Preliminary data from 2021’s Giving Tuesday show that philanthropic donations in the U.S. increased by 9% from 2020 to 2021, compared to a 25% surge the year prior.
That has a lot to do with the pandemic, said Soraya Alexander, chief operating officer of the nonprofit fundraising platform Classy, in an email to Marketplace.
“Much of the world’s attention and funding went to direct COVID relief organizations — certainly not a bad thing considering the situation — but it put further pressure on those unrelated to the cause, as well as the smaller nonprofits within our communities,” she explained.
To compete for funds and visibility during the pandemic, nonprofits have had to wholeheartedly embrace tech. One advantage of that? It also helps attract younger donors.
That’s also useful given that millennials are a very generous generation. One study found that nearly three out of every four millennials donated money during the pandemic.
“Younger Americans are more interested in giving directly. They’re more likely to participate in crowdfunding. They’re very interested in supporting causes, rather than particular organizations and have higher rates of impact investing,” said Una Osili, associate dean for research at the Lilly Family School of Philanthropy at Indiana University. “Some of that is driven by a shift in the economy, but also technology making it possible to connect directly to causes you care about.”
And with younger generations slated to inherit trillions during the Great Wealth Transfer, charitable organizations won’t want to be left behind.
“While the Silent Generation and the Baby Boomers will transfer an estimated $30 to $68 trillion to adult children, nonprofits should not wait for this to begin,” Classy’s Alexander said. “Nonprofits need to adapt their fundraising strategies toward younger generations now.”
Leaning in to tech
Take a fancy gala dinner, for example. If you have a mental image of older benefactors in a stuffy hotel ballroom with tickets going for hundreds or thousands a head, you’re not alone.
In the pandemic, when programming was forced online, there was an added benefit, said Rick Cohen, chief operating officer at the National Council of Nonprofits: It makes those events more accessible to a wider audience. Plus, a Zoom-based event is a lot cheaper to host than a fancy gala dinner.
“Not everybody can come to a dinner in the evening. Maybe they’ve got work obligations, things going on in the evening. Maybe they have kids and don’t want to have to find a babysitter just to be able to take part in the event,” he said. “If the event’s online, they can. They can do it from home.”
Many nonprofits see leveraging technology as an opportunity to diversify their donor demographics. Doctors Without Borders-USA, for example, spearheaded live streaming campaigns, a chance for the organization to reach donors during lockdown and interest donors who were younger and more diverse than their standard donor profiles.
Odds are that shift from in-person fundraising to online events was a hurdle for many small nonprofits (many of the same ones fighting for funds amid COVID) with little IT infrastructure, Cohen said. But it parallels a transition forced on many at the dawn of the internet.
Where does he see space for future innovation among nonprofits? Cryptocurrency donations.
The next (nonprofit) frontier
“It mirrors what a lot of nonprofits went through 20 years ago when donating online really took off, “ Cohen said. Few nonprofits jumped headfirst into accepting online donations. “Now, it’s kind of taken over as the norm rather than a mailed check.“
That’s a space United Way embraced. The group started accepting bitcoin donations in 2014, among the first and largest nonprofits to do so. And it’s not stopping there.
“We’re currently building partnerships in the Web 3.0 space to create sustainable revenue from crypto philanthropy. We’re also experimenting with NFTs to fundraise, build community and as a new type of storytelling to engage passionate young donors,” said United Way chief experience officer Stan Little in an email.
Those are the kind of executive decisions nonprofits are having to make to stay relevant, said Indiana University’s Una Osili. After all, those donors represent the future of donors.
“It makes it very difficult if you’re relying on those older donors without really thinking about how you can build a future pipeline,” she said. “While younger donors may not be giving the same dollar amounts right now, what you’re able to add to is that growth trajectory in the future.”