One Large Donor or Lots of Small Ones—What Does Your Nonprofit Need?

December 24, 2016; Quartz

According to a November 2016 report from the Institute for Policy Studies, between 2003 and 2013, charitable deductions by people making over $100,000 rose by 40 percent, but they declined by 34 percent for those making less. (Numbers are based on tax returns to the IRS and are adjusted for inflation). The researchers attribute these shifts in the balance of the sources of (deducted) charitable gifts to an ever-increasing income gap.

“This really does change the calculus for [nonprofits],” said Chuck Collins, a senior researcher at the Institute for Policy Studies, who has also done his share of fundraising. “You’re spending a lot more time pursuing the same small pool of mega donors…orienting your whole fundraising around major donor acquisition.”

Collins added that large donors are more likely than smaller donors to want their donation to fulfill a specific donor-designated purpose, and this may drive a nonprofit off mission as it seeks to address the orientation of one supporter rather than the full span. Finally, he says, relying on a few large donors rather than many smaller donors can create real instability.

Essentially, what Collins is pointing out, albeit in a broad-brush kind of way, is that the very same worries we have about the effect of oligarchy on the economy as a whole should also concern us in the nonprofit economy. If we believe that we need a sustainable nonprofit economy that is broad-based and accurately reflective of the needs and ideas and dreams of the whole of our population, we need to consider how to maintain and build that bond with our many donors, in pursuit of a real democratic future.—Ruth McCambridge