Charitable giving has always reflected the state of the economy, and 2024 was no different. As the economy outperformed expectations, with the stock market achieving double-digit growth rates, affluent donors played a key role in helping their causes thrive. However, inflation continued to challenge everyday donors, limiting their ability to contribute. This resulted in a familiar pattern: while overall giving increased, the number of donors decreased.
The Changing Landscape of Giving
According to the 2024 Generosity Commission Report, the percentage of U.S. households donating to nonprofits has dropped by 15.8% over the past decade. This decline is driven by several factors, including economic uncertainty, declining religiosity, social disconnection, and decreased trust in institutions.
As we move into a new year, fundraisers must adapt to this changing landscape by targeting everyday donors and emphasizing the impact of small contributions. Every major donor likely started with a modest gift, underscoring the value of cultivating relationships at all giving levels.
The Power of Hyperpersonalization
To address the decline in donor numbers and retention, nonprofits need to broaden their outreach and embrace hyperpersonalization. By leveraging data and technology, organizations can connect with donors in meaningful ways.
Key strategies include:
- Predictive Analytics: Use data to identify potential donors who might be overlooked by traditional methods.
- AI-Driven Personalization: Tailor donor experiences based on interests, giving history, and sentiment. Apply stewardship strategies traditionally reserved for major donors to mid-level and everyday contributors.
- Data Hygiene: Ensure your donor data is accurate and up-to-date to maximize the impact of AI-driven approaches.
- Relationship-Based Fundraising: Train your team to focus on building lasting connections with donors, creating a sense of trust and engagement.
Related Reading: Donor Advised Funds – A Trend Fundraisers Should Pay Attention To
Digital First: Meeting Donors Where They Are
Younger donors are digital natives who expect seamless, technology-driven giving experiences. Emerging as the most generous supporter base to date, Gen Z donors (born 1997–2012) are outpacing Millennials and Gen X in both giving frequency and total contributions. Is your organization ready to meet this demand? Here are some tips.
- Upgrade Your Tools: Retire outdated approaches like costly galas and invest in modern CRMs and frictionless payment options such as Venmo and Apple Pay.
- Focus on Accessibility: Make giving as simple and secure as possible to improve convenience and attract a broader audience.
- Community-Driven Strategies: Engage younger donors through community-driven strategies that emphasize small, frequent contributions. These grassroots approaches, such as peer-to-peer fundraising and crowdfunding, resonate with donors who prioritize collective efforts and value making a consistent impact over time.
Emerging Trends to Watch
Several key trends are shaping the future of philanthropy:
- Tax Law Changes: The Tax Cuts and Jobs Act, which raised the standard deduction and reduced the number of itemized charitable deductions, is set to expire in 2025. This could have significant implications for giving behavior.
- Recurring Giving: Monthly giving programs are growing, offering nonprofits a reliable revenue stream. Emphasize ease and impact to attract recurring donors.
- Non-Cash Gifts: The tax advantages of non-cash gifts make them an increasingly attractive option for everyday donors. Contributions like stock gifts, qualified charitable distributions (QCDs), and cryptocurrency are growing in popularity. Be prepared to accept and promote these options.
- Donor-Advised Funds (DAFs): DAFs remain a favored and tax efficient vehicle for charitable giving. Developing strategies to access and steward these donors is critical for long-term success.
Preparing for What’s Ahead
Looking ahead to 2025, optimism remains high due to improving economic conditions. Continued growth in charitable giving is expected, but success will require innovation, adaptability, and a willingness to embrace new approaches.
Fundraisers who invest in technology, build strong relationships, and focus on donor-centric strategies will be poised for success. Those who fail to adapt risk falling behind.
How Are You Fundraising Forward?
Join the conversation and prepare your organization to thrive in 2025 and beyond. Reach out to Maureen Mahoney Hill, CFRE, at Maureen@AdvancementAdvisorsGroup.com to learn more about how you can adapt your strategies and make a lasting impact.
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Maureen Mahoney Hill, CFRE, is the founder and principal of Advancement Advisors, a consulting firm dedicated to helping nonprofits strengthen their fundraising efforts.