an estimated 1.4 million nonprofits in the U.S. Today, that number has jumped to roughly 1.8 million. That may not seem like a big difference, but it’s a 28 percent increase.
Meanwhile, the number of U.S. households that give to charity has dropped by 13 percent from 2000 to 2016. That’s 20 million fewer families donating. (Click here to read our thoughts on why this is happening.)
Simply put: The number of nonprofits is growing. The number of donors is shrinking.
This is a problem, and it underscores the importance of creating a deep connection with your donors.
2. AN INCREASING FOCUS ON MID-LEVEL DONORS
As the pool of donors slowly evaporates, this puts an increasing emphasis on retaining the valuable donors you have. And many nonprofits are realizing that they have ignored their mid-level donors for far too long.
This group often makes up about 1 percent of an organization’s donors, yet accounts for 30-35 percent of total revenue. You can’t afford to overlook them.
The challenge in approaching mid-level donors is that they don’t fit snugly into a direct response program or a major gifts program. In addition, nonprofits often feel they don’t have the capacity to provide the more personal touch that mid-level donors demand. Mid-level donors are a hybrid, which requires a hybrid approach.
We recently shared our thoughts on how to reconcile these challenges with The Chronicle of Philanthropy.
3. GROWTH OF DONOR-ADVISED FUNDS
The hottest trend in the fundraising world right now is donor-advised funds (DAFs).
How hot, you ask? In just five years, the amount of charitable assets in DAFs has gone from $50 billion to $121 billion. And DAFs accounted for 12.7 percent of all giving in 2018.
If you’re not talking to your donors about DAFs, you’re missing out on a key source of new revenue. If you want to learn more about donor-advised funds, check out our blog post that breaks down how you can get started.
4. YOUNGER DONORS CHANGING GIVING BEHAVIOR
Speaking of major shifts in the marketplace, younger generations of donors are finding new avenues for donating to nonprofit organizations.
Whether it’s learning about a budding technology like livestream fundraising, harnessing the proliferation of smartphones or adapting your approach to donations on an existing channel like social media, now is a good time to experiment with ways to expand your audience.
The concentration of wealth still sits with Baby Boomers (and increasingly Generation X), so this is no time to abandon direct mail, email, paid search and display. However, reaching and connecting with Millennials and Generation Z in the channels they prefer will be important to your future.
Plant the seeds now for a comprehensive multichannel strategy that will pay off down the road.
5. DATA PRIVACY REGULATIONS ARE HERE
Another key area to watch in 2020 will be new laws around data privacy.
Canada and Europe are a step ahead of the U.S. with sweeping laws that govern data privacy. But we’ve finally seen the first big domino fall in America with the California Consumer Protection Act (CCPA), which goes into effect Jan. 1.
Maine, Illinois, and Nevada also passed data privacy laws in 2019, and 21 other states had privacy-related bills that didn’t pass but will likely resurface in 2020.
Momentum is building for a national data privacy law, and we may see one pass Congress as soon as next year. You can prepare now by reviewing your data policies and practices.
6. ELECTION SEASON IS HEATING UP
You didn’t really think you’d get through a 2020 article without talking about politics, did you? J/K.
We’ll steer clear of the great red vs. blue debate, but there’s no avoiding the fact that 2020 is a presidential election year. And we know it will be a wild ride.
This election will affect nonprofits across the nation in a variety of ways. We know some groups will benefit from politicized causes, and we know donors will be more distracted by a flood of politicians asking for donations.
But one of the most interesting aspects to us is how elections have a history of marketing evolution.
7. MONETIZATION OF MARKETING
And finally, speaking of marketing, we’re beginning to see the crumbling of walls between the marketing and development departments at nonprofits.
For some organizations, however, these two teams still operate in siloes. Marketing focuses their dollars on brand awareness, while development uses its spending on fundraising efforts.
We can’t yell this loudly enough: Stop operating this way!
We have seen numerous clients repurpose their marketing budget toward fundraising – and have success in doing so. They still get the brand awareness they’re seeking, but that awareness also comes with revenue in return.
Changes are afoot in the fundraising world, so this is no time to bury your head in the sand. As you think about the future, consider how each of these trends fits into the puzzle of your organization’s strategy.
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