I always like to check in with our industry expert peers and educators. It’s especially important now with so much changing for nonprofits today. One particular area that’s been different in 2020 is how nonprofits raise money. Just in time for #GivingTuesday, Michael Rosen graciously answers my questions about the future of fundraising, the latest trends and considerations for fundraising post COVID-19 for 2020 and beyond. Here’s what we talked about.

Q:  What fundraising trends from 2020 should we expect to continue in 2021?

A: The uncertainty arises from unanswered questions including which party will control the U.S. Senate, when will a COVID-19 vaccine be widely available, when will the coronavirus pandemic end, when will the economy rebound, how will the election affect the philanthropic priorities of donors?

To mitigate risk, charities need to continue to ask for the support they need. Those who seek support with an inspiring case will do the best in the coming year, even if their bottom line falls short of ideal.

Out of necessity, charities had to embrace technology more fully in 2020, sometimes in creative ways. For example, many charities had to shift from in-person to virtual events, with varying results. One such charity is the Doug Flutie, Jr. Foundation for Autism. The Foundation switched from an in-person gala to a virtual event during the pandemic. Each netted $200,000, providing vital resources and stability. The virtual event allowed the charity to cut costs and broaden its audience by expanding its geographic outreach, appealing to those with financial limitations, and gaining participation from those with calendar constraints. Because of its success, the Foundation anticipates that it will return to an in-person event when that is possible, but it will keep elements of the virtual event. The new hybrid model will broaden its gala audience, contain costs, generate more sponsorship revenue, and more. This is just one of the innovative ways that the Foundation leverages technology.

Smart charities will continue to use technology to engage supporters in creative ways in 2021 and beyond. They will host hybrid events, additional events that are virtual, remote town halls, electronic surveys, distribution of videos showing the charity at work, etc. Charities leveraging technology in 2020 were not only able to sustain themselves, many were able to discover creative, new applications that will benefit them in the future through enhanced donor cultivation and fundraising results. Dr. Russell James' YouTube: Encourage Generacity gives interesting perspectives. 

Q:  With COVID-19 not going anywhere for a while, where do you see an increase or decrease in philanthropic giving in 2021 (community foundations, healthcare, etc.)?

A:  If the stock markets continue to perform well, though still volatile, foundation giving will remain strong. Furthermore, many foundations have pledged to be especially generous in response to the pandemic. If gross domestic product rebounds quickly and significantly, corporate and individual giving will be resilient as there is a strong correlation between GDP and philanthropy. In a seeming contradiction of that principle, in 2020, charitable giving remained strong despite the economic collapse. Based on history, however, that can be expected for a short time; yet, we can also anticipate that philanthropy will stall if the economy does not recover in 2021.

Moving forward, charities should not make generalizations about segments (e.g., individuals, corporations, foundations), not that they ever should have treated them as homogeneous groups. We need to look at donation sources in a granular way. For example, in the COVID-19 world, some corporations are hugely profitable while others have gone out of business. It is especially important now for charities to know their prospects and donors. This article hits on how the pandemic has changed giving: The Ethics of Legacy Fundraising During Emergencies.

Q:  COVID-19 likely led to an increase in planned giving donations in 2020. Do you see this continuing?

A:  Legacy giving will remain popular with donors in 2021. For example, including a charity in one’s will or as a beneficiary are great ways to support an important mission without the need for a present financial sacrifice. In other words, people can still fulfill their philanthropic ambitions even if they do not have cash to donate or want to preserve their cash given economic uncertainty. Other gift planning options such as Trusts or Charitable Gift Annuities can also help donors meet tax-planning or income goals while supporting a favorite charity. To be successful, fundraisers need to approach planned giving conversations with great care as this is a stressful environment. I suggest these additional resources for more information: Legacy Fundraising: The Best of Times or the Worst of Times and The Final Outcome of Charitable Bequest Gift Intentions: Findings and Implications for Legacy Fundraising.

Q:  Should we anticipate a shift in giving from donor groups in response to the 2020 election results?

A:  Traditionally, when a conservative occupies the White House, it’s a boom time for liberal charities. The opposite has also traditionally been true. However, 2016 and 2020 have not been traditional elections. As divergent policy battles continue to rage, it is safe to assume that both liberal and conservative charities will continue to attract strong support. We can also anticipate that donors will continue to support charities that are dealing with COVID-19 (e.g., hospitals, food banks, homeless shelters). Once the pandemic is well under control, we’ll begin to see a shift away from those nonprofits as the traditional sector-giving distribution is restored.

