Fresh Research

Research shows that multi-channel donors can be worth more than donors who give only online or only offline. But do nonprofits treat multi-channel donors like they're worth two or three times more to their organization? A recent experiment looked at how nonprofits respond after a gift and the results could surprise you.

Gabe Cooper,  CEO of Phoenix-based Virtuous Software joins the program to talk about the study  they embarked on with NextAfter Institute, titled, The State of Multichannel Donor Communications: How 119 Organizations Are Using Online and Offline Channels to Engage New Donors.

The report examines how charities responded to donations that were made both online and offline. Donations of $20 were made to 119 organizations in the spring of 2020. Communications were then tracked across email, direct mail, telephone and text messaging for four months, culminating with the final 57-page report.

"We seem to know intuitively that communicating with people on multiple channels works," Cooper said. "The data over and over again in these studies suggests that communicating on multiple channels gets far higher engagement from donors and so the fact that we are not really mailing all our online donors or vice versa...that is a little bit shocking because it seems to be a pretty big disconnect from how we know donors behave," he said.

"Only 3% of the organizations we gave to were actually doing multi-channel well, meaning, somebody came in on one channel, and then they started engaging with them on both in a meaningful way or even more channels," Cooper said. "So, that was the big shocker for me was even though multichannel gives are worth 300% more LTV [lifetime value] than a typical single-channel donor, there's just very few nonprofits that are doing this after a first gift."

There were some other surprising findings -- both good and bad -- and several organizations were  cited for being stellar with their communications, with Cooper in particular noting Buckner International and Doctors Without Borders.

Donor-advised funds (DAF) have dominated philanthropy in any number of ways over the past decade, whether it's increasing charitable contributions, boosting assets, or simply garnering attention within the public square.

That could be why it takes a super sized episode of Fresh Research tackle the topic. This episode diverges from the usual format; instead of one interview there are two interviews, each taking a side on the subject of DAFs and proposed reforms around charitable giving.

The first segment will feature Ray Madoff, co-founder and director of the Boston College Law School Forum on Philanthropy and the Public Good. She's part of the Initiative to Accelerate Charitable Giving, a coalition of philanthropists, nonprofits and foundations pushing charitable reforms, including new rules around donor-advised funds. Since this episode was recorded, Madoff released a new paper with UC-San Diego Professor James Andreoni titled, Impact of the Rise of Commercial Donor-Advised Funds on the Charitable Landscape, 1991-2019. Among the findings was that even though “more funds are flowing into, and growing in, private foundations and DAFs, there’s no evidence that charities have benefited from this trend.”

In the second segment, Howard Husock, senior executive fellow at The Philanthropy Roundtable and adjunct fellow at American Enterprise Institute (AEI), talks about some of the shortcomings of the reforms proposed by IACG around DAFs and foundations. AEI hosted a similar discussion between Madoff and Husock during a recent virtual panel. You can find the link to the YouTube video here.

Husock also touches on his recent paper for AEI, Appreciation in donor-advised funds: An analysis of major sponsors {48:55}. The report uses data from the Internal Revenue Service (IRS) for the four largest commercial sponsors managing DAFs to get a sense of the magnitude of their asset appreciation over the past decade. During the discussion, Husock also notes a paper {51:56} by Dan Heist (“Understanding Donor-Advised Funds: How Grants Flow During Recessions,” with Danielle Vance-McMullen), which was the subject of a previous Fresh Research episode in 2019.

Even for the Best Nonprofits To Work For, 2020 was a difficult year. The United States Tennis Association Mid-Atlantic Section (USTA MAS) rarely has any voluntary turnover among its 21 employees. But like at many nonprofits, the pandemic forced difficult decisions. The organization laid off about one-third of its staff in July. It was among 10 of the 2021 Best Nonprofits To Work For that reported laying off or furloughing staff last year.

Chief Operating Officer Beth Twomey joins this episode of the Fresh Research podcast, to talk about how the organization kept employees engaged and some of the challenges and successes of thep ast year. The Herndon, Va.-based USTA MAS ranked No. 1 among small nonprofits and No. 1 overall in the 2021 edition of the Best Nonprofits To Work For.

After months of working through the pandemic, employees received a care package in October from CEO Tara Fitzpatrick-Navarro. It included a personal thank you note as well as a branded mask, Yeti coffee mug, a hooded sweatshirt, T-shirt and tennis ball chocolates. “I can’t tell you what a giggle it brought to everybody,” Twomey said. “It’s a way for staff to know that she’s thinking of them, and that her door is open, and she’s available, and she’s here to make their life a little bit sweeter."

As part of the Best Nonprofits To Work For process, The NonProfit Times works with Harrisburg, Pa.-based Best Companies Group (BCG). Participating nonprofits go through a battery of surveys, including employees, managers and outside vendors. There are 78 questions within eight categories that make up the Employee Benchmark Report (EBR), which compiles the percentage of responses that were “agree somewhat” and agree strongly.” On average, the 50 Best Nonprofits often score higher among those categories than organizations that don’t make the list.

