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Five emerging trends that should be on every fundraiser's radar

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It's hard to believe, but it’s really only been a few years since charitable giving mostly involved mailing a cheque in answer to a direct mail appeal from a nonprofit or charity. While this option is still open to Canadian donors, times are changing, and the face of charitable giving in Canada is significantly different than in the past. As we talked with people on the front lines of charitable giving, we found five emerging trends fundraisers and charity leaders would do well to pay attention to.

Some things DON'T change

First of all, before diving into the new trends, it should be stated, as Paul Nazareth, VP, Community Engagement, CanadaHelps, emphasizes, “Donors want what they have always wanted: to give, to make a difference, and to know they’ve had an impact.”

And there are some stable factors in charitable giving: people still donate most to places of worship, with medical charities, children and animals being perennially strong recipients also. Canada Revenue Agency’s recent Report on the Charities Program 2015-6 found that the most popular fundraising methods are still collection plates/boxes, fundraising galas, and sales.

It’s also true that the nonprofit sector is in constant change and has always required innovation. As Bruce MacDonald, President & CEO of Imagine Canada, says, “The charitable sector has always been very innovative — you don’t stay around unless you adapt to society, and we have organizations that have been around more than a hundred years.”

Diversity

Fraser Green, Chief Strategist & Smartypants of Good Works, puts it bluntly: “There is no such thing as ‘the public’ anymore. We aren’t all white, straight, living in cities, watching television and driving cars.” He adds, “Marketers know how to target very specific audiences and to come after us with products we are interested in. We are used to being catered to as consumers — but charities still tend to cast us all together, sending big messages to large groups of people.”

This fragmentation of the market means that donors are being more selective about which organizations they support, wanting to give to organizations that offer them a specific and meaningful sense of purpose, says Green.

This diversity is sometimes generational — “A 75-year-old donor giving toa health charity and a 32-year-old donor giving to Planned Parenthood are very very different and need to be approached differently,” says Green — but it extends beyond that.

The AFP Foundation for Philanthropy Canada has released a wealth of free resources after conducting a five-year project on diversity and inclusion in philanthropy. Leah Eustace, ACFRE, Chair of the Foundation, says, “I’ve learned that many charities struggle with building relationships with all the cultural communities they serve. This isn’t being done purposely but we often don’t have the training in cultural competency to be as inclusiveas we could be. There is a huge pool of donors (as well as volunteers and prospective staff) we aren’t asking appropriately and aren’t engaging appropriately — and they have much to give. If donors don’t feel they are reflected well or understood by an organization, they will go elsewhere.”

Anti-institutional

With the Brexit vote and the Trump ascendancy, it is clear to MacDonald that “there is an anti-institutional bias sweeping the globe and extending into the nonprofit sector.”

Primarily this has to do with trust and transparency. When Imagine Canada commissioned market research in August 2016, 86% of Canadians said their top considerations when giving were transparency and well-managed organizations. This can account for the emergence of tools like Charity Data that was launched in August 2016 to inform donors about the charities they are considering supporting.

“In order to mitigate the anti-institutional bias,” MacDonald says, “organizations need to change their mindset toward transparency. If they don’t, there is enough choice within each cause area that a donor can find one that offers the transparency they are looking for.”

Organizations need to be open about their financial situation, their boards of directors, and the impacts of their work, both good and bad, says MacDonald. “People are looking authenticity and an honest examination about whether programs are working and where adjustments are being made. Organizations that want to attract and retain donors need to understand that there used to be blind trust, but today, if organizations aren’t transparent, donors are wondering ‘what aren’t you telling me?’”

Eustace agrees. “My grandmother, who was part ofthe civic generation, would write a cheque in response to every appeal she received in the mail, regardless of who it was from or what it was about, and she didn’t particularly care if she heard from them again.”

