This article on the Barron’s website caught my eye this week. In this piece, Eric Grossman goes deep on new research from our good friends at Indiana University’s Lilly Family School of Philanthropy. The research was designed to explore the charitable giving by race and ethnicity and and found that all racial and ethnic groups are experiencing declining rates of giving.
This report, part of the "Everyday Donors of Color" research series, notes a significant drop in household giving from 2000 to 2018 and examines how various factors, including economic shocks and changes in trust, affect giving rates among different groups. This trend, coupled with the evolving nature of philanthropy and the rise of digital fundraising, presents both challenges and opportunities for smaller nonprofit organizations. So, what are some the challenges that the report is showing facing smaller nonprofits and what are some productive ways these smaller nonprofits can battle back these trends? That’s the focus of today’s Pinnacle Strategies newsletter!
Challenges for Smaller Nonprofit Organizations
Declining Donor Base: The overall decrease in the percentage of households giving to charity directly impacts the potential donor base for smaller nonprofits. They may struggle to maintain or grow their funding, especially if they have historically relied on small-scale, individual donors.
Economic Sensitivity: Smaller nonprofits might be more vulnerable to economic downturns, as donors from communities of color, who are often disproportionately affected by financial shocks, may reduce their giving.
Trust Issues: The decline in interpersonal trust noted in the report suggests that smaller organizations need to work harder to build and maintain trust with potential donors, a process that can be resource-intensive.
Diverse Giving Preferences: Understanding and adapting to the varied ways in which different communities practice generosity requires nuanced strategies that might be challenging for smaller organizations with limited resources.
Opportunities for Smaller Nonprofit Organizations
Culturally Relevant Engagement: Smaller nonprofits often have the agility to develop more personalized, community-centric approaches. This can be a significant advantage in engaging donors of color in culturally relevant ways.
Digital Fundraising: The rise of digital fundraising and recurring giving, particularly among younger donors, presents an opportunity for smaller nonprofits to reach a broader, more diverse donor base.
Building Trust: Smaller organizations can focus on building long-term relationships with donors, emphasizing transparency and accountability to foster trust.
Innovative Fundraising Models: The exploration of giving circles, funding collaboratives, and partnerships with culturally relevant institutions can be more feasible and effective for smaller organizations.
Implications and Strategic Responses for Smaller Nonprofits
Diversifying Funding Sources: To mitigate the impact of declining individual donations, smaller nonprofits should explore diverse funding sources, including grants, corporate sponsorships, and innovative fundraising models.
Community Engagement: Building strong ties with the communities they serve can help smaller nonprofits understand and align with the giving preferences and values of diverse groups.
Embracing Technology: Adopting digital tools for fundraising and donor engagement can help smaller organizations stay relevant and appealing to a broader audience, especially younger donors.
Education and Awareness: Nonprofits should educate their staff and volunteers about the diverse traditions of generosity in different communities, ensuring that their approaches to fundraising and donor engagement are respectful and inclusive.
Focus on Impact: Demonstrating clear, tangible impacts of donations can strengthen donors' trust and commitment, particularly important in a climate where trust in institutions is declining.
Collaborations and Partnerships: Forming partnerships with other nonprofits, community groups, and businesses can amplify impact, share resources, and broaden donor reach.
The Weekly Notebook
A few notes and ideas of things I am seeing and hearing on the nonprofit world.
Now Hiring!
If you or your nonprofit would like to advertise a job opening here, please shoot me an email at pinnaclestrategiesltd@gmail.com. We have a large and growing base of readers and we are happy to get the word out!
How Can We Work Together?
Did you know that Pinnacle Strategies works individually with nonprofit and public sector leaders to help them solve problems, achieve goals and gain confidence in their roles?
Why?
Because, this work is hard and it’s often a lonely road. Our nonprofit and public sector leaders need people that they can talk to to get solid advice and encouragement to do the work that is in front of them. If you feel that this can be of value to you, or a member of your team, please reach out to pinnaclestrategiesltd@gmail.com and let’s talk.
Ready to Learn Something New?
One of the prettiest cities in the Midwest is Indianapolis and travelling there can open a perfect opportunity to sharpen your skills and meet new professionals in the field. I would encourage you to look at some of the offerings of The Fund Raising School at the Lilly School of Philanthropy at Indiana University’s campus in Indianapolis. The professional development school has great programming both on-line and in-person both in Indianapolis and at other sites across the country. Take a look at their course offerings here!
Online Learning Options from Texas A&M Announced
If travelling for professional development isn’t in the cards (or the budget), the Center for Nonprofits at Texas A&M University has some great offerings! I recently enrolled in one of their certificate programs and really enjoyed the online format and the online discussions that were developed. It was time and money well spent and I would highly recommend this program, especially for early or mid-career professionals. The next session begins in early February and you can learn more here!
Other Ways to Connect
Our coaching practice has openings and it has been a blast working with nonprofit leaders all across the country! If you are interested in working with me to get your nonprofit organization on a track to achieve the big missions you have, please reach out to me at pinnaclestrategiesltd@gmail.com.
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