The top 50 organizations are broken down by size. Medium organizations, those with 50 to 249 employees, accounted for almost half of the 50 Best Nonprofits, with 24 honorees. Small organizations, considered those with 15 to 49 employees, nabbed 20 of the 50 spots, including No. 1 and No. 2. There were six large organizations, those with 250 or more employees, that made the final cut.

Overall, Best Nonprofits scored highest relative to their counterparts that didn’t make the list in the categories of Leadership and Planning (+11%), Pay and Benefits (+11%), and Culture and Communications (+10%). Best Nonprofits scored highest in the areas of Work Environment and Overall Engagement, both 95%.

A new report examines how crowdfunding fits into the larger philanthropic landscape and perceptions of crowdfunding by both crowdfunding donors and non-crowdfunding donors while also looking at charitable behavior during the COVID-19 pandemic.

The study, Charitable Crowdfunding: Who Gives, to What, and Why?, by Indiana University Lilly Family School of Philanthropy at IUPUI, uses data from a survey of 1,535 U.S. adults in September 2020. The sample was weighted to ensure results were representative of the general population.

Una Osili, Ph.D., is associate dean for research and international programs and Efroymson Chair in Philanthropy at the Lilly Family School of Philanthropy. “One of our big questions around 2020 is that in addition to studying how donors were giving, we were also looking at how philanthropy was changing during the pandemic,” she said. “What is very clear is that crowdfunding now is an important part of the philanthropy landscape and that is likely to continue going forward."

In recent years, some disaster giving was starting to be powered through crowdfunding, with donors connecting with individuals affected by hurricanes in Texas and Puerto Rico, according to Osili. "With COVID, we're starting to see some of that take place, where individuals are supporting campaigns that are designed to help other individuals. Some of them artists in the community or small businesses. So the notion of generosity expanding means that we're also seeing new types of causes emerge or cause areas," she said, such as funds directed to help essential workers.

Crowdfunding donors tend to be more diverse, younger, less religious and more likely to be single, compared to traditional charitable giving donors. Nearly 20% of donors typically give to social justice causes. A higher percentage of those who give through crowdfunding (27.7%) or social media (28.6%) support social justice causes, compared to traditional charitable donors.

The complete 24-page report can be accessed here.

Before the coronavirus pandemic, Pam Keough would have described herself as one of those bosses who believes everyone needs to be in the office. Now, it's not so black and white.

For a lot of nonprofits, it's been a year of working remotely, replacing in-person events with virtual events and trying to make it through the next quarter.

Keough is president and CEO of Make-A-Wish Foundation Connecticut. in Trumbull, Conn., about 70 miles outside New York City. A year ago, she spoke with The NonProfit Times about how the organization was dealing with the early stages of the pandemic. We visited with her again in fall, about six months into the pandemic, and again in March, just before the anniversary of the pandemic, to see how things have gone.

"In general, I see the light at the end of the tunnel," Keough said during an interview in March. "It's gotten to a point -- and I'm talking to a lot of the CEOs -- their staff has just kind of had it. Everyone's just ready to get back to where we were over a year ago," she said.

In September, some staff returned to the office voluntarily, going in teams and implementing safety measures like directional arrows on the floor and deep cleaning protocols. But when COVID cases rose amid another wave in December, people got nervous, Keough said. "I think people have gone the other way, they don't want to wear their sweatpants anymore, they don't want their dog barking in the background. I think people have just had enough," she said.

Keough has tried hard to be sensitive to employee concerns, whether coming into the office or working remotely. Ahead of the Presidents' Day holiday, she surprised staff with an extra day off on Friday to make it a four-day weekend. "People aren't taking PTO although we're encouraging them," she said. "You get back what you give so when you give a day off, they come back recharged and work even harder."

At the start of the pandemic in spring 2020, digital fundraising declined but traditional mail took off as people were home and actually reading their mail. That phenomenon has since flipped, with digital fundraising back  up and direct mail fundraising back to normal. Still, Keough expects the pipeline of wishes probably won't get back to normal until 2024. MAW Connecticut laid off three of 18 staff members in August but plans to hire one back on the program side.

Early indicators show that charitable giving was up in 2020 in response to the coronavirus pandemic. Projections for giving in 2021 and 2022 are even rosier.

Charitable giving is expected to increase 4.1% this year, buoyed by individual giving (+6%), and another 5.7% in 2022 on the strength of increased giving via foundations (+8.8%) and estates (+11.9%).

On this episode of the Fresh Research podcast, Una Osili, Ph.D., joins us to break down the projections from the Lilly Family School of Philanthropy at IUPUI in Indianapolis, Ind. She is associate dean for research and international programs and a professor of economics and philanthropic studies at the Lilly Family School of Philanthropy. She's also a dean's fellow at the Mays Family Institute on Diverse Philanthropy.