Donors today place less blind trust in institutions, but that doesn’t mean they don’t trust nonprofits. “A key highlight of the Foundation’s What Canadian Donors Want research was that trust in charities is up 6% since 2011 and that there is more trust for the charitable sector than the public sector,” says Eustace. “More scrutiny by donors doesn’t mean a lack of trust but that they are being diligent about which charities to support.” This same diligence can be seen in the increasing numbers of donors who want to receive information about how their donation has made a difference (a climb of 6 points to 83% in the Foundation’s most recent research) and fewer needing acknowledgement for their donation (38%).

This same factor has other implications on charitable giving. An increasing number of Canadians are favouring local charities – the Foundation’s research found that since 2013, donations to organizations with a local focus increased from 49 percent to 54 percent, while donations to organizations with a national focus declined from 35 percent to 28 percent.

It also accounts for the desire for relationship between donors and the charities they support. Among the findings of the 2016 Burk Donor Survey was that the percentage of respondents who follow charitable organizations on social media has “increased significantly”, particularly among charities that “post relevant updates on their work [with] timeliness and refreshing content plus effective use of images [being] especially important.”

Cross-channel giving with technology is playing an increasing role

Not only is the donor base becoming more diverse, but so too are the ways donors can receive and respond to appeals. “Something that is truly new in the sector is cross-channel giving,” explains Siobhan Aspinall, CFRE, Director of Philanthropy at Canuck Place Children's Hospice. “We don’t know whether a donor saw something on Twitter, in a direct mail letter, heard a commercial, or talked with a friend.” The challenge, according to many of those we talked with, is knowing how to align a donation with a method of solicitation, and thus, which channels to pursue and invest in.

“Sometimes an organization might think that direct mail response is down, without looking at it holistically,” says Eustace. “I might get a letter in the mail, but after I’ve read it, I’ll jump on line and donate that way. It’s often difficult to determine what prompted an online gift but charities are starting to track across channels, so that if a surge in online donations follows a mail appeal, they can give soft credit to that mailing.”

Donors also like to give in variable ways, says Aspinall, donating stock one time and giving by credit card the next. This can also be challenging for organizations, although MacDonald advises organizations “to examine the patterns they see with their donor base and to adjust accordingly.”

There is more clarity when it comes to specific technology. Eustace notes that 60% of all emails today are read on mobile devices, so appeals that are customized to be easy to read on small screens are a must. “More and more, people want giving to be quick and easy,” says Eustace, who says that charities in Australia that added PayPal buttons to their websites to allow easy online giving saw their online donations go up substantially. Online donations through CanadaHelps increased 23.9% from 2015 to 2016 (to a total of $133M), with a 45% increase in donation of securities and a 40% increase in monthly gifts.

And, while millennial donors are clearly digital natives, the Burk Survey found that “older donors are catching up to trends first adopted by young supporters”, noting that in 2015, 31% of respondents under 35 years of age responded to at least one online appeal - but so did 26% of middle age and 28% of senior respondents.

Social media donation requests — whether from the charity itself or from a loyal donor — are also growing, with the AFP survey finding that fifteen percent of Canadians on social media have donated in response to a request posted on social media, and the Burk survey finding that giving through social media has risen from 6.6% two years ago to 9% today.

Fewer giving more

“Charitable donations are going up,” says Eustace, “which can give charities a false sense of security because the reality is that the number of donors are going down.” The Foundation’s research found that the number of Canadian donors is down 4% since 2011, with two-thirds of Canadians reporting making a donation in the previous year - but the average annual giving increased from $726 to $924. The Fraser Institute Generosity Index put the numbers even lower, with only 21.3% of Canadians claiming charitable donations in 2014, but bases that number on income tax reporting. Charitable law lawyer Mark Blumberg observes that, based on 2014 T3010 data from the CRA, Canadian taxpayers only claimed $9B of the $15.7 billion issued by charities in receipts. Still, it is indisputable that fewer donors are giving more.

Imagine Canada’s chief economist Brian Emmett identified a looming social deficit in his economic forecast for the upcoming decade, noting that the rich becoming richer will not necessarily make up for the disappearing middle class of donors, while the poor becoming poorer will add demand for services.

