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Check-Up Clinic: Advice

Posted: 5/13/2020

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How Nonprofits Can Boost Development in the Coming Months

by Jordan Ault

Nonprofit leaders have encountered numerous challenges over a few short months. How can we pursue our mission when our office is closed? Can we continue to make payroll? How do we recover after cancelling major fundraisers?

As nonprofits adapt to a changing landscape, the question remains: What's next? As our attorneys speak with nonprofit leaders, nearly every conversation veers toward whether the institution can establish a level of giving that allows it to perform its mission in the future.

The nonprofit landscape seems to be moving toward two competing realities: (1) nonprofits have slowed their appeals to donors, while (2) giving continues at historic levels, or even increases. Many nonprofit clients saw a steep decline in giving immediately following federal, state and local shelter-in-place orders. In addition, nonprofits that see giving tied to physical events — most notably religious institutions — have been hardest hit.

But the situation is not as dire as many feared. Fidelity Charitable recently worked with Artemis Strategy Group to survey over 1,800 adults in the U.S. who donated at least $1,000 to charity in 2019. The results of the survey are fascinating:

  • Twenty-five percent of respondents expected their financial giving to increase in 2020. The primary reasons given for the increase in funding were the increased need and the desire to assist in times of trouble.
  • A majority of respondents (54%) reported that COVID-19 will have no impact on their philanthropic giving.
  • Only 9% of respondents expected their financial giving to decrease. The primary reasons given for a decrease in funding were an uncertain financial outlook and worries about a recession.
  • The approach to giving in times of crisis is generational, with younger generations more likely to increase their giving. Forty-six of Millennials expected to increase their philanthropic giving in 2020.
  • A large number of donors (43%) intended to direct their donations to nonprofits that they have supported in the past, with only 16% planning to shift their giving to different nonprofits.
  • A majority of donors (58%) intend to direct their giving to address local or domestic response to the COVID-19 pandemic, with donors nearly evenly split between supporting the economic and health impacts of the pandemic.
  • Nearly one in three donors feels that they lack the information needed to understand how to direct their giving to help address the impact of COVID-19. This uncertainty is more pronounced in older generations.
  • Not surprisingly, 47% of donors report that their volunteer activities will decrease or stop altogether over the coming months.
  • In addition, a majority of nonprofit leaders reported a significant impact in nearly every area: fundraising and development, volunteer services, and delivery of programs and services.

This data suggests that although nonprofits have encountered significant challenges, nonprofit leaders and development directors should consider a few key steps as they determine their financial outlook:

  1. Ask. Donors — particularly recurring donors — are eager to continue their financial support of nonprofits. They report being worried about the economic and health ramifications of COVID-19, but unsure of how to respond. The fact that requests for donations are drying up only exacerbates this problem. Consider reaching out to donors of all sizes as you are able, particularly by telephone (or in person when it becomes safe to do so). Timing is critical as donors have begun to receive stimulus funds.
  2. Don't rely on online giving. A higher percentage of older donors report being unsure of how best to direct their donations. Providing "old-fashioned" requests through the mail may result in a more significant response than a social media campaign. This is particularly important for nonprofits that typically collect donations during physical events, such as "passing the plate" during worship services.
  3. Consider mimicking a year-end appeal. Donors that intend to continue their giving are concerned about the increased need in their communities. Explain how your organization's mission addresses these needs through personal stories, if possible.
  4. Highlight new tax incentives. Following the Tax Cuts and Jobs Act of 2017, fewer taxpayers are claiming itemized deductions on their federal income tax returns, meaning many taxpayers did not or will not receive any direct tax benefit for their charitable contributions. The CARES Act encourages charitable giving by creating a new partial above-the-line deduction for cash contributions up to $300 to certain charitable organizations, which will benefit taxpayers that do not itemize deductions. Other provisions of the CARES Act are favorable to donors who wish to make large cash contributions in 2020. Consider highlighting the new deductions, perhaps even requesting a donation of $300.
  5. Be creative. Nearly half of volunteers expect to decrease or stop their volunteer service in the coming months due to health concerns. Brainstorm ways for regular volunteers to be of service, particularly if they can assist from the safety of their homes.
  6. Be honest. Nonprofit leaders have addressed numerous hurdles over the last few months. Donors want to know whether the organizations they support are weathering the storm. Don't be afraid to tout your successes, while also being forthright about the hardships you face. Donors want to know that their money is making an impact, so don't hesitate to explain how their donation will help support your organization, your staff and the community you serve.
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