Navigating the Changing Fundraising Landscape: What You Need to Know

Maybe you are as tired of hearing about this as I am. Despite that, it is still important to keep ringing this bell: the fundraising landscape is changing. So, what are you going to do about it?

A quick review of the “old” facts, just as a reminder of what has been and continues to be:

1. Funders’ priorities have shifted, and the shifting continues. Even before the pandemic and urgency of social justice, so many funders had changed their priorities, giving to a “new-to-them” slice of the sector, no longer giving to a long-standing slice of the sector they supported.

2. The number of individual donors in the United States has been declining for the past four years, though bequest giving has been growing slowly but steadily.

3. The traditional, linear path to giving that has worked for generations—the “pyramid of giving”-- hasn’t been working for Millennials, nor, it would appear, for Generation Z. Their model is is referred to as the “vortex.”

4. Government dollars, for those who can access them, continue to shrink while not getting any easier to apply for and report on. In fact, depending upon where you are geographically, your state dollars may be even harder to come by.

Now for the new facts:

1. Raising dollars has gotten more and more complex, not to mention competitive. The number of nonprofits hasn’t stopped increasing while the number of donors is decreasing. There is some “positive” news here, though: the size of the average one-time gift made in 2023 was $121, up $6 from 2021. Subscription giving, favored by 57% of donors in 2023, also saw an increase, with an average gift of $25/month, up $1 from 2021.

2. The rise (in at least the talk of) in “trust-based philanthropy”—a horrible term that speaks volumes about how giving was done prior to funders and donors adopting the concept of trust-based philanthropy. Around for a while, the idea behind trust-based philanthropy is that it balances the power in the relationship between giver and recipient, reduces inequities and holds both sides of the equation accountable. Excuse me for being a little skeptical, but I have heard too many funders talk for years about their partners (meaning the nonprofits) while having anything but a partnership relationship. Maybe the new nomenclature will make a difference.

3. While the number of individuals who have signed on to the Giving Pledge (started in 2010 by Bill and Melinda Gates and Warren Buffet), currently at 241, that number is growing every year; but so is the percentage of donors residing outside of the US and, likely, giving outside of the US. Signers of the Giving Pledge promise to give the majority their wealth to charity during their lifetime or in their will. And giving that wealth to a foundation counts. So, the idea that money would be spent in larger amounts in a shorter period of time in order to create some major change isn’t necessarily going to happen. It may just come to rest in someone else’s coffers.

4. Paralleling that, the number of foundations deciding to sunset is also growing, with some of those deadlines having passed and others rapidly approaching. While so many were shocked when the Edna McConnell Clark Foundation announced in December of 2016 that it would sunset in ten years, it is even more startling to realize that this amazing funder will no longer exist a mere two j years. The Gates Foundation will sunset 20 years after the deaths of William and Melinda Gates and Warren Buffet.

5. Causeway, just acquired by Charity Navigator, is a new approach to philanthropy that competes, as does every pass-through funder, with nonprofits seeking direct access to donors. While Causeway is, on the one hand, a brilliant idea for donors, it is not necessarily brilliant for nonprofits. Designed to appeal to philanthropists in their 20s and 30s, think of Causeway as to donors what mutual funds are for investors. Causeway works in a similar manner: it takes donors’ money and invests that money in the nonprofits its thinks are good and that align with donors’ stipulations (such as mission preference, for example). How does Causeway determine what is a “worthy” nonprofit? Charity Navigator’s “Give Now List.” Beginning in 2024, Charity Navigator will be the money manager and continue to give to organizations that are highly rated according to its rankings. Out of the 1.5M nonprofits in the US, not quite 200,000 have submitted themselves to Charity Navigator’s evaluation. Since Charity Navigator anointed itself as “the world’s … most trusted nonprofit evaluator,” I have known of less than two handfuls of small(er) nonprofits—those that make up the bulk of the 1.5M--that have gone through this evaluation process. Enough said; you can put the dots together.

The message here is simple: the thing that is already hard enough—bringing in money to support your mission work—is likely going to get even more challenging; it certainly isn’t going to get less challenging. So, what are you going to do about it--starting now?