Where is 2020 Giving Going?

The Too Early Predictions for 2020 Charitable Giving: What We Know Now and Where it May Go

Buildings closed. Events canceled. Shelter in place is part our language now. With the lockdown, the economy has been severely impacted—but what about philanthropy? What should nonprofits expect for this year?

At The Signatry, both donors and ministries keep asking us, “Where is giving headed for 2020? Will we recover? What are we seeing?”

While it is too soon to give a final answer on 2020 giving, we have been hard at work. Webinars. Zoom calls. Calls with nonprofit leaders, churches, consultants and donors. We have heard from both sides of the fence.

Here are some of our early insights, and five ways nonprofits can prepare for an unpredictable future.

The Current State of Giving

The early statistics for COVID-19 giving are in. And it is a mixed bag. Only two months of research leaves much non-conclusive data, but here is what we have heard so far:

• As a whole, giving is down. According to a CCS survey of 1,183 nonprofits interviewed since the outbreak of COVID-19, 63% have seen a decline of giving.[1] Likewise, a survey by State of the Plate showed that 65% of churches surveyed had seen giving decrease.

However, some charities tell a different story. Jason Nave, Chief Revenue Officer for Answers in Genesis, told The Signatry that their giving doubled in April and has continued to stay higher than usual. Likewise, Steve Woodworth, president of Masterworks, shares that giving has been up for his nonprofit clients since the outbreak of COVID-19 and has continued to be at higher levels. He told The Signatry, “In March, the stock market tanked by a third and major donor giving went up by a third [for his clients].” He expects the coming months to be “a season of heightened responsiveness and generosity.”

A survey by Dunham+Company showed that church-goers are more likely to be generous during the pandemic. Regarding those who answered that they would keep giving, “They are more likely to frequent religious services at least weekly (40 percent) and are twice as likely to continue their ongoing commitment to giving than those who do not frequent religious services (19 percent).”

• The recession is not one size fits all. Some ministries have been hurt more than others. Nonprofits directly providing frontlines COVID-19 care have actually seen giving increase. The healthcare sectors and disaster relief agencies are bringing in more donations than usual, because of the perceived increased need. However, the Chronicle of Philanthropy listed food banks, thrift stores, domestic violence shelters, colleges and universities, and cultural institutions as those hardest hit. Food banks and shelters are experiencing increased demand with less volunteers, and the other organizations’ revenue relied on events, enrollment, ticket sales, or retail sales.

Donor Behavior

As we talked with nonprofit consultants, we kept hearing common themes from the donors they work with. And the survey results match the anecdotes. Donors are not necessarily giving less, but they are changing their giving behavior. Here is what we have found:

• Donors are still giving. A survey by Dunham+Company showed that 81% of donors are still giving. Fidelity Charitable shared similar data—79% of their donors planned to give the same or more this year. So if most donors are still giving, why the decline?
• Donors are consolidating. “I’m talking to a lot of people of high net worth, and there aren’t many families who are considering adding new charities to their portfolio,” Bob Westfall, CEO of Westfall Gold, told The Signatry. “If anything, they’re talking about scaling back a charity or two.” Donors might be giving the same amount, but they are giving to fewer organizations. For example, if they were donating to six charities, they might shrink that number to three of their favorite charities, ensuring those organizations stay afloat. Donors are not adding new charities unless the charity is directly related to COVID-19 relief.
• Donors are giving from donor advised funds. Fidelity Charitable has seen gifts from donor advised funds (DAFs) increase 18% from this time last year. Similarly, Schwab Charitable reports their “outgoing grants increased 21 percent in value compared with the same period last year.” Because DAFs represent charitable dollars set aside in previous years, fund holders are poised to give during economic downturns.

An Uncertain Future

According to CCS Fundraising, 80% of nonprofits expect giving to be down for the year. Of course, any prediction depends on unknown factors. Melissa Wyers, executive director of EveryAction, predicts “giving by wealthy and middle-class donors will drop for the next two to three months, then start to return to normal.”

Morgan Stanley is equally optimistic. They predict that although the current economic recession is deeper than the 2008 recession, we will see a faster recovery. They write, “[T]he phased reopening, scaling up of public-health authorities’ ability to test and contact-trace on a meaningful level, the development of medical solutions to treat and prevent the disease, and the awareness of the population at large offer some reassurance that we have a much better chance to reduce the size and scope of future outbreaks.” Less risk of outbreaks means more readiness to resume economic activity.

Five Tips for Responding

While you cannot prepare for a storm after it has begun, you can find ways to survive. Below are ways nonprofit leaders recommend weathering the storm:

• Don’t cut your fundraising budget. It can be tempting for nonprofits to skimp expenses in fundraising in order to keep their programs running, but this becomes a “self-fulfilling prophecy” according to Steven Nardizzi, former CEO of Wounded Warrior. Fundraising is an investment in your future work. During the Great Recession of 2008, Wounded Warriors could not serve all the returning veterans because their funds were down. They made the hard choice of reducing their programs in order to maintain their fundraising. They served less soldiers in the short-term, but grew as a result. In the years to come, they were able to serve far more soldiers in the long term by making tough decisions in the short term.
• Communicate frequently with donors. Over and over, every consultant The Signatry interviewed said the same thing: Relationship is key. Keep contacting your donors, but be tactful and use it as a way to minister to them. Care for them as you show them the crucial role they play. “Charities have to go overboard to make the donor feel a part of the mission,” Dale Berkey, president of BBS & Associates, told The Signatry. “Donors are far less likely to go away if they feel a sense of ownership.” Look for new ways to reach out—share “organic” videos, tell stories, convey impact, articulate ministry progress, and surprise and delight donors.
• Contact donor advised fund holders. Look through your records to see who has given from a donor advised fund. These donors will likely be able to continue or even increase their giving, even if their income is down. “Donor advised funds are donations made in prior years that can only be used for charitable purposes,” advises the Lilly School of Philanthropy. “Examine your database to determine who has given through a DAF and do outreach.”
• Ask about complex asset gifts. The CARES Act allows for 100% of adjusted gross income to qualify as a tax-deductible donation. Al Mueller, president of Excellence in Giving, pointed out, “You’re going to have to give out of assets to do that.” Charities who can receive complex asset gifts—such as stock or real estate—can help their donors take advantage of the new tax law for 2020. Regardless of the AGI adjustment this year, talking with donors about asset gifts changes the reference point for their giving. According to Russell James, professor of Charitable Financial Planning at Texas Tech University, when people are reminded of their wealth in complex assets, they give more generously.
• Remember God can provide. Lean times remind us our provision has always come from God. Westfall told The Signatry about one charity whose spring gala was scheduled for April but postponed till the fall because of COVID-19. The charity had budgeted to hit $1 million by September, with a significant chunk of those donations coming through the gala. The gala was postponed, but that same month, the charity received two surprise gifts, together totaling $1 million. The anecdote reminds us provision can always come from unexpected places. Stay faithful in prayer and trust God.

In short, we do not know what 2020 giving will look like. Overall, we expect it to be a down year particularly if an organization relied on events and ticket sales. But there is reason for optimism. If you stay in touch with your donors and clearly keep the vision and mission in front of those invested in your work, they will respond. There is some hope that the stock market will pick back up to pre-coronavirus levels. If that occurs there may be a rush of year-end giving. One clear lesson, however, has been the necessity of a strong digital platform with analytics.

Now is not the time to shrink back. These are bold times which require bold leadership.

 

[1] “Fundraising Impact of Covid-19: April 20-May 1, 2020” CCS Fundraising, ccsfundraising.com