Drakes Bay Fundraising
A Next Generation Fundraising Company

Archive for July, 2011

Less Exploitation, More Engagement

Posted by Christopher Dann
Friday July 29, 2011
Categories: Fundraising

No one understands estate giving more and explains it better than Robert Sharpe Jr. We try not to miss his conference sessions, and he spoke a few weeks ago during the Public Media Development Managers Conference in Pittsburgh.

In the course of profiling those whose ages make them the best prospects for effecting legacy gifts, Robert used the term “geriatric fundraising.”  It’s a term worth special attention as we watch donor bases age.

We ought to consider a spectrum of donor experience management on one end of which is exploitation and on the other end of which is engagement. At the center of the spectrum we could usefully put benign neglect. Then we should examine all our fundraising and donor relationship management practices, scoring each one along that spectrum.

Robert talked about some of the practices of benign neglect, like calling “lapsed” or “expired” those who have supported faithfully for many, many years but not responded in fifteen months or so, and our failing to check in on them.

And if we really want to move toward engagement, we should take carefully into account the increasing probability that our donor is in someone else’s care and suffering dementia. There are, after all, some 8.5 million Americans today suffering some degree and form of dementia, 60% of them fatal Alzheimer’s disease.  That incidence is rising right in line with our aging population.

Change in charitable tax deduction appears inevitable

Posted by Christopher Dann
Thursday July 21, 2011
Categories: Research

While it will be impossible to know with any reasonable degree of certainty for many months what changes will be made, let alone predict its impact on giving, we know enough to start contingency planning.

What’s on the table in Congress and at the White House is the Deficit Reduction Commission’s proposal that the charitable tax deduction be transformed to a 12% tax credit for giving above 2% of adjusted gross income (AGI).

We’ve reported earlier that the Bureau of Labor Statistics has documented in its Consumer Expenditure Survey for 2009 that the lion’s share of household giving – about 2/3rds – comes from households headed by people over 45.  Overall average annual household giving from that sector was approximately $2,100 in 2009 and is probably about that still. So to get a tax credit, these households would have to have an average AGI of $105,000.

These facts offer persuasive rationale for learning the age and income characteristics of one’s donor base, if you haven’t already.

While we have no idea at this point what else tax code reform might do to affect the average AGI (such as the elimination or reduction of mortgage interest deductions on second homes), we at least have a starting point for worst-case scenario planning. That planning should take into account, if only for making footnotes, this probability: if the Congress and the White House bite the bullet on eliminating the charitable deduction, states will surely follow suit. The impact depends, of course, on variable state tax burdens.

Only a fool would predict the impact on giving of this change in treatment of charitable giving for tax purposes. There are no definitive data. Most Americans have not availed themselves of the charitable tax deduction. While there is no doubt that the share of total giving attributable to those who have used the deduction is enormous, there has also been no definitive study of the importance of tax-deductibility on giving among those committed to substantial philanthropy.


Harbingers of Fundraising Trends

Posted by Christopher Dann
Tuesday July 12, 2011
Categories: Consumer Confidence Index, Fundraising

All giving comes from discretionary income (or it doesn’t come at all!). That’s why we pay such close attention to the Consumer Confidence Index. Some academics in the past have disputed the correlation, but we’re convinced the Index gives clear insight into how consumers are likely to be spending discretionary income.

The latest Bureau of Labor Statistics Consumer Expenditure Survey offers, we think, reasonable evidence.  The CCI has been in the cellar since the Great Recession started and has stayed there since those who presumed to know declared the recession’s end. Here, then, is a selection of items from the BLS survey that we’d characterize as objects of discretionary spending, and here’s what happened to them from 2006 to 2009:

Item % Decline in Spending
Food away from home –   8.6%
Alcoholic beverages – 17.8%
Household furnishings and equipment – 17.1%
Apparel – 13.5%
Vehicle purchases – 27.0%
Reading materials – 11.7%
Cash contributions –13.4%





We’re fairly certain that for most people, the restoration of most or all those items preceding cash contributions will precede the restoration of their giving unless nonprofit organizations figure out how to compete more effectively for discretionary income. Even so, watching for the upswing of items like dining out, new car purchasing, and furniture is, we think, a good way to foresee the upswing of giving.

By now, most in our field should know that an organization’s need is irrelevant; what’s relevant is its case for support, what needs to get done and can’t get done without the renewed support of donors.


Recession Bites Assets

Posted by Christopher Dann
Thursday July 7, 2011
Categories: Focus Groups, Research

Blog #10

Recession Bites Assets

If Gretchen Morgenson’s Reckless Endangerment hasn’t closed your eyes and ears to anything the Federal Reserve may say from now on, there are data from their report, Aftermath of the Storm: Family Finances from 2007 to 2009¹, worth the while of fundraisers and nonprofit financial management executives.

The Fed’s surveys of household finances are usually conducted every three years. But the Great Recession prompted them to re-interview 2007 survey respondents.

The report documents that overall median household net worth fell 23.4% from 2007 to 2009.

