Four Philanthropic Trends in 2015
2014 was a banner year for philanthropy in America. What do we have to look forward to in 2015? While nothing is for certain, here’s a look at four trends that are a good bet to continue.
2014 will likely be remembered as a banner year for American philanthropy. All indicators show that total giving in America will surpass any previous highs. We won’t know those results for sure until the publication of the Giving USA study in June. But 2014 will definitely be remembered as the year the ALS Ice Bucket Challenge took social media by storm. This phenomenon caught everyone by surprise, demonstrating the awesome power of social media and online fundraising while raising some profound questions. The job market continues to improve. While the stock market may be volatile, it appears safe to conclude we have exited a period of prolonged economic difficulty and have entered a period of “new normal.” Of course, figuring out how the new normal is different from the old normal is an ongoing challenge and should be a major focus for all nonprofit leaders.
What do we have to look forward to in 2015? Clearly, I am no soothsayer, and if the Ice Bucket Challenge taught us anything, it is to continue to expect the unexpected. But here are four trends that nonprofit leaders and donors should take heed of while planning for the year to come and beyond.
1. Capital Projects are Back
No aspect of philanthropy suffered more during the Great Recession and subsequent years than capital projects. Ask anyone in the construction business or in architecture. At times, it felt like new projects or renovations had essentially ground to a halt. Outside of the largest and most flush nonprofits, few seemed willing to ask their donors for money to build and those that did were driven to do so by absolute necessity. During the past five years, the majority of campaigns I have either been part of or have knowledge of have focused on building endowments and improving the scope of programming. At the same time, there has been a great deal of talk in faith communities about the over abundance of buildings and an overreliance on physical structures to house intuitions and offer genuine experiences. Organizations that have pushed off much-needed capital improvements may not want to delay any longer. With the economy improved, donors appear ready to support bricks and mortar projects. They may have questions and may be more skeptical than in the past, but if you offer a good plan and a solid case for giving you stand a good chance. I am confident that, under the right circumstances, if you are building, the donors will come.
2. The Further Growth of Donor Advised Funds and Private Labeling
I have been saying this for a couple of years, but donor advised funds (DAFs) are transforming American philanthropy, taking power, money and prestige away from private foundations. This charitable vehicle allows people to set aside dollars in a philanthropic instrument for charitable purposes, often to achieve particular or personal interests and goals. It is putting money away now to give later. It is much less costly, however, than starting a charitable foundation. Donor advised funds also require far less reporting to the IRS than do foundations, and there is no required minimum annual disbursement. We know from all indications that giving to and by donor advised funds keeps going up. The 2014 U.S. Trust Study on High Network Philanthropy found that, among households worth $1 million or more, giving to philanthropic vehicles such as donor advised funds was second only to giving to educational institutions. Here’s the innovation to watch: Increasing numbers of large nonprofits such as hospitals and universities are offering their own, private label DAFs. What does this mean? It means that, say by starting a DAF with a university, a donor is agreeing to set aside a certain percentage of the funds, usually around 50 percent, to go to that university. This means that the deck is being further stacked in favor of the largest nonprofits. Synagogues or other smaller nonprofits likely can’t mimic this strategy. One further suggestion: Nonprofits should keep track of what donations come from donor advised funds and then make an extra effort to build a relationship with that donor, who is likely giving in a very strategic way and committed to philanthropy for the long haul.
3. Continued Downturn in Traditional Umbrella Campaigns
Sorry Jewish Federations, local United Way campaigns and Catholic Charities there is no around this: Donors aren’t giving to umbrella campaigns the way they once did. We know the reasons: Donors want to be directly involved and hand-pick the programs they support, rather than put their money in a communal pie and have volunteers and professionals divvy up the slices. Federations are certainly well aware of this and have been working to stay ahead of the trend. The best, most effective umbrella organizations in the country are driving the conversations in their communities and offering innovative solutions and tangible opportunities for donors to make targeted gifts. But in 2015, umbrella campaigns on the upswing are the exception, not the rule.
4. Increasing Professionalization of Small and Mid-Sized Nonprofits
Successful small and mid-sized nonprofits are learning tricks from universities and other philanthropic behemoths by investing more time and resources in technology and development. Increasingly development directors of these nonprofits, including synagogues, are experienced professionals who are trained in the theories and practices of fundraising. In many of these modest nonprofits, we are seeing improved communications to various donor segments, with technology and social media being used in effective and strategic ways. To be sure, this doesn’t hold true for everyone and many charitable organizations have some catching up to do regarding the professionalization of their development programs. The improvement we are seeing is encouraging news. But it also means increased competition and the smallest fish will have to fight even harder to stay in the pond.
As we collectively search for ways to build institutions that suit the needs of the 21st century, it is encouraging to know that donors are willing to support our nonprofits in their efforts. However, while the challenges may not be as steep as the years of the recessions, challenges still persist. Let us embrace the challenges and build a better world – one gift at a time. I expect 2015 to be a seminal year for change in the nonprofit world.
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