To say that 2020 was a game changer would be putting it lightly. I know many of us in the nonprofit world were anxiously awaiting Giving USA’s annual report on philanthropy; after a year of unforeseen circumstances, nonprofit leaders around the country had to rely on their own creativity to steer the ship through the storm without any clear insight on what was “working” and what wasn’t.
The 2021 Giving USA report finally dropped last week—jam-packed with statistics that offer a better idea of the effect COVID-19 had on the nonprofit world. While I was pleasantly surprised by many of the findings (believe it or not, giving was at an all time high in 2020: $471.77 billion!), there are some crucial takeaways that will be critical for nonprofits to keep in mind as we move forward. Let me break it down for you:
Giving at an All-Time High
Giving was at an all time high in 2020. In a year where we expected giving to decrease dramatically, that wasn’t quite the case. While the number of individual donors did decrease, the total amount given increased—a direct result of changes that the GDP and stock market experienced during the height of COVID-19 shutdowns.
As the GDP shrank, corporate giving dried up with it. And as the stock market grew, high net worth individuals (HNWI) saw their wealth grow in tandem. These HNWI made up the majority of philanthropy in 2020—resulting in an overall increase in dollars given, even though 20 million households stopped giving all together.
This means we’re losing middle class givers. So, how do we re-engage them? 42% of the workforce were working at home as of June 2020… gauging who is in a new routine is an important factor to consider in how and when people give.
Key takeaway: A majority of giving in 2020 came from individuals whose wealth increased with the market. Moving forward, nonprofits need to make engaging with HNWI donors—and stewarding them long-term—a top priority. Beyond that, create a strategy for re-engaging any donors you may have lost during turbulent times.
Everything went virtual in 2020 and philanthropy was no exception. Social media was the #1 place where people gave last year; online giving accounted for 13% of overall giving—up from 10% in 2019 and continuing to increase. Why’s this? Because social media is accessible and equitable.
Like it or not, online giving is here to stay! This report shows that social media strategy is no longer an option, it is a *must*. As millennials begin to inherit wealth from the generations above them, mission-based organizations have to shift their engagement strategies to match their tech-savvy prospects. 70% of nonprofits say they will invest more in social media in 2021. Will you be one of them?
Key takeaway: Digital media engagement is absolutely critical. Not only do nonprofits need an online presence, but they need to continue investing in it. If you don’t have a social media manager on your staff or board—someone to engage several different channels and get creative with influencer partnerships and advertisements—you’re already behind. (And if you’re a social media expert, join a board! They need you!)
All Nonprofits are Not Created Equal
This one might feel obvious, but giving was not even across-the-board in 2020. While giving to seven of the nine sub-sectors grew (religion, education, human services, public/societal benefit, international affairs, and environment), giving to health and arts/culture both decreased from the previous year.
While giving to the arts/culture sector tends to decrease in times of crisis, it is still worth noting that the sectors that were prepared to adapt to a “new normal” performed better. Charities were well-served by being able to pivot to providing online services and fundraising programs like crowdfunding, mutual aid, and giving circles. Not only does this require a flexible and innovative staff, but it also requires financial reserves; you don’t want to be dead in the water as soon as the going gets tough. Always have funds to fall back on while you’re re-calibrating.
When the going gets tough, your supporters want to see that you have been good stewards of their donations—this requires planning for future recessions. Big donors are looking for more than just a mission, they are looking for a history of producing sustained change regardless of bumps in the road.
Key takeaway: 2020 was a difficult year for all of us, but it was more difficult for the organizations that were unprepared for things to go wrong. The U.S. economy enters a recession roughly every ten years; your organization must be prepared for rough waters with an endowment, a rainy day fund, and general reserves. When you’re not scrambling for funding, you have the brain-space to get creative in a time of crisis.
2020 happened. Now what?
Whether you acquired several new donors or you focused on strengthening your bond with your key stakeholders, your organization needs to be thinking about long-term stewardship moving forward. What is your plan to keep new donors engaged? How are you customizing communication to your individual donors? A good rule of thumb is to include good news, challenges, and a call to action with every communication. An annual report is a must, but I recommend going even further and sending a quarterly report. Make your supporters feel like a central part of your organization (because they are!)
Key takeaway: If you take anything away from the 2020 Giving USA report, let it be these two biggest and most actionable items:
1. Invest in your major gifts and individual giving program
2. Invest in social media (building brand awareness and online giving)
Quick hits on they baseline stats:
Individuals, bequests, and foundations outpaced previous years of giving — building personal relationships and peer to peer solicitations are always the highest ROI.
- Individual giving totaled an estimated $324.10 billion, rising 2.2% in 2020. Giving by individuals achieved its highest total dollar amount to date, adjusted for inflation, but it comprised less than 70% of total giving for the third consecutive year.
- Giving by bequest was an estimated $41.19 billion in 2020, and grew 10.3% from 2019. For context, giving by bequest often fluctuates substantially from year to year.
- Giving by foundations increased 17.0%, to an estimated $88.55 billion reaching its highest-ever dollar amount. Giving by foundations, which has grown in nine of the last 10 years, represented 19% of total giving in 2020, its largest share on record.
Corporate giving responded to the market predictably and experienced a downturn — corporations respond to consumers and employee consider how you might influence this sector.
- Giving by corporations is estimated to have declined by 6.1% in 2020 to $16.88 billion (a decline of 7.3% adjusted for inflation). This type of giving is highly responsive to changes in corporate pre-tax profits and GDP, both of which declined in 2020.
Public-society benefit organizations saw the greatest growth – let’s figure out a way to sustain this!
- Giving to public-society benefit organizations increased an estimated 15.7% to $48.00 billion. Adjusted for inflation, giving to public-society benefit organizations grew 14.3%. This category includes a wide range of charitable organizations, including national donor-advised funds, United Ways and civil rights organizations.
Giving to arts and culture experienced significant decline — creative expression is integral to humanity and progress. Support the arts!
- Giving to arts, culture, and humanities is estimated to have declined 7.5% to $19.47 billion. Adjusted for inflation, giving to the arts, culture, and humanities subsector declined 8.6%.
Final note: Most people give in Q4 — of that, nearly 1/3 of annual giving happens in December. Don’t miss the opportunity to bring in and sustain givers at end of year. However, the end of the calendar is NOT a compelling reason to make a significant philanthropic investment — so don’t lead with that as your “why” to your CTA “give now.” Focus on participation and gratitude for all donors. Use your loyal supporters to fundraise and advocate for you. Invest time in soliciting major gifts in Q1 or Q2.
LSC is a bespoke consulting firm serving nonprofits across the country as they embark on transformational change. From the master-mindset of a 10-figure fundraiser to the operations of a harmonious fundraising team. We offer executive coaching, board retreats, annual planning, capital campaign management, and major gifts donor engagement strategies. We can help you interpret the report and activate an approach.
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