Here are data selected particularly with nonprofit organization interest in mind:

Demographic ‘09 Median % Change from ‘07
Select Age Ranges
35 – 44 $69,400 – 28.5%
45 – 54 $150,000 – 25.9%
55 – 64 $222,300 – 13.7%
65 – 74 $205,500 – 11.7%
75 or older $191,000 – 16.6%
College degree $294,600 – 17.2%
Homeowner $244,800 – 21.3%


Thanks, again, to New Strategist (www.newstrategist.com) to bringing this to our attention.



The Smart Donor

Posted by Christopher Dann
Tuesday July 5, 2011
Categories: Fundraising

Almost all today’s donors who went to college and who are in their prime time of giving – those between the ages of 50 and 651 — graduated college between 1968 and 1983. Two very important things were happening during those years and they were bound to have major impact on the demographic character of today’s donor marketplace.

First there was a fast-paced evolution in higher education that some have termed the democratization of American higher education.  David Brooks wrote about this in his BOBOS in Paradise, noting that in 1960 there were 2,000 institutions of higher learning in the country and by 1980 there were 3,200.  There were 235,000 college professors in 1960 and 685,000 in 1980.

Second, the passage of the Civil Rights Act of 1964 and establishment of the Equal Employment Opportunity Commission the following July were to have their intended influences on the greater and eventually better remunerated employment of women. David Brooks also noted that while the number of women enrolled in college increased 47% from 1950 to 1960, it increased an additional 168% from 1960 to 1970.

The more women with more money, the better off the nonprofit sector would be by the time they reached their years of maximized earnings and discretionary income. That is, provided the institutions of the nonprofit sector could engage better educated and better heeled women in support of its values and causes.

Much as we like to think otherwise – and, alas many who should know better do think otherwise – sustained financial and voluntary support of nonprofit organizations apart from places of worship are activities practiced by an elite subset of our society, and education is what makes them elite.

Education is also the principal determining factor of financial capacity. So it provides both motive and means to engage in financial support of nonprofit organizations.

In its latest edition of The American Marketplace – Demographics and Spending  Patterns – 10th Edition2 New Strategist editors reference the Bureau of the Census 2010 Current Population Survey and note that college graduates in 2009 had more than twice the median household income of high school-only graduates and accounted for 76 percent of all households with incomes of $200,000 or more. And the higher the degree, the greater the household income. At the top of education attainment, those with professional degrees, median household income was 50% higher than it was for those headed by those with just bachelor’s degrees.

Looking further in The American Marketplace, 2009 data from the Bureau of Labor Statistics’ Consumer Expenditure Survey we see that households headed by people with bachelor’s of higher degrees made cash contributions 74% above household average and accounted for a 51% share of all household cash contributions.

Thirty-one percent of householders 25 or older have at least a bachelor’s degree.  But in studies we conducted the 2007 we found 64% of Red Cross chapter donors were college graduates, even though 62% were then over 65 years old. Also in 2007 we saw that while more than two-thirds of public television station retained members were over 65, 73% of them had college or advanced degrees.

Just four years later, with more of those graduates moving into the prime age range of giving, we have found a public radio station membership with 91% graduated from college and a cultural/educational institution – despite having 42% of its retained members over 75! – with 81% college having graduate college degrees and an astounding 49% having earned doctorate degrees.

And, yes, this group we are focusing on, those between the ages of 50 and 65 this year, are also Boomers.  While education doesn’t necessarily define who a Boomer is, it obviously does tend to define who a donor is.  But, as J. Walker Smith and Ann Clurman pointed out many years ago in their seminal report and book on generational marketing, Rocking the Ages, generations don’t change with age, ages change with generations. And Boomers began to show their stars and stripes before they got to college.

So we have more than education with which to reckon as we think about engaging the loyal support of people now in their prime age of giving. We have education plus the idiosyncrasies of what the Yankelovich folks called the cohort experiences of this generation.

In his book Change by Design, Tim Brown offers an almost perfect metaphor for the challenge nonprofit organizations face, and the bigger and older the nonprofit, the more apt the metaphor is.  The passage is worth quoting in its entirety:

As consumers, we are making new and different sorts of demands; we relate differently to brands; we expect to participate in determining what will be offered to us; and we expect our relationship with manufacturers and sellers to continue beyond the point of purchase. To meet these heightened expectations, companies need to yield some of their sovereign authority over the market and enter into a two-way conversation with their customers.

Take that advice and apply it to a situation in which engagement is entirely voluntary and in which the person you want to engage is very smart and you will have achieved the focus of mind required of today’s fundraising.

1 This is the age range of highest discretionary income.  For a copy of our “Client Advisory on Discretionary Income” please request a copy in the comments section.

2 2011, New Strategist Publications, Inc., Ithaca, New York, www.newstrategist.com

Next Generation Fundraising and Drakes Bay Fundraising merged in the fall of 2013, bringing the longstanding professional acquaintances of their four principals – Tim Oleary, Carol Leister, Cindy Germain, and Christopher Dann – into a single company and combining the special resources and experiences of each to provide clients greater breadth and depth of service.

For more information about Next Generation Fundraising, click here.