Monday, October 29, 2012

BIG’s Blog: The Beginning of the Big Decline?

People in general are resistant to change.

Institutions are resistant to change.

This does not bode well for institutions that are made up of people when there is great change going on.

Last week the Chronicle of Philanthropy published a news item reporting that analysis of a joint project by the Association for Fundraising Professionals and the Urban Institute reported that in 2011, for every 100 new donors that nonprofits recruited, they lost 107. You will no doubt read and hear more about this very significant piece of news from every nonprofit analyst and blogger in the days to come.

So here is my take.

This should not come as a surprise to my readers since the results of this study fit exactly with the narrative I have been laying out in these blogs for over two years.

First of all, I do not believe this is the result of the economic downturn. In fact, the same report shows that for every new $100 gained, in 2011 $100 was lost. This is bad news but significantly better than the average of the previous three years (2008, 2009 and 2010), which more closely correspond in time to the economic downturn. In those three years, for every $100 gained they actually lost $110 on average. At least in 2011 they broke even!

No, the more ominous news is the actual increase in donors lost. Philanthropy in the United States has been on a roll for the last 60+ years. But the unheralded cohorts who are the real heroes and who have sustained the philanthropic giving have been the Depression and World War II generations; otherwise known as the Great Generations, the term coined by Tom Brokaw.

These two generational cohorts trust institutions and they give to institutions. But beginning with the Baby Boomers, institutional trust is gone. The post WWII generations lived through social upheaval starting with the Boomers in the 1960s. Most nonprofit organizations have been over weighted with Depression and WWII donors for the last 30+ years, and for faith-based organizations…that goes double.

My take is that the decline in real numbers of these two significant cohorts to philanthropy is starting to show up in the statistics. And, unfortunately, this relatively small decline portends the beginning of increasingly large fall-offs in the years to come.

What can be done about this?

The good news is that study after study shows that the Baby Boomer, Generation X, and the Millennial generational cohorts are philanthropic. But older nonprofit institutions need to undertake dramatic measures in how they portray themselves and how they think about fundraising with these younger generations. Just because they have been successful for the last 50+ years is no guarantee they will continue to be successful using the same approach and methods they have employed in the past. But, alas, institutions are resistant to change.

One of two outcomes will happen to established institutions over the next decade. Either they will change and adopt new fundraising methods or they will see accelerated decline in fundraising revenue. It will be either/or; very black and white.

On the wall in my office are the words of an ancient Chinese curse: May you live in interesting times. It is a constant reminder to me of the times we live in. There is no doubt fundraisers live in interesting times. The question is, will they be able to steer their institutions through the change before it is too late?


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