Understanding a Changing Fundraising Environment
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Submittable sits down with Jeremiah Stevens, director of development for the Advocate Charitable Foundation, to discuss current fundraising trends and their impact on the giving landscape.
With big changes in public policy, tax law, and economic conditions, corporate foundation trends and corporate social responsibility (CSR) strategy are also changing as we enter 2020.
In response, foundations that have traditionally sought a broad donor base and secured annual and unrestricted giving must shift tactics. Additionally, where foundations might have previously operated alone, some social, economic, and environmental issues have become too large for any one foundation to tackle. This has spurred private foundations to collaborate with public, private and social organizations—a change that’s also impacting the new direction many foundations are moving toward.
Jeremiah Stevens, who serves as the director of development for the Advocate Charitable Foundation, has almost 20 years of experience in giving. He has a number of important insights on the shifting giving landscape that others can use to increase the impact of their corporate foundations and to understand current corporate foundation trends.
Submittable sat down for a chat with him.
How is foundation giving changing in 2020, and why?
Jeremiah Stevens: There is an increasing focus on major gifts. As the 80/20 rule moves to the 90/10 rule, and in some foundations, 95/5, the payoff for doing broad-based democratic appeals is decreasing.
Additionally, the public focus on the cost-to-raise-a-dollar metric means foundations are getting leaner and focusing on the big payoff. The result is a lot more focus on destination programs and specific projects, and less focus on annual giving and unrestricted funds. The struggle for foundation representatives becomes identifying and cultivating these top prospects without the strong annual giving acquisition team. In previous years, these were the teams that helped identify new names.
From the donor side, we see more giving from donor-advised funds and foundations, which can add a layer of complexity to the process and a certain distance from the donor, which inhibits building deeply personal relationships that lead to transformative gifts.
How do recent changes in tax laws affect foundation giving?
JS: We are seeing a small decrease in mid-level gifts, but it’s too early to tell if it’s a normal ebb and flow, or if it is indicative of a systemic change. There’s a lot of fear that people will no longer give if there’s no tax break. Personally, I find that to be unfounded because anyone who is giving below the new maximum probably wasn’t heavily dependent on the deduction anyway. Mid-level donors typically are happy to take the tax break, but they are usually giving out of commitment to the organization.
What conversations are happening about foundations’ priorities and new trends in giving?
JS: As donors become more sophisticated, and as information becomes easier to access, we see more donors wanting to be a part of decision-making processes for their gifts. We have also seen a growth in interests in partnerships between organizations.
The donor base is shrinking, but donations are increasing. Why is this happening, and what does it mean for foundation giving?
JS: The donor base is shrinking in part because organizations are forced to reduce their outreach efforts in order to maintain a cost-per-dollar ratio that is acceptable to board members, donors and the public.
Further, as the success of fundraising campaigns centralizes in the hands of a few, there is decreasing incentive to focus on the base. The downside of this trend is that we are not cultivating the next generation of donors. Smart organizations are, at minimum, investing in junior boards and auxiliary boards to engage millennials.
We are on the verge of the greatest generational transfer of wealth to happen in history, and if organizations want to gain a portion of that, they are going to need to have cultivated the children as well as the parents.
Corporate Foundation Trends in 2020
The ongoing changes in the social and economic spheres directly impact corporate foundation trends and corporations’ decisions about how to raise money and where to allocate it. This means foundations have to be nimble on their feet. As a rule of thumb, foundations should ensure that they have solid data to support intended goals and data to show the foundation’s impact. Foundations with a narrower project or focus will find it easier to show the benefits of their giving. And by partnering with other foundations, nonprofits or social organizations, the impact of foundation giving may increase exponentially.
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