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Why Promoting Community Philanthropy is Urgent Work for Us All

Posted Jan 22, 2020 08:59 AM
A culture that engages everyone in supporting philanthropy is critical to fundraising success. As long as any staff or board member thinks fundraising is "not their job," the organization will miss opportunities to engage donors, tell its most powerful stories, and express its mission in a clear and powerful way.

We fundraise because we need the money, but in the process, we recognize we also need the discipline that the fundraising process gives us.

Talk to your staff about why fundraising is as essential and natural as breathing for the life of your organization. We inhale to receive people into our organization and we exhale to share meaning and purpose with them. Without these relationships, nonprofits are poor in ways more important than just money.

501 Commons took on producing GiveBIG last year because of the imperative to widen the circle of people who are invested in the health and success of nonprofits. Wealth inequality, climate change, federal government retrenchment, rising health care costs, and many more factors are placing a greater demand on nonprofits. At the same time, the funding environment is increasingly difficult.

Foundations hold nearly $900 billion in their coffers but many give out only the 5% required of their holdings each year. Government grants are important sources for many organizations but often do not cover the full cost of services
even when the government itself is driving up costs (will state grants adjust to cover rising costs due to the new overtime rules?) The future of our sector depends on our ability to engage more individual donors.

But, lets look at some scary trends.

Donor-Advised Funds
The biggest charities in America now are charitable sponsors of donor-advised funds like Fidelity Charitable, Goldman Sachs Philanthropy Fund, and Schwab Charitable. They have overtaken organizations like United Way, Feeding America, and the Salvation Army. They and other donor-advised funds hold an estimated $185 billion. And, there is no payout requirement on those funds.

A rapidly growing share of donations are coming from DAF accounts
about 13% of the nearly $300 billion in individual donations annually. This growth will continue. Nonprofits face the challenge is identifying and engaging people who've already gotten their tax benefits even if the money they donated has not gone out to benefit the community. We are reaching out to DAF sponsors to prompt their financial advisors to engage their clients with GiveBIG and encourage them to give through our DAF/IRA option.

Smaller Donations Are Declining
Giving USA's 2019 report (looking back on 2018) showed a decline in donations from individuals giving smaller donations, while the mega-rich are increasing the size of their gifts. The number of households that give anything to charity is declining and donor retention is on a downward trend. The increase in the standard deduction in 2018 reduces the number of people who itemize to an estimated 5
10%, most with incomes over $200,000, and removes the end-of-year impetus to make donations.

A recent Nonprofit Quarterly article by Ruth McCambridge called Giving USA 2019: Most Nonprofits Will Need to Work Harder for Their Money sums up the challenges we are facing with a quote from Elizabeth Boris, chair of AFP's Growth in Giving Initiative, “Giving is increasing because of larger gifts from richer donors. Smaller and mid-level donors are slowly but surely disappearing—across the board, among all organizations. Philanthropy should not and cannot be the domain of the wealthy, and the entire sector needs to look at how we reach out and engage these donors.”

McCambridge adds: "In our opinion, there is nowhere near the degree of alarm there should be about the loss of ordinary people as donors....nonprofits should consider how to work countercyclically to build and engage their donor bases differently and with a sense that their future sustainability and independence depends upon it—because they do."

Join us in turning the tide in Washington State by participating in GiveBIG and bringing your energy and creativity to this problem. Working together, we can grow the number of people who chose to invest in the programs, resources, and services that allow people and communities to flourish.