Click here to read on NonProfitPRO.
In the early 2000s, approximately two-thirds of Americans actively gave to charity. Since the 2008 Great Recession, that number declined each year through 2018 when fewer than half of all households donated.
Continuing to use status-quo tactics isn’t working. For the first time ever, the number of donations decreased last year, according to the Fundraising Effectiveness Project. Traditional fundraising tactics might be outdated and it may be time to evolve them to represent today’s changing demographics. After all, the country is expected to become more racially diverse by 2050 when non-Hispanic white individuals will no longer be the majority in America.
Earlier this month, the Indiana University Lilly Family School of Philanthropy released a new report, “The Giving Environment: Giving Trends by Race and Ethnicity,” to address these shifting trends based on giving by examining data from 2000 through 2018, mainly from its past work, including the “Philanthropy Panel Study” and the “General Social Study.”
“Generosity is inherent in all cultures; it is expressed and carried out in different ways in different communities. By better understanding the diverse practices and long-term giving trends of donors of color, both donors and nonprofit organizations gain valuable insights on ways they can come together to achieve shared goals,” Una Osili, Ph.D., associate dean for research and international programs at the university, said in a statement.
The report examines data across races, including American Indian, Asian American, Black American, Hispanic American and white American. Though researchers acknowledged there could be significant findings missed as a result of the broad categorizations, they were confident that the decline in giving that began in 2000 became more prominent after the 2008 recession.
Nonetheless, here are three takeaways from the report and how your nonprofit can begin to overcome the associated hurdles to reaching new demographics to support your cause.
1. Black Americans Give the Largest Percentage of Their Wealth to Charity
Previous research has indicated that donors’ giving directly correlates to their income. Despite Asian and white Americans having the highest average income and Black Americans having the lowest average income from 2000 to 2018, Black Americans gave higher percentages of their income to charity most of those years, with 3% to 4% of their income dedicated to charity.
The report’s researchers note that their findings show the need for revised strategies and priorities to captivate diverse donors. Some ways to reach diverse audiences include utilizing digital fundraising, including social media and crowdfunding, researchers suggested.
“Donors representing a range of racial and ethnic backgrounds, particularly younger generations, are adopting technology-focused tools as a means to drive change,” researchers wrote in the report.
2. More White American Households Are Expected to Benefit From the Great Wealth Transfer
Historically, wealth inequality has disproportionately affected communities of color, making it difficult for households to build wealth to pass along to future generations. The Great Recession caused significant declines in familial wealth, widening the gap between white and Black households in particular, researchers wrote in the report, noting the per capita wealth ratio between them is 6-to-1. Therefore, familial wealth passed down during the Great Wealth Transfer will likely occur in a higher proportion of white households.
To make giving affordable for everyone, researchers suggested recurring giving options that allow donors to include donations in their monthly budgets. In addition, planned giving can be used as an engagement tactic to allow donors to provide more support over a longer period.
3. Trust Among Most Racial Groups Has Been Slowly Declining
Though Americans trusted nonprofits more than other institutions in an Indiana University Lilly Family School of Philanthropy study released earlier this year, trust remained relatively low across all options, particularly for Congress and large corporations.
This report cited the “General Social Study,” which found donors were more trusting than non-donors. However, when broken down by race, trust has been declining with the exception of Black Americans whose trust level increased between 2021 and 2022.
“When observed together, the declines in interpersonal trust could be another reason for the decline of giving rates and amounts,” researchers wrote in the report.
As a result of these trust issues, researchers concluded that it could be a reason for the rise in giving circles, an effort where donors with similar values pool their money to make a bigger impact for the causes they choose to support.
“A pivotal strategy in appealing to diverse donors is involving communities of color in decision-making and offering transparency regarding initiatives and their broader influence,” researchers wrote in the report.
Though most of this study’s data didn’t surpass 2018 — two years before the COVID-19 pandemic — it still paints a picture of how the economy affects giving. The repercussions of the pandemic and the 2008 recession have similarities, so these findings can help nonprofits engage a more diverse pool of donors.
“Philanthropy does not conform to a one-size-fits-all approach,” Osili said in a statement. “It’s important for nonprofits and philanthropy professionals to understand the formal and informal channels through which communities of color practice generosity and to adapt their strategies for reaching and retaining donors of diverse backgrounds and rich traditions of generosity. Authentically engaging donors in long-term efforts to build trust in their organizations is also important, as our research suggests trust is another important factor in developing strong relationships.”Return to Insights & Events