The number of charitable donors in the U.S. has been declining in recent decades. While overall giving amounts have risen, participation rates have dropped. What’s behind this trend and how can nonprofits reverse it?
Research shows several factors driving the decline in donor participation.
Generational changes are a major contributor, as younger generations are less likely to donate than older generations. Income and wealth inequality also play a role, as fewer people have disposable income to donate. Changes to tax policy, like the 2017 Tax Cuts and Jobs Act, have reduced incentives for some to give.
However, these factors do not fully explain the trend. Nonprofits must also examine how they communicate with and engage donors. Researchers have found that donors give for two main reasons: to support the public good (the “output” motives) and to satisfy private motivations (the “input” motives). Messages focused only on the public benefits of giving may not resonate with those also motivated by private benefits like social approval or self-image.
What can nonprofits do?
- First, evaluate fundraising messages through the lens of dual motives. Are you appealing to donors’ self-interest as well as support for your mission?
- Second, make long-term donor retention a priority metric. While revenue matters, focus also on developing lifetime donor relationships.
- Third, work with interested donors to engage the next generation. Kids often mimic the giving habits of role models, but many are unaware if their parents donate. Programs where families participate together in philanthropy can nurture a lifelong giving habit.
- Finally, collaborate with researchers to conduct studies on donor motivation and messaging. For example, research is needed on how different types of campaign matches (e.g. donor matching funds vs. seed funding) influence future giving behavior. Partnerships between nonprofits and researchers can help bridge the gap between theory and practice, generating actionable insights for overcoming the declining donor challenge.
Overall, reversing the downward trend in donor participation will require a combination of adapting to external factors, improving donor relationships and knowledge, and making philanthropy an engaging lifelong affair for supporters and their families. With a research-based approach, nonprofits can find ways to turn occasional donors into regulars and secure their support for years to come.
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