Three historic factors are converging right now to create a fundraising season for human service organizations that is like no other: the outpouring of support from donors during the pandemic, the federal government’s landmark investment in recovery, and a stock market that keeps climbing.
The three factors are explained below, followed by actions you can take today to capitalize on the exceptional fundraising landscape that is in front of you. Take advantage of these opportunities today, because you will likely never see them again.
Factor 1: Record Giving
Philanthropic giving in 2020 was the highest ever on record. The Funding Effectiveness Project found record giving again in Q1 of 2021 (the most recent available when this article was first published). The Lilly School of Philanthropy predicts overall 2021 giving will rise 4.1 percent over 2020’s record levels. Total giving is anticipated to rise another 5.7 percent in 2022 (Ware, 2021).
Donors continue to be motivated to give by what they see around them. The pandemic. Earthquakes, hurricanes, wildfires. Social justice. Environmental justice. Your organizations are on the front lines mobilizing donors to join your efforts. Show them how you are making an impact with their investment.
Factor 2: Government Investment
The American Rescue Plan (ARPA) passed earlier this year has new opportunities for nonprofits to receive funding through the State and Local Fiscal Recovery Fund (SLFRP). State, local, and Tribal governments have received $350 billion that they can use to respond to the COVID-19 emergency and bring back jobs. They determine how they want to use these Fiscal Recovery Funds; many will share a portion of these funds with nonprofits that are responding to the pandemic and its negative impacts.
The 2020 CARES Act did a good job of encouraging giving at the highest levels. Taxpayers who itemized could deduct up to 100 percent of the Adjusted Gross Income (AGI). Prior to the pandemic, the limit was 60 percent.
Factor 3: The Stock Market
Despite a volatile stock market, threat of government shutdowns, and unrest around the world, the economy’s long-term outlook remains optimistic. When the market (as indicated by the Standard & Poor’s 500 Index) is strong, giving is strong. This graphic, from Giving USA 2021, shows just how strong is the correlation.
Wall Street analysts expect a 45 percent growth in S&P 500 earnings at the end of 2021 and growth again in 2022 (Bhargava, 2021). Major donors will look to offset their stock market gains with philanthropic gifts, including major gifts and campaign gifts.
An October 1 article in Philanthropy Today entitled “Stocks Faltered in September, but Fundraisers Shouldn’t Fret” suggests that the long-term philanthropic outlook is still strong (Theis, 2021). Consumer confidence was up slightly in September and jobless rates were down, despite a chaotic September stock market.
HOW TO CAPITALIZE ON THESE FACTORS
1: Donor Retention and Donor Growth
Don’t let record giving turn into record rates of attrition. It’s more important than ever to steward your donors so they will provide the sustainable funding streams that can transform your organization. Develop real and meaningful relationships with donors today and they will become your future major donors and your campaign’s lead givers. Do nothing and the opportunities are lost forever (the recapture rate of a lapsed new donor is only 5 percent).
Solidify your moves management program and grow donors by systematically inviting your donors to give at a higher level than the prior year. Ask for a specific amount that is 10-20 percent higher than their last gift. Encourage them to give monthly so their overall gift can be higher. Involve your advancement committee or your board by encouraging them to write a handwritten personal note at the bottom of the appeal letter or make a call to invite their peers to increase their giving.
If a capital campaign has been on the back burner, it’s time to move it forward. Launch a campaign study as soon as possible as the first step in engaging your donors and giving them a reason to stretch their investment in you. For more information on how best to accomplish this, read (Link to our Maximizing Pandemic Donors lead gen).
2: Identify Government Funding Opportunities
State and local governments have until December 2024 to allocate the SLFRP funds they have received through the ARPA; all funds must be spent by the end of 2026. Since it is up to each state and local government to determine how they want to allocate funds, check with your state or local government to determine your eligibility and a timeline for distribution.
If you’ve received an allocation from the CARES Act or expect ARPA funding through your local government, it’s important to keep your donors informed. If you are still determining how to utilize the funds, engage your donors in the decision-making process. Hold listening sessions with your major donors and community stakeholders. Open a dialogue that enables your donors to speak into the decision-making process. Tweak your strategic plan if necessary and involve your key stakeholders in the process.
3: End-of-the-Year Giving
The stimulus plan passed on December 27, 2020, extended the charitable giving incentives of the original CARES Act. This means that high-wealth donors can still deduct up to 100 percent of their adjusted gross income (AGI) limit for cash contributions made to qualifying nonprofits in 2021. Use your board or your advancement committee to strategize major gift opportunities between now and the end of the year to take advantage of these charitable incentives.
Have meaningful conversations with your largest donors. Ask them about their passions and why they invest in your organization. Listen for new opportunities to match their funding priorities with programs you have or would like to start. Consider asking them to make a challenge gift that could be matched by the end of the year. Start scheduling these visits—in person or virtual—now.
Foodbanks, homeless shelters, and other human service organizations are in the middle of a historic fundraising period. Be sure to recognize all the opportunities that lie in front of you. Engage your key stakeholders and volunteers in the process. The window to act will close soon so refocus your efforts and spend time strategizing how to best capitalize on today’s potential for fundraising growth.
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About the Author
Jessica Browning, MBA is Principal and EVP of the Winkler Group, a capital campaign and strategic planning firm headquartered in Charleston, South Carolina. A former member of the Giving USA Editorial Review Board, Ms. Browning has a B.A. from Duke University and an M.B.A. and M.A. from the College of William & Mary.
Bhargava, K. (2021, August 24). UBS Wealth expects S&P 500 to touch 5,000 by 2022; growth, inflation may stay above historical norms. The Financial Express. Retrieved from https://www.financialexpress.com/investing-abroad/featured-stories/ubs-wealth-expects-s-growth-inflation-may-stay-above-historical-norms/2316605/.
Theis, M. (2021, October 1). Stocks Faltered in September, but Fundraisers Shouldn’t Fret. The Chronicle of Philanthropy. Retrieved from https://www.philanthropy.com/article/stocks-faltered-in-september-but-fundraisers-shouldnt-fret?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_2970527_nl_Philanthropy-Today_date_20211004&cid=pt&source=&sourceid.
Ware, A. (2021, February 19). The outlook for charitable giving. Lilly Family School of Philanthropy. Retrieved from https://blog.philanthropy.iupui.edu/2021/02/19/the-outlook-for-charitable-giving/.