Charitable Giving During a Global Pandemic

Spring of 2020 was a time of significant disruption to our daily lives and what we considered normal. COVID-19 has taken its toll on our health physically, spiritually, mentally, and financially. This crisis came as a shock for most people as our communities shut down, and we were physically distanced from others. It changed all areas of our life.

Frontline and essential workers continued at their place of employment facing struggles of their own with health and safety risks and childcare since schools and daycare facilities closed. Many parents became remote employees, childcare providers, and homeschool educators all at the same time. There was no time to prepare for this unexpected event. It just happened.

While other people lost their job as employers were forced to cut their workforce as businesses shut down to reduce the spread of COVID-19. As a result of the high unemployment rate, many people struggled to make ends meet and found themselves needing assistance. Nonprofit organizations providing food and other basic needs experienced an increase in those needing help. Many of whom had not previously requested these services.

In addition to this increased demand, nonprofit organizations found themselves looking for new ways to meet the needs of the people and continue fundraising to meet these needs. No longer were fundraising events being held in-person. Events were canceled after months of hard work and preparation. It was challenging and took time to figure out a way through the storm.

Here are a couple of key findings from early 2020 from the Lilly Family School of Philanthropy.

  • Around one-third of U.S. households gave directly to charitable organizations, individuals, or businesses in response to the COVID-19 pandemic during the initial months of the crisis.
  • Nearly half of households gave indirectly in response to the pandemic during the early months of the crisis (for example, by ordering takeout to support restaurants and their employees or continuing to pay individuals and businesses for services they could not render).

As 2020 moved through the year, people continued to give to nonprofit organizations. The fear was that people would stop giving, and then where would the resources come from to help all the people out of work. Many organizations asked how to fundraise and ask people for money when they could be out of work or struggling with new life issues. Being sensitive to the needs of donors created a challenge in fundraising, and many nonprofits didn’t fundraise well for months.

Bloomerang recently published a blog with some 2020 giving facts that surprised me and encouraged me simultaneously. There is hope, and people care about each other and want to help others.

“Giving during the pandemic did not go down; it increased, albeit modestly.

Giving USA 2021, produced by Giving USA Foundation and Indiana University Lilly Family School of Philanthropy, reports total giving grew 5.1% on a year-over-year basis in 2020 (3.8% adjusted for inflation).

Here are a few 2021 key findings from the report to help us retain and upgrade nonprofit donors:

  • Giving by individuals increased 2.2% (1% adjusted for inflation), even as its share of total giving remained below 70% for the third consecutive year.
  • Giving by bequest increased 10.3% (9% adjusted).
  • Corporate giving, cash, and in-kind fell 6.1% (-7.3% adjusted), presumably due to losses and/or income uncertainty.
  • Giving by foundations jumped 17% (15.6% adjusted), presumably due to growth in the S&P 500 in recent years and how the 2020 market recovery positioned foundations to respond to the impetus to distribute more during a time of pressing needs.

Giving was unevenly directed; donor perceptions of greatest need had an impact.

In terms of issue area, giving to:

  • Public-society benefit organizations grew 15.7% (14.3% adjusted for inflation)
  • Environmental and animal welfare groups grew 11.6% (10.3% adjusted)
  • Human services organizations grew 9.7% (8.4% adjusted)
  • International affairs-related causes grew 9.1% (7.8% adjusted)
  • Foundations grew 2% (0.8% adjusted)
  • Health organizations fell 3% (-4.2% adjusted) in part due to declines in revenue from fundraising walks, runs, and other events.
  • Arts, culture, and humanities fell 7.5% (-8.6% adjusted).

Giving was unevenly sourced; wealthier donors were more insulated from pandemic effects. The effects of the pandemic and the ensuing economic shock disproportionately affected households. Some may have had a greater capacity to give charitably than households and communities that struggled financially.

Despite these documented leaps in giving for 2020, many nonprofits are now wondering about giving patterns moving forward. The Fundraising Effectiveness Project (FEP) noted that while 2020 saw an overall increase in giving, that year’s donor retention rate dropped by 4.1 percent.

Moving forward with how to retain and upgrade nonprofit donors in mind

Take heart: When times are tough, the tough get giving. 

Per the FEP’s report, in 2020:

  • The overall number of donors grew by 7.3%.
  • New donors were up by 18.5%.
  • Recaptured donors (whose last gift was two or more years ago) were up nearly 14%.
  • Total giving in the United States increased by 10.6%.

Check your gut: Donors are still giving up at rapid rates.

That punch-in-the-gut feeling you have that you’re losing as many donors as you’re gaining is real. Per the FEP, donor retention rates (which have been falling at least since 2006, the first year of the FEP) continued to fall last year. This was true for all types of donors in 2020, regardless of recency or frequency.

  • The overall donor retention rate was 43.6%, a 4.1% drop from the 2019 rate of 45.4%.
  • The first-time donor retention rate dropped 9.2% to an average of 19.2%. Moving donors from their first gift to their second continues to be a chronic issue for the sector.”

GivingTuesday has some suggestions for engagement opportunities to continue into the coming year.

  • Explore options for cultivating mid-size donors. They showed a decline in their giving, but giving from small and supersize donors grew substantially.
  • Offer more opportunities for donors to give additional gifts over time. When donors are given good reasons to give again, they will do so! It doesn’t take a pandemic to make this work, but it will require being proactive in sharing compelling opportunities with donors.

Some people don’t have the finances available to donate but are happy to volunteer their time.  While in-person volunteering opportunities have been difficult to find. Even if the opportunity wasn’t through a nonprofit organization, many people have helped a friend or neighbor during these challenging times.

Volunteering has many positive benefits on the mind and body, some of which include connecting you to others, reducing the risk of depression, advancing your career, and bringing fun and fulfillment to your life. Of these, my favorite is knowing that there is a relationship between volunteering and happiness. The London School of Economics examined this relationship and found the more people volunteered, the happier they were. I know I am a happier person when I volunteer, especially when volunteering with friends or family.

I encourage you to regularly reach out to volunteers and donors with opportunities for them to continue to feel involved and appreciated by your nonprofit organization.

We’d love to hear your thoughts on how fundraising and volunteering has gone for you in the past months. Do you have success stories to share?

We have many ways we support nonprofits. If you find yourself needing some extra help, you can check out our services here.