As we head into #GivingTuesday, where modest donations in high volume are king, we are reflecting on a larger-donor dynamic that suggests a wait-and-see attitude toward predictions for more than 20-percent growth in overall fundraising for the day, at least as the event will be experienced in local communities. We would note that the daylong fundraising event will be spread across 50 countries this year, so readers should see our analysis as focused on our domestic scene.
There is good and bad news in the latest quarterly report from the Fundraising Effectiveness Project (FEP). While giving overall increased significantly over the third quarter of 2018, the number of households giving continues to trend downward; this is the result of increases in the dollar amounts of large gifts.
As readers may recall, NPQ noted this confluence of trends in an article by Dr. Patrick Rooney at the beginning of this year, and both components of the phenomenon appear to be becoming more extreme. This may place an event like #GivingTuesday, which depends upon smaller dollar donations for the most part, firmly in the crosshairs of these inequitable times.
Granted, FEP’s definition of a major gift is any donation of $1,000 or above, but that category increased over 2017, while revenue from general donors ($249 and under) and mid-level donors ($250–$999) still lags behind last year. The mean donation on Giving Tuesday in 2017 was $120.
“At this point, there’s one major reason giving is increasing, and that’s money raised from donors giving larger gifts,” said Elizabeth Boris, chair of the Growth in Giving Initiative. “We are concerned that we are seeing increases essentially from only one group of donors, and that the total number of donors continues to lag.”
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In line with the combined trend lines, the total number of donors has decreased by 4.3 percent in 2018 compared to the same period in 2017.
“What we’re trying to do with our Quarterly Reports is track the flow of giving and see if there are trends we can determine that will give us a sense of how giving will do overall,” said Boris. “However, there are a lot of factors that can influence giving, such as changes in the tax law, natural disasters, or even an important political election. While the number of people giving is lower in 2018 so far than it was in 2017, a strong fourth quarter can change everything. Even if we have a great #GivingTuesday and fourth quarter, though, the FEP wants to remind charities of the continuing long-term challenges we face, such as the slowly shrinking pool of donors.”
But how likely are nonprofits to see a comeback in a year where the tax incentive that sparks end-of-year giving has been removed for most donors, replaced by a higher standard deduction per the Tax Cuts and Jobs Act of 2017? According to the Detroit Free Press, about 46.5 million taxpayer households itemized deductions for 2017, “but that number is expected to drop to 18 million for 2018 returns—or about a bit more than 10 percent of individual returns, according to the Joint Committee on Taxation.”
In recent years, charities have organized their fundraising campaigns to take place between Thanksgiving and Christmas, pushing for end-of-year gifts so donors can take advantage of charitable deductions. When that deadline no longer factors into when most people give, will the last month of the year be as lucrative as it has been in the recent past? Even at NPQ, which does not generally believe that donors are overwhelmingly influenced by tax breaks, we could imagine that the removal of the deadline will have some effect.
Higher-dollar donors will still be able to itemize charitable deductions, of course, and this may only worsen the existing dynamic of more large-dollar donations and fewer small-dollar ones. Predictions for 2018’s #GivingTuesday call for a 21-percent increase in overall revenue raised and an estimated total of $363 million. This would be a $63 million increase over 2017. Stranger things have definitely happened, and for those who have placed eggs in this fundraising basket, we wish you a very strange day indeed.