What’s also important is why donors aren’t giving. In the various surveys of Canadians, personal financial stability (or lack thereof) is generally identified as the main reason. Among those who have not made a donation in the past 12 months surveyed by the AFP Foundation, there was a 5% increase of respondents saying they cannot afford to make charitable donations (and a three-point increase in those who say there are no charities worthy of their money.)

To some degree this may be a question of perception. Imagine Canada’s Personal Philanthropy Project talked with Canadians with above-average income to understand why they are or aren’t giving. MacDonald says, “Despite their incomes, these people don’t view themselves as being wealthy, that they have made it and are ready and able to give back.” He adds, “These people are donating to their buddy who is cycling for charity or to a cause related to their family, but they are not thinking about philanthropy in an intentional way. As a sector, we need to find ways to stimulate and motivate intentional conversations about philanthropy.”

Donors are also choosing to give to fewer causes, with the oldest donors in the Burk survey supporting, on average, twice the number of causes as middle-aged donors. Eustace says, “I suspect donors today narrow their focus to the charities they feel connected with and give to those.”

New vehicles

Remember the Ice Bucket Challenge? It’s clear that social good is being done differently today, with an increase in crowd-funded campaigns, giving circles and other emerging approaches to giving that reflect many of the trends listed above. Giving is moving beyond (and in some cases away from) tax-receiptable giving. As Nazareth says, “It’s hard to compete with the immediacy of the guy on the corner telling a great story, especially if your methods of communicating are ancient and not responsive.”

Rather than simply trying to adopt every new success, MacDonald suggests organizations examine the elements of their success and adapt this for their own context and their own donor base. He notes, for instance, that a key factor in the success of the Ice Bucket Challenge was the callout to three specific people: that virality was built right into the campaign.

Organizations also need to be careful of assuming that a seemingly successful new vehicle is a good source for fundraising. Aspinall says of peer-to-peer fundraising, “A friend of a friend is not a friend. Someone may make a donation once when asked by a friend, but that doesn’t make them committed to your cause.” Nazareth adds, “While peer-to-peer is the fastest growing method of fundraising, this type of donor is transitory and transactional. Often they are not even a donor you have a second chance with.” The Burk report notes that “social media appears to be better at facilitating engagement than giving.” Likewise, Nazareth says of giving circles, “While they bring in money and raise awareness, they are the wrong kind of acquisition because the donors are transactional and there is actually a ban on contacting one-time donors in the future.”

While noting that the act of giving twenty dollars to help a family whose house has burned down feels similar to giving to a registered charity, MacDonald says that charities, which face unprecedented scrutiny for their work, have to communicate the value of their infrastructure to provide ongoing support — as compared with a more nimble, but far less accountable, crowdfunding campaign.

The relationship between charities and their donors might best be summed up by the Facebook status that says “It’s complicated.” At the same time, donors are engaged with charities as never before and do have the capacity to give more than they have before, so it’s a relationship worth studying, understanding and investing in.

Susan Fish is a writer/editor at Storywell, a company that helps individuals and organizations tell their story well. She has written for the nonprofit sector for almost two decades and loves a good story.

Please note: While we ensure that all links and email addresses are accurate at their publishing date, the quick-changing nature of the web means that some links to other websites and email addresses may no longer be accurate.

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j.b@globalphilanthropic.com j.b@globalphilanthropic.com
Susan correctly references the Canada Revenue Agency's recent Report on the Charities Program 2015-6 when she says that “the top fundraising methods are still collection plates/boxes, fundraising galas, and sales.”

But it's important to note that CRA did not mean that these techniques are most successful at raising funds; only that they are the most widely used.

John Bouza
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susanfish@rogers.com susanfish@rogers.com
Good point. And other traditional methods of collecting funds, such as door-to-door and street-corner appeals are still popular but even less effective.
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