Windfall had the opportunity to attend The Giving Institute’s Summer Symposium this year in Washington DC. The Giving Institute consists of organizations that assist nonprofits and have embraced and embodied the core values of ethics, excellence, and leadership in advancing philanthropy.
At this symposium, we heard from experts who work with nonprofits across the board and learned about the biggest questions, issues and concerns that are facing nonprofits today. In this post, we’ll cover the following fundraising themes we learned about, as well as our perspectives on where data strategy fits in:
- Fewer donors are giving more
- Proposed tax law changes may impact giving from high-net-worth individuals
- Volunteers are likely to be valuable donors
- It’s vital to connect with your constituents with the right message
Fewer Donors are Giving More
While GivingUSA showed a high level of donations in 2020, the actual number of donors declined. This means that there are fewer donors in total, but they are giving more. So while the total donations is a bright spot, it’s still uncertain if this trend will continue. Additionally, this means that finding high net worth households – those people who have the potential to give those major gifts – is more important than ever before.
If your organization is struggling to increase donations, a large donation can really move the needle and help you reach your fundraising goals for the year. Doubling down on research and focusing on major donors are expected to be important strategies to capture this trend.
Proposed Tax Law Changes
Certain proposed tax law changes could significantly change taxes for high net worth individuals. These proposals include an increase to the top income tax rate bracket, impacting the wealthy, and that change would begin as early as 2022. There has also been a proposal to tax long-term capital gains and qualified dividends at ordinary income rates for households with an adjusted gross income of over $1 million. Finally, gifts and transfers at death can be taxed as income realization events.
These changes could drastically impact how high net worth individuals think about gifts. Make sure you have a plan for if these changes go through. Organizations should ask for donations today, before any changes take place, so that their constituents can take advantage of the current, more advantageous tax laws. Understanding family “balance sheet” wealth helps organizations identify candidates likely to be looking for these sorts of tax advantaged donation opportunities.
Volunteers as Potential Donors
Volunteers have shown a very high correlation with donations. Oftentimes, nonprofits consider donation history to be the best indicator of future giving. While this may sometimes be true, this method overlooks wide swathes of people who have never given a monetary amount, but have given a very strong indication of interest in a cause and mission through volunteerism. In fact, 79% of those who volunteer with a nonprofit also donate to that organization. So if you are looking for a major donor, it is important to also look at your volunteers. Specifically, 69% of high net worth individuals said they also volunteer (Source: CCS Fundraising).
This opens up a new world of possibilities to find your next major donor. Instead of looking only at people within your donor management system as potential donors, organizations can also look to volunteers as a potential source of funding impact. Additionally, volunteerism can and should be used as an indicator of affinity when conducting prospect research activities, such as segmentation and predictive modeling.
Connecting With Your Constituents
People tend to join communities and groups that mirror their values and interests. As fewer people are donating larger amounts, nonprofits should remember that donors are searching for a connection to those organizations that give to. Because we’re in a “high emotion” period, with the divisive nature of politics on social media, it is more important than ever to connect with your donors with the right message.
A robust data strategy can be useful in providing a baseline set of information on key donors, enabling fundraisers to engage more intelligently.. Understanding information such as political affiliation, recent life events, other charitable activities, etc. can be crucial in driving initial connections.
In spite of the difficulties in 2020, nonprofit organizations that actively fundraised weathered the storm and saw an increase in total dollars donated. However, the trends we listed above, and those still to come, could drastically change the future of giving. Organizations should take a data-driven approach to find and engage the right affluent households at the right time so they can make 2021 another top fundraising year.
Interested in learning how Windfall’s can help you identify, segment, and engage with your most affluent donors and prospects?