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Growing Philanthropy: New Audiences, New Channels (Part 3 of 3)

Charitable giving is estimated to be only 2 percent of average household disposable (after tax) income in the U.S. This number has remained unchanged on average for the past 40 years. A new report called “Growing Philanthropy,” based on a recent summit of nonprofit leaders, offers ways to change how nonprofits approach fundraising. AFP will present the recommendations in a three-part series.

(Nov. 22, 2011) Part three in our series on Growing Philanthropy highlights some of the most promising new avenues for increasing giving.

Based upon the comments of the participants in the Growing Philanthropy Summit held in Washington, D.C., this past June, Adrian Sargeant and Jen Shang of Indiana University first recommend monthly giving as an avenue with strong potential for growth.

Recommendation: Encourage the adoption of monthly giving

The wider adoption of monthly giving (also known as regular or sustained giving) in the U.S. could itself transform philanthropy, say Sargeant and Shang. The lifetime value of supporters giving in this way is estimated to be 600-800 percent higher than the cash or annual alternative (McKinnon, 1999), and young donors regard monthly giving as more convenient and environmentally friendly.

Recommendation: Improve the sector’s engagement with young people

To better connect with young people, the focus should be on engagement, not donations, recognizing that while many young people are not in a position to give cash, this is in no way a reflection of their interest in charitable causes.

Recommendation: Encourage and promote best practices in social media

There remains a significant opportunity to grow giving and develop supporter engagement through social media, say Sargeant and Shang, who believe that it may be expanded beyond the 11 percent of total online giving it currently represents. “Social media is particularly powerful because it adds value to the supporter relationship, stimulating other forms of engagement that move well beyond the cash support of a particular campaign,” they explain.

Recommendation: Encourage asset-based giving

It’s estimated that the average American’s wealth is comprised of only 7 percent cash. The other 93 percent is made up of stocks and non-cash assets such as real estate, business interests, and various types of valuable personal property. 93 percent of a person’s giving potential is therefore through their assets and largely untapped by fundraisers who continue (in the main) to ask for cash. The Summit called for the fundraising sector (through its educational programs) to develop greater financial literacy to facilitate more meaningful conversations with donors.

Recommendation: Improve the quality of bequest fundraising practice

While over 80 percent of Americans will support the nonprofit sector during their lifetimes, only around 8 percent of them will do so on their death, note the authors, who argue that every category of supporter should be encouraged to consider a “bequest” or “gift in their will.”

Recommendation: Challenge the wealthy to plan their own philanthropy

Rather than focus on a fixed percentage, many of the summit participants felt that the best way of increasing giving would be to encourage the wealthy to think through for themselves what might constitute an appropriate portion of their wealth to give away. Self-discovery, rather than the “scolding model” is recommended.

In the end, these new ideas are a framework for building long-term, even lifetime support, and do so using new technology but also underutilized giving forms such as bequests. Forming a real and fruitful relationship means working on building a genuine connection, whether that person is young and able to give only modestly (if at all) or among the nation’s wealthiest.

The recommendations of the report Growing Philanthropy in the United States are based on a summit held in Washington, D.C. in June 2011 with 35 leading U.S.-philanthropy experts, including nonprofit leaders, technology suppliers, consultants and executives from foundations and associations. To download the full report, click here.

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