Rossi’s Roundup: Positive forecast for philanthropy is a breath of fresh air

I hope you are as thrilled as everyone who has seen or read the forecasted outlook for philanthropy. It’s such a breath of fresh air after the last two years.

The Lilly Family School of Philanthropy at Indiana University released their “Philanthropy Outlook for 2024-25,” and it’s a burst of confetti for the soul. Key highlights are listed below for you, your team and board of directors to absorb like sunshine.

Want to hear an interesting and fun interview? Tune into the RKD Group: Chat podcast as Kate McKinley sits down with Kelley Likes, Vice President of Philanthropy at Humane Society of the Pikes Peak Region and long-time RKD Group client. They discuss her calling to serve in the nonprofit sector, particularly animal welfare, including:

• Her journey into nonprofit fundraising
• Day-to-day challenges she faces
• Advice for other female leaders
• The importance of leaning on and learning from others in the space
• Foster puppies (if you know Kelley, of course they did!)

In the past few weeks, there have been headlines such as, “Massive changes coming to Google Chrome threaten to reshape the modern internet,” informing us we won’t be “munching” on third-party cookies much longer. That’s why it’s so important for every nonprofit to make their organization’s digital footprint, tech and tools a priority.

First-party data is essential! It's time to roll out the red carpet and embrace the power of APIs, a treasure trove of tech tools and data lakes. These include RKD Group’s Identity, Fundraising Management and other tools, which will help to grow your organization’s presence and support base. You can read more about this on our blog.

On another note, here are a few more CRM data hygiene tips to consider:

• Flags: When was the last time you actually reviewed all the flags created in your CRM and affecting your mail stream? Get ready for an eye-opener if you haven’t done this in a while.
• Newsletter Only flag: When did you last look at the quantity and growth of this flag’s use? Are these ‘contacts’ actually supporting your organization? Or are you providing an expensive donor touchpoint which is only convincing the reader they are already a supporter? Please review this list of contacts and refine it.
• Do Not Mail and/or Do Not Solicit flag: If the donor has not made a gift in the last 13-18 months, remove the flag. They didn’t keep their word of continuing to support your organization.

Don’t miss a super read from RKD’s Ronnie Richard, who discusses authenticity and communication in the Thinkers Newsletter on LinkedIn.

Now let’s get to it; grab your favorite beverage, and a snack if you need it, and take a much needed 5-minute break.

1. Report Predicts Uptick in Giving in 2024 and 2025

A new report, “The Philanthropy Outlook 2024 and 2025” from the Lilly Family School of Philanthropy at Indiana University, has bold predictions. Researchers expect giving to increase by 4.2% this year, followed by a 3.9% increase in 2025—a complete reversal of Giving USA’s 3.4% drop in giving for 2022. This rate is also above average for the past decade’s 1.9% growth rate.

The report is broken down into the same four categories as Giving USA.

1. Individual Giving: The average growth for American households is projected to rise by 2.6% this year. That rate is expected to also increase by 3.4% in 2025. The growth is attributed to average growth in personal income and net worth, which typically leads to increased charitable giving, according to the report. Meanwhile, stock market gains can cause an increased number of individual million-dollar gifts to charity.
2. Foundations: In 2024, giving from community, private and operating foundations is expected to increase 10.3% — an above-average rate. Next year, it’ll increase another 5.3%. Stock market and GDP growth will be the main contributing factors in the growth.
3. Estates: Cash and non-cash legacy gifts will grow by 2.7% in 2024 and 5.5% in 2025. Next year’s growth trends above average, possibly an indication of the great wealth transfer being underway. Net worth gains, such as increased home values and stock market gains, is mostly attributable to the increases in both years.
4. Corporations: Predictions for corporate giving, which include gifts from corporate foundations, are a 1.9% and 2.6% increase, respectively, for 2024 and 2025. These gains are attributed to growth in both GDP and the stock market but fall below average for this category.

2. 3 Takeaways from GivingTuesday’s New GivingPulse Report

To get a quarterly look at how people are being generous, GivingTuesday launched its new quarterly report, GivingPulse. Each week, 100 Americans are surveyed about their generous acts over the past week. That results in 1,200 people surveyed over the course of each quarter. GivingPulse tracked data that dates back to September 2022 and has discovered what affected giving in the third quarter of 2023.

Here is a look at three takeaways from the research:

1. Three Generosity Levels Have Been Established

• High Generosity: plan ahead and prefer recurring donations; average age of 39, earning a salary of $69,000 to $107,000, with about half being highly religious. This group gave $2,000 to $2,500 on average over the past year.
• Medium Generosity: more spontaneous with their giving; report giving without being asked to do so at a higher rate than their high-generosity counterparts; 50 years old on average, earn between $59,000 to $92,000 and gave an average of $700 to $900 in the past year.
• Low Generosity: made up 52% of those surveyed in the third quarter; earn slightly less than their medium-generosity counterparts; aged 50 on average, with $54,000 to $86,000 average salaries; gave between $400 and $500 on average over the past year.