The Lilly School partners with the University of Pennsylvania Wharton School of Business, which provides data using the Penn Wharton Budget Model for select economic variables used in producing the estimates.

Growth rates are based on predictions for giving in inflation-adjusted 2019 dollars using 2020 as the base year. Projections are a “best-case scenario,” if Gross Domestic Product (GDP) recovers in 2021 as is expected by the Congressional Budget office (CBO) and others.

“In terms of overall growth in philanthropy, we do have to be concerned that underlying models show recovery but that recovery certainly is not expected to be broad based,” Osili said. “Some sectors of the economy are recovering faster than others, and some households have been more affected by the pandemic, not just their health conditions but also their incomes, their wealth, their ability to access employment,” she said.

“This is the extension of the K-shaped recovery we heard a lot about in 2020 where some American workers are able to work from home, work remotely, and their incomes, their wealth, if not grown, have at least stayed relatively stable through 2020-2021,” Osili said.

Overall giving rose 2% in 2020 compared to 2019 while online donations grew 21%, according to the Blackbaud Institute Charitable Giving Report.

Steve MacLaughlin, vice president, production management, at Blackbaud, visits this episode of the Fresh Research podcast to break down the data and what you need to know about 2020 giving. The report is based on $40.7 billion in giving to 8,833 nonprofits during 2020, including online giving of $3.2 billion to 4,964 nonprofits, via the Charleston, S.C.-based firm.

"There was a definite roller coaster ride in the data that we observed over time," MacLaughlin said. "But then we started to see a recovery in the third quarter of 2020, and then certainly the fourth quarter. The last sort of three months of the year were really positive," he said.

Fundraising at the largest organizations -- those that raise more than $10 million annually -- jumped 5.3%. Medium nonprofits, which have annual fundraising revenue between $1 million and $10 million, experienced a 1.2% increase in donations. The smallest nonprofits, annual fundraising of less than $1 million, were the only category to experience a drop from 2019 to 2020 -- down 7.2%.

For MacLaughlin, 2020 was all about online fundraising, which reached 13% of total giving and mobile devices accounted for 28% of the total. The average gift amount during 2020 was $737, up from $617 in 2019. Online average donations, which are more likely to reflect individuals than institutions, jumped to $177 from $148 in 2019.

"Certainly in 2020 was where we saw, you know, a significant shift -- I think really a pivotal moment -- for online giving," eclipsing 10% of overall giving. "As overall giving struggled, especially the middle part of 2020, online giving was really holding up the dam, if you will," he said, pointing out that as overall giving was down 8% in the second quarter, online giving was up 36%.

"For me, what happened in 2020 was digital adaptation. You didn't really have a choice. You didn't have a choice about your preference for Zoom or Webex or Teams or Slack or whatever you use for virtual meetings -- you just had to do it. So we saw this big shift. Certainly the shift also was consumer driven because in so many ways consumer behavior mirrors donor behavior because the common denominator is humans. And so as they shifted in the past to a lot more online experiences, you saw that shift as well with online giving."

Donor-advised funds (DAF) in 2019 continued their meteoric growth over the past decade and in the first half of 2020 -- amidst the coronavirus pandemic -- grantmaking by DAFs increased by almost 30 percent.

The 2020 Donor-Advised Fund Report is the most comprehensive data on donor-advised funds (DAFs) in the United States. The latest report, covering the 2019 fiscal year, showed a continued decade of growth across the board, exceeding $25 billion in grants for the first time.

Eileen Heisman, president and CEO of the National Philanthropic Trust in Jenkintown, Pa., joins this episode to discuss the 2020 Donor-Advised Fund Report and the  Donor-Advised Fund COVID Grantmaking Survey.

Published each year since 2006,  the latest DAF report showed:

In the past 10 years, the number of DAF accounts grew almost 300 percent while the value of DAF accounts averaged $162,556, a decrease of 2.7%.

The Donor-Advised Fund Report does not cover 2020. For that, we discuss NP Trust’s Donor-Advised Fund COVID Grantmaking Survey. It is the first sector-wide review of grantmaking from DAFs to charities in response to COVID-19, using self-reported data by 13 DAF sponsors at the end of 2020. Collectively, this group represents almost 50 percent of total DAF charitable grant dollars annually and includes national charities and community foundation DAF sponsors.

The survey shows that grantmaking to qualified charities increased by almost 30 percent during the first six months of 2020, to more than $8.3 billion. Every subsector but arts and culture -- down 9 percent -- saw a substantial increase in the value of DAF grants during the first six months of 2020.

During a discussion about DAF payout rates [20:12], Heisman refers to a paper by Dan Heist and Danielle Vance-McMullen that was featured on a previous episode of Fresh Research.