State incomes have declined and social services are being cut to meet budget gaps. Foundations lost $150 billion last year–that’s more than foundations gave out in the last four years combined. Many of the biggest corporate givers–Citigroup, JP Morgan, Wells Fargo–are in financial distress. Giving by high-net-worth individuals is down because their assets are down. This is a dire snapshot of the fundraising market that nonprofits face.
The only giving that is expected to remain unchanged is giving by individual donors who give from income. Individual giving has increased every year despite recessions.
These were some of the key points made by Curtis Chang of Consulting Within Reach, at his seminar I attended yesterday with nonprofits and funders in the Silicon Valley area. Nonprofits are facing an ecological shift in donors. To survive, nonprofits need to lessen their fundraising focused on state, corporate, foundation and high-net-worth individuals giving, said Curtis. And they need to increase their focus on development staff and marketing appeals to target middle class individuals.
This requires a whole new set of capacities that need to be built to reach individual donors. Curtis shared this graphic with us:
State/Corporate/Foundation Fundraising Model
Appeal: innovation/social impact
Content: hard data
Communication: grant writing
Key Contacts: program officers
Individual Fundraising Model
Appeal: brand experience
Content: emotional stories
Key Contacts: social connections
I agree with many of Curtis’ points, especially the need these days to focus on individual donors. I think there is one missing piece in this, which is to cultivate volunteers as well as individual donors. Research shows that 50 percent of volunteers end up donating to the nonprofits as well. This is a spectacular conversion rate and much better than any direct mail or Facebook solicitation. If nonprofits can convey the stories, the emotional experience, and rewards of being part of their cause, donations will follow.
Perla Ni, founding publisher of the Stanford Social Innovation Review, is the founder and CEO of GreatNonprofits. She is also a cofounder of Grassroots.com.