There are quite a few influences that are impacting giving in 2021. Namely, a global pandemic!
Rick Dunham joined me on a recent podcast to unpack some of these factors and what nonprofits can expect as we move closer to 2022.
Trent: Rick, there are certain baseline influences to giving that occur every year. Can you speak to a few of those?
Rick: According to Giving USA, data has shown for years that one of the leading indicators to charitable contributions is the stock market. If the market is growing, charitable contributions tend to go up. If the market goes down, charitable contributions follow.
We’ve had an incredible run with the stock market recently. It will always be bumpy, but the trajectory has been very positive and strong. And if that kind of performance continues throughout 2021, it should be a harbinger of good things for giving.
Trent: When the stock market dips, is giving mirrored pretty closely to that?
Rick: It’s pretty close. But it depends on the performance. At the end of 2018, there was a massive implosion of the stock market. It dropped dramatically from mid-November through December and it gutted year-end giving. There was a very direct correlation between the two.
Not only does the stock market affect giving, but tax policy has a very direct correlation as well. Back in 2017, Lilly Family School of Philanthropy did a study on behalf of the independent sector. In every case where there was a universal tax deduction, they were able to demonstrate that charitable giving would indefinitely grow.
And right now there is a universal tax deduction in place. There are current bipartisan efforts to try to put in place permanently the universal tax deduction with a lot more latitude in terms of the ceiling. I think the whole premise would be that if we can allow people to deduct anything they give to charities before taxes, we will raise more money.
Trent: Is there anything that would lead you to believe giving will be better or worse in the near future?
Rick: I’ve been watching the economists’ report on personal savings rates. Between February 2020 and December 2020, Americans placed $2.1 trillion into savings accounts.
And I heard just recently that the savings rate is over 25%. People who are locked down or changing the way in which they live are just not spending as much money. To me, that’s good news. Organizations that were on the front foot in 2020 in their fundraising program saw the fruit of that as they kept donors engaged and gave them a strong reason to support.
People have money to spend. They’re dying to travel and live normal lives again. Will that create a level of distraction that we’ve not experienced in awhile? We don’t know.
What we do know is that the number one enemy to fundraising is a distracted donor. It’s why being present with a donor and keeping them engaged is so crucial. Your donors love you, but they don’t love you so much that they’re thinking about your organization 24/7.
So how do you keep that presence with the donor? How do you keep them engaged, inspired, and ensure that they’re continuing to support your cause?
Trent: We know that one of the main drivers of giving in 2020 was religious service attendance.
So if we’re a faith-based organization and our donors are making choices about where they will give, then it’s really incumbent upon us to lean in.
We can’t just say we’re going to implement this strategy in six or 18 months. What do we need to do to make that a reality as soon as possible now? If we know there’s an initiative, a capital campaign, some kind of investment in the organization that we want to compel our donors to be involved in, it doesn’t make a lot of sense to wait.
Rick: Right. And sometimes organizations don’t act like they’re responsible for the relationship, which is a mistake.
If I really want to build a relationship, I have to take responsibility for that relationship to ensure that it reaches its potential. As an organization, we’re responsible for the donor’s relationship. How do I steward that relationship in such a fashion that I take that person to their highest level of potential engagement with and commitment to the organization? I can’t pull back and expect that donor to step in. I have to step in if I want them to engage in a deeper way. And tomorrow is not the time to do that. It’s today.
Trent: Anything else that you would want to communicate to people listening today, as they walk forward in 2021 and prepare for 2022?
Rick: Everything I’ve heard speaks to strength through ’21, but all bets are off starting in ’22. And I think we’re seeing a little bit of that with the market reacting to possible growth and inflation. So again, it’s just something to keep your eye on because that could definitely dampen giving towards the end of the year.
For more insight into 2021 Giving Trends, be sure to listen in on The Dunham Podcast episode, Will Giving Drop Noticeably in 2021?