2. Giving Directly to Individuals Was More Common Than Giving to Nonprofits
   Though giving cash directly to a person in need was the top choice among respondents in the third quarter of 2023, online giving directly to a nonprofit came in second, with 22% of respondents reporting that activity. Checkout donations (21%), donations by check (19%) and cash donations at a live event (18%) rounded out the top five responses.
   
   
3. Those Solicited Are More Likely To Give
   GivingPulse found that 56% of its respondents who had not given in the week prior to taking the survey in the third quarter of 2023 had not been asked to give in the past year or could not recall the last occurrence. On the contrary, 54% of those who had given in the past week had been asked to donate within the past month.

3. Survey: More Than Half of Nonprofits Use A.I.

The average nonprofit now uses A.I. for at least some tasks, a milestone that comes just over a year since the rise of tools like ChatGPT catapulted the technology into the public imagination.

According to a survey of 4,600 nonprofits released by Google.org, the charitable arm of the multinational tech company, more than half of nonprofits say at least some of their employees use generative A.I. daily, mostly for proposal writing or content creation. Yet, even as A.I. becomes more common in the workplace, many employees—and nonprofits—are just beginning to scratch the surface of what the technology is capable of.

4. Digital-First Fundraising Benchmarks

The data in this report comes from 27 nonprofit organizations that are adopting an approach called Digital-First Fundraising. It doesn’t throw out traditional fundraising channels or trade the major gifts team for impersonal emails. Instead, it leverages a mindset that thinks about digital as the primary point of engagement—empowering and increasing the effectiveness of all channels. (Mid-level and major gifts are excluded since they can be heavily influenced by the economic outlook.)

Key highlights:

• Digital-first organizations are growing 12.7% faster than the average nonprofit.
• Online revenue growth has outpaced offline revenue growth for the past 5 years. Broad-based online revenue has grown by 99% over the past 5 years, while broad-based offline revenue has grown by 36%. That means that broad-based online donations are growing 175% faster than broad-based offline donations.
• Digital-first organizations during the pandemic saw an even greater increase than the 5% in individual giving of the average nonprofit—growing revenues by 22.5%.
• In 2022, individual giving dropped by 6.4%, but digital-first organizations only saw a 3.9% drop.
• Major gifts have increased for digital-first organizations by 18.6% over the past 5 years. Additionally, these organizations have seen mid-level giving increase by 32.4% over the past 5 years.
• New online-acquired donors were 48% more valuable than offline donors. This doesn’t mean you should throw out direct mail as a channel. In fact, your online channels can make your offline channels even more effective. The coordinated effort of email and direct mail appeals was far more effective than using either channel on its own. In one experiment, a joint Direct Mail & Email Appeal increased conversions by 61% compared to sending only a direct mail appeal.
• There is minimal difference in retention rates of new online and offline donors. Digital-first retention rates are higher than the average nonprofit. In 2023, the average overall retention rate for a digital-first organization was 52.86%. One organization even saw a retention rate as high as 86%!
• Looking at retention in a single channel misrepresents the donor experience. As we look at where new donors gave their second gift in 2023, we see that 18% of new donors gave their second gift in a different channel than their original donation. Fundraisers tend to bucket donors into channels. But donors simply interact with the messages that are in front of them, regardless of channel. Understanding this radically changes our approach to stewardship and cultivation.

The average digital-first organization spends 2.71% of their annual giving on digital advertising. That said, there is a large amount of variance in how much organizations spend. A brand-new organization with minimal traffic often must spend a larger amount of money to acquire the traffic needed for growth. In one case, an organization founded within the past 3 years is spending +64% of their current giving on digital advertising in order to build a strong foundation of broad-based support.

5. Mid-Level Donors Offer Fundraisers a Huge Opportunity amid Declines in Giving

A new report found that 31% of such donors have made a bequest, and 23% are considering it. The report found that 53% of mid-level donors have been giving to the charity they support for 10 years or more. These donors also tend to be older; the lion’s share are either baby boomers (61%) or members of the silent generation (21%). Only 13% are Generation X, and 5% are millennials and Gen Z. Fifty-nine percent of the donors identified as women, while 39% identified as men and 3% chose not to answer.

The survey found most mid-level donors connected with their favorite causes when they were young; 72% engaged with their cause by the age of 39. The bulk of those people (42%) connected at age 20 to 39, while a smaller share (19%) connected in their teens and the remainder (11%) found their cause at age 12 or younger.

Nearly a third of mid-level donors have made a bequest to a charity, and 23% are considering it. Nearly three-quarters of respondents said they maintained their donation amounts during the previous two years, a period of high inflation and economic uncertainty — and 8% said they increased their giving during that time. Mid-level donors make up 1% to 5% of the donor file and give 25% to 35% of revenue.