Q:  Could an anticipated “wealth tax” cause a significant change for mega-donors and lead them to make larger contributions by year-end 2020?

A:  If Republicans maintain control of the U.S. Senate, it is extremely unlikely that a wealth tax will be adopted. Unfortunately, we won’t know which party will control the Senate until January. So, major donors will have to make decisions in 2020 without complete information. An interesting twist is that some states are considering imposing their own wealth tax or high-income surtax.

While it is difficult to know what calculus wealthy donors will use, we do know that the CARES (Coronavirus Aid, Relief, and Economic Security) Act provides all taxpayers, including wealthy individuals, with incentives to give generously in 2020. Those provisions, in response to the pandemic, will expire at the end of the current year.

While the pandemic has not affected all wealthy individuals in the same way, most continue to have sufficient resources to make substantial donations. Year-end giving from mega-philanthropists should remain strong. 

Q: What advice would you give our foundation/endowment audience for growing their fundraising efforts and rewards going into 2021?

A:  The keys to fundraising success for any nonprofit organization, including foundations and endowment funds, are to write an inspiring case for support, engage prospects and donors, and ask for support. The surest way to fail is to stop asking.

To set the stage for 2021 appeals, charities should properly thank donors. That means thanking donors for being kind, thoughtful, caring, etc. Instead of thanking a donor for her generous gift, thank her for being generous and caring enough to make a gift. In other words, use a meaningful adjective to highlight the donor rather than the donation. Always provide a heartfelt thank you, and be sure to let donors know the impact they have had through their giving.

Q:  Donor-advised funds (DAFs) have been steadily increasing as an effective fundraising vehicle but what are your thoughts about ways they could change?

A:  We will continue to see record in-flows and out-flows involving DAFs. While traditional DAFs have required the contribution of thousands of dollars to create an account, we are now seeing the rising popularity of micro-DAFs that allow even small donors to establish giving accounts with no minimum contribution required for creation. This means, in addition to the increase in money flowing through DAFs, we are seeing an increase in the number of individuals who have created a DAF account.

Given the DAF trends, charities should let donors know they accept DAF gifts. For example, an organization might highlight a DAF supporter in a newsletter. Also, the organization’s website should remind donors that they can recommend a contribution through their DAF. While charities will provide a hard-credit for gifts to a DAF’s sponsoring organization, a soft-credit should be made to the individual recommending the gift. That person should be thanked. Later, when appealing to that individual, the charity should remind him that he can recommend another DAF gift.  

Q:  What is most important for charities to know as one year ends and another is about to start?

A:  The key take-away is to learn from history and from current trends. Those nonprofits that continue to cultivate relationships, make a strong case for support by highlighting donor impact and actually ask for contributions are the ones who will benefit most, not just now, but they will have a stronger base for increased support moving forward. 

Michael's Blog: Michael Rosen Says

Michael_RosenAbout Michael

Michael J. Rosen, President of the fundraising consulting firm ML Innovations, has been named one of “America's Top 25 Fundraising Experts.” He is the author of the bestselling book Donor-Centered Planned Gift Marketing, and publisher of Michael Rosen Says..., recognized as a “Top Fundraising Blog.” Michael can be reached at mrosen@mlinnovations.com.

Legal Note

This information is provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company (SEI). Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results. This presentation should not be relied upon by the reader as research or investment advice (unless SIMC has otherwise separately entered into a written agreement for the provision of investment advice).

The opinions and views expressed herein are those of Michael Rosen. SEI cannot guarantee the accuracy or completeness of the information and assumes no responsibility or liability for its incompleteness or inaccuracy. Michael Rosen and ML Innovations are not affiliated with SEI or its subsidiaries.

Investing involves risk including possible loss of principal.

Neither SEI nor its subsidiaries provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.

To learn more about the CARES Act, please visit https://www.congress.gov/bill/116th-congress/house-bill/748

Join Nonprofit Committee Connection

Your tie to topics that support your goals. Get email updates on the latest.

Subscribe:

I understand SEI may send future emails to me, even if I opted-out before, and that I can opt-out again later.
Maryjane Bobyock, author of Nonprofit Committee Connection