written by Tim Winkler, Jim Bush, and Jessica Browning, Winkler Group Principals
The Giving USA 2021 report can be summarized in four words: Americans are extremely generous.
In a year filled with tremendous heartbreak, giving soared to record highs. Giving in 2020 grew 5.1 percent to $471.44 billion, a level we have never seen before. Giving as a percentage of GDP (gross domestic product) grew to its highest level since at least 1980—2.3 percent (Giving USA, 2021).
Giving by individuals, foundations, and by bequest all grew. Only giving by corporations declined. Only giving to arts/culture/humanities and to health declined. Giving to all other sectors increased (Giving USA, 2021).
“Faced with a pandemic, racial inequities, and a shuttered economy, donors got to work doing what they do best: solving challenges.”
The Winkler Group, as a member of the Giving Institute, has advanced access to Giving USA data and Principals Jim Bush and Jessica Browning are current and past members of the Giving USA Editorial Review Board. Below are our five takeaways from this year’s findings.
KEY TAKEAWAY #1: GIVING GREW DESPITE AN UNEVEN LANDSCAPE
It may seem counter-intuitive that Americans gave at record levels in a year filled with such upheaval. But consider the stock market (highly correlated to philanthropy giving) and the CARES Act.
The S&P 500 grew by 16.5 percent by the end of 2020 thanks to huge gains in the stock market. In addition, the CARES Act pumped unprecedented amounts of money into our economy; one of its provisions increased the charitable cash contribution limit from 60 percent of AGI (adjustable gross income) to 100 percent.
“A strong stock market, an influx of government stimulus money, and an incentive for wealthy donors to give resulted in record philanthropy.”
KEY TAKEAWAY #2: STOP COURTING CORPORATE GIFTS
Corporate giving comprised only 3.6 percent of all charitable giving last year, yet many nonprofits focused a majority of their efforts on securing corporate gifts. In 2020, corporate pre-tax profits declined 3.35 percent as leisure, travel, transportation, and entertainment sectors saw major losses. As a result, corporate giving fell by 6.1 percent in 2020 (Giving USA, 2021).
A year like 2020 illustrates the volatility of corporate giving and the complexity of factors that control it. Corporate giving is becoming more and more transactional as shareholders emphasize bottom-line results. Corporate philanthropy has given way to corporate sponsorships and marketing partnerships. This type of giving, even though it brings potential success, is transactional. It is subject to annual renewal and often requests for more and more benefits in exchange.
Efforts to focus on individual giving—which made up 68.7 percent of 2020 giving and 77.6 percent when including bequests—will yield a much better return (Giving USA, 2021). With effective cultivation and stewardship, giving from individuals will be more stable year after year.
KEY TAKEAWAY #3: DO NOT COMPARE 2020 TO OTHER YEARS
There will never be another year like 2020. Because giving patterns and trends deviated from the norm, resist the temptation to compare 2020 to any other years.
Between 2008 and 2019, giving largely consolidated. Donors began giving larger gifts but giving to fewer organizations. That shifted in 2020. The number of smaller gifts (less than $250) grew by 15.3 percent while the number of larger gifts grew by only 8 percent. The number of new donors increased by 18.5% (Fundraising Effectiveness Project, 2020).
Consider removing 2020 from any review of your longitudinal data. Or at least put an asterisk next to it. Help educate board members about 2020’s aberrations. Manage their expectations and help them understand why it is unlikely to sustain 2020’s rates of new donors, new contributions, and even spikes in giving levels.
KEY TAKEAWAY #4: PAYING EXTRA ATTENTION TO 2020 DONORS WILL YIELD BIG RETURNS
Most organizations saw an increase in new donors last year. Yet, the national renewal rate of new donors is less than 20 percent. And the overall donor retention rate (new and returning donors) was only 43.6 percent in 2020 according to the Fundraising Effectiveness Project (2020).
Help improve this abysmal rate of attrition by genuinely stewarding your new donors. Tell them how important they were to you last year, and how important they still are. Make the communication personal and do not forget to evoke emotion. Make a strong case for their renewal.
KEY TAKEAWAY #5: DONORS WILL CONTINUE TO GIVE
The economy is strong. Mask mandates are being cancelled as vaccination rates climb and COVID cases decline. The philanthropic outlook is good.
“We continue to see donors making large, transformational gifts to their favorite organizations, universities, hospitals, and ministries.”
The Lilly Family School of Philanthropy at Indiana University predicts that giving by American individuals and households will increase by 6.0 percent in 2021 and by 3.9 percent in 2022. And this is on top of the strong giving we saw in 2020 (Ware, 2021). Wall Street analysts expect the S&P 500 earnings for 2021 to jump 23.3 percent (Valetkevitch, 2021).
So, keep engaging your donors. Give them reasons to return to your museums, your campuses, and your sanctuaries. Show them the good work you have been doing throughout the pandemic—work that would not have been possible without their support.
About the Authors
As founder and CEO, Tim Winkler provides the overall strategic direction, vision, and day-to-day management of the firm’s practice. He serves as a national director of the Giving Institute and is a Certified Fundraising Executive (CFRE). Throughout his career, every campaign he has led has met or exceeded its goal. He has a B.A. from Wheaton College and an M.A. in Theological Studies from Columbia Biblical Seminary.
Jim Bush, Winkler Group Principal and President, has been a fundraiser for more than 30 years. Recognized as an expert in his field, he’s helped nonprofits, universities, and healthcare systems raise more than $300 million and increase their organizational capacity through strategic planning. A noted lecturer, trainer, and teacher, Jim’s articles on fundraising have been published in leading nonprofit journals. He serves on the Giving USA Editorial Review Board and holds a bachelor’s degree from Elon University.
Jessica Browning, Winkler Group Principal and Executive Vice President, has helped lead nonprofit organizations for more than 25 years. An award-winning case statement writer, Jessica is a specialist in donor communications and a former member of the Giving USA Editorial Review Board. Jessica received a B.A. from Duke University as well as an M.A. and M.B.A. from the College of William & Mary.
References
Fundraising Effectiveness Project. (2020, December 22). Quarterly Fundraising Report: Year-to-date nonprofit sector trends 01/01/2020-09/30/2020. AFP Foundation for Philanthropy. https://afpglobal.org/fepreports
Giving USA. 2021 Annual Report. Giving USA. (2021, June 15). https://store.givingusa.org/products/2021-annual-report.
Valetkevitch, C. (2021, February 25). S&P 500 to gain 6% in rest of 2021: Reuters poll. Reuters. https://www.reuters.com/article/us-usa-stocks-poll-idINKBN2AP03V.
Ware, A. (2021, February 19). The outlook for charitable giving. Lilly Family School of Philanthropy. https://blog.philanthropy.iupui.edu/2021/02/19/the-outlook-for-charitable-giving/.