6. Economic Headlines

Consumers are feeling increasingly confident that inflation will continue falling. The latest University of Michigan survey showed consumers expect inflation to fall to 2.9% in the next year, down from expectations of 3% seen during February. Expectations for long-run inflation were 2.8%, down from the 2.9% seen a month prior.

"Overall, sentiment is essentially unchanged throughout the first quarter of 2024 ... This stability reflects a perception among consumers that the economy has been holding steady in its current state," Survey of Consumers director Joanne Hsu said. "As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead."

• U.S. prices increased less than expected in February, with the cost of services outside housing and energy slowing significantly, keeping a June interest rate cut from the Federal Reserve on the table. Policymakers anticipate three rate cuts this year. Financial markets expect the first rate reduction in June. When adjusted for inflation, consumer spending rebounded 0.4%, after dropping 0.2% in January. The increase in the so-called real consumer spending suggested that consumption likely retained most of its momentum in the first quarter, which bodes well for the economy's prospects. But much of the spending was funded from savings as growth in personal income slowed. The saving rate dropped to 3.6%―the lowest level since December 2022―from 4.1% in January.
• An inflation gauge closely tracked by the Federal Reserve shows price pressures easing gradually. Consumers, whose purchases drive most of the nation's economic growth, surged 0.8% last month, up from a 0.2% gain in January. Some of that increase, though, reflected higher gasoline prices. Still, inflation remains stubbornly above the Fed’s 2% annual target, and opinion surveys have revealed public discontent that high prices are squeezing America’s households, despite a sharp pickup in average wages. If inflation continues to ease, the Fed will likely begin cutting its key rate in the coming months. Rate cuts would, over time, lead to lower costs for home and auto loans, credit card borrowing and business loans.
• We still don’t believe how much things cost. The high prices of items like coffee and milk have consumers grumbling about inflation across the board, even as it has cooled. A yearslong run of higher prices has unmoored many Americans’ expectations of what daily purchases should cost, from a cup of coffee to a package of paper towels. Shoppers are also put off by paying the same or higher prices for smaller amounts of stuff, what’s known as shrinkflation. Altogether, those researchers say, people no longer feel they’re getting the value they once did, and that is souring the national mood.
• Food is taking a bite out of your income. Consumers are getting creative. Shoppers share strategies for coping with food inflation, including potluck dinners, gardening and even hunting. Eating rice and beans instead of meat. Planning out meals a month in advance. Trying to raise more food in backyard gardens. Americans are changing the way they eat, shop and live to cope with a stretch of record food inflation. Hundreds of readers responded to a Wall Street Journal article that illustrated how food has come to consume the biggest portion of Americans’ income since 1991, sharing strategies they have adopted in their kitchens.
• Since October, stocks have climbed the wall of worry and closed each month in the green — brushing aside concerns over inflation, recession, corporate earnings, Fed hiking, Fed easing and the like, extending this winning streak to five months. Since 1950, there have been 30 five-month streaks in the S&P 500, including the most recent one, along with another streak that ended last July. In all but two of the prior 28 cases, the S&P 500 was higher 12 months later, with an average gain of 12.5% and a 93% win rate. This compares to a 9.0% average one-year return with a 74% win rate.

7. More great blogs, updates and podcasts

Blog updates:

• Personalizing your media strategy with dynamic retargeting
• Tech turmoil? The impact of a new AI Law and possible TikTok ban
• Harnessing corporate giving in today's fundraising landscape
• I’m done quitting. Let’s chart a new course forward.

GroupThinkers Monthly LinkedIn Update:

• Travel diaries: A journey through authenticity and communication
• Mardi Gras magic: An exciting launch for the 2024 Nonprofit Marketer's Compass
• Get ready to enter the next phase of the economy, AI and fundraising

Podcast updates:

• Thinkers: Building human-centered workplaces with Dimple Dhabalia
• Chat: Meet Elizabeth Romano from Food Bank for New York City
• Thinkers: Human-centered technology with Tim Lockie
• Chat: Meet Jane McGrath from American Bible Society
• Thinkers: Showing up authentically and creating space with Sterrin Bird
• Chat: Meet Julie Puzzo at American Kidney Fund

Webinars and Past Webinar Recordings:

• Nonprofits: Get more out of GA4 with Jenn Thompson & Kord Hickson
• Rebuild trust and reach new audiences at the same time with Nicole Daily
• Transform your newsletters to be donor-centric with Lisa Rossi
• Craft captivating videos that engage your donors with Chris Weiland
• How to build stories around your content with Billy Vaudry

In closing, brace yourselves my fellow chocoholics: the cost of cocoa is skyrocketing due to drought and other factors. But hey, we'll navigate through this cocoa crisis together just like we have the last several years in fundraising, armed with resilience and maybe a few extra snacks.

Thank you for reading along with me.