The Future of Fundraising and Donating

A Coffee-shop Conundrum

Here at CHIVE, we are super curious about understanding how people can do good with the $$$’s in their pocket.

How we went about predicting the future

We decided to refine our speculation of the future into 2 sections: The Future of Individual Fundraising and The Future of Individual Giving. We feel it’s important to draw these 2 distinctions; although they may respond to each-others activities, they are in themselves unique drivers governed by different individuals and interests.

  1. Charities lacking capacity — Most charities simply don’t have the time, expertise, or access to information to enable accurate forecasting. From charities we’ve spoken to they will sometimes bring a consultant in to benchmark their existing donors, what they like, don’t like, etc. In fact, they generally seem to have a good grasp on the here and now, but when it comes to the future, they lack an informed response. The sector as a whole has not shared forecasts, as we have not seen any charities share data on donor preferences/ their predictions for the future.

The Future of Individual Fundraising

1 — How Charities will reach and convince donors

Visual Impact Reporting

Organizations will move from annual reports to real-time reporting of their impact in the community. Fundraisers will become more adept at using digital communications technologies and creative design to inform donors about the impact achieved by their dollars. For their part, donors will demand such reporting. (1)

Marketing by Generation

Nonprofit marketers are having to target each giving generation differently. According to the Global NGO Online Technology Report, Millennials’ giving is most inspired by social media whereas email has the most impact on Gen X and Baby Boomers. Meanwhile, it’s predicted Gen Z will prefer mobile apps. (2)

2 — What methods of fundraising will matter

Virtual

Strategic technology

Improved Transaction Times

Organizations will reduce the time between the giving decision and the actual transaction. One-click giving and other impulse-gifting technologies will gain in popularity. Giving will become a quick-and-easy experience that meets individuals’ impulsive need to serve the greater good. (6)

Data Capture

3 — Why Charities should care about individual givers

New Zealand Philanthropy and Giving by Source ($M); New Zealand Philanthropy and Grants (8)
US Philanthropy by Source (9)

The Future of Individual Donating

1 — Who Is Doing the donating

Millenials of growing importance

Millennials in NZ represent 21% of the New Zealand population and will make up 75% of the workforce in the Next Decade. (10)

  • the sociological status of the millennial generation, conditional on making a gift, millennials tend to give “substantially more than members of earlier generations.” (11)

Baby-boomers leaving legacies

The baby-boomers are dying much sooner than expected and leaving unprecedented legacies, where these have not been mopped up by care-home costs. Many charities do a legacy campaign that is anywhere near to being up to the task and the possibilities. (13)

Comparison of age groups over the next 50 years (14)

Ageing Population

It is worth being wary of an ageing population. Although this doesn’t reflect who are the key donors, it does reflect a change in the way NZ will look and feel.

A potential decline in total no. of donors in NZ

The broad mass-market donors currently make up just over half of total donations. This is expected to slip due to greater growth in other forms of fundraising and the falling proportion of donors among the population.

2 — How will they be donating / how much

Direct debit, but a change from the status quo

Direct debits (and standing orders) have been an incredible, regular, tax-effective, and predictable source of income for many charities over the last few decades. However, 20 years from now, I predict they will be a fading star. A number of factors are going to contribute to this decline. Legislation on data collection and permission-based database appeals have already eviscerated the main sources of direct debit recruitment: telephone fundraising, cold mail, and supporter appeals. Regulations are making door-to-door fundraising and street fundraising more difficult. All this means that the mechanisms by which people are recruited to direct debits have become harder and less common. (15)

Crowdfunding by Donor Networks

We will see more donor networks composed of individuals who come together around specific causes, engage in volunteerism, and/or willingly promote the activities of the causes and organizations they support. Increasingly, fundraising staff will have the capability to track these networks as well as other peer groups and use that information to leverage their resources. (16)

Smaller Gifts, More Often

Donors will provide smaller gifts but will give several times over the course of the year. Organizations that provide small, impulsive gifting opportunities will be better positioned to strengthen their relationships with donors. In addition, donors will continue to drive smaller gifts toward projects where tangible results can be demonstrated. (17)

Monthly Giving with potential to grow

Although currently accounting for only 17% of all online revenue in M+R’s 2016 Benchmark study, this reflects rapid growth. In 2015, monthly revenue grew by 24% across all sectors, compared to 18% growth in one-time revenue. Encourage this by helping donors understand the value of monthly gifts and create content specific to these givers.

Bequests expected to be a big market

Leaving a gift to charity in your will is usually the single most significant level of support provided by donors over their lifetime. The combination of an ageing population and the so-called “baby boomer bulge” as the number of older New Zealanders rise, plus increasing asset values with significant gains in property prices, point to strong gains in bequest values in the next two decades. This is part of the massive wealth transfer taking place in many western countries and should provide a strong boost for charities. While many causes will benefit, it is particularly helpful in some cause areas, such as animal welfare where bequests have historically provided a large proportion of total income.

3 — Why will people donate

Donations as social

Some of the giving patterns we see in today’s under 35s include a much more social aspect to donations — giving is done with friends, in a social setting, or in a way that can be broadcast on social media. It is also much more transactional — people are less loyal to particular charities, and more likely to give because the activity or cause is good. How many people who run a triathlon, do the ice bucket challenge, take a #nomakeupselfie, or take part in Movember care that much about the cause? The activity is supreme, and the charity second. This is one of the reasons that we fear for the future of individual donations to charities — how do you put a photo of direct debit on Instagram? The real question is whether today’s under 35s will gradually take up the giving habits of the current over 60s. (19)

Communication of stories, not just appeals

Virtual communications and social media present an easy way for an organization of any size to reach new audiences. The challenge over the next 20 years will be for the potential and power of social media as a communications tool (rather than a fundraising tool) to be realized. The real winners will be those whose social media is allowed to be full of the P’s: passion, personality, people, and opinion. (20)

4 — What people will be donating to

Causes are changing

In NZ, religion remains the main cause supported but its dominance has fallen and guided by census data, which is expected to fall further. The largest gains for receivers is in welfare and human services related sectors such as social services, community development, and disabilities. (21)

All recipient causes of US Giving (22)
  • Giving into foundations (both private/family and donor-advised funds, including through community foundations)
  • International aid and environment/ animals (albeit from a lower base than in New Zealand).

We’re still uncertain what the future looks like

We are incredibly grateful for the internet, the experts that provided these insights, and the time to gather and share these thoughts. We believe that, if we went back to our friend and had another coffee, we would have some answers. But could we honestly say we have a full grasp on the future of fundraising and donating? Probably not.

Aotearoa New Zealand’s first charity market place | Helping Kiwi’s find and donate to causes they care about 🌱https://chivecharities.nz