Cultivating Young Donors Promises Big Returns Someday, Survey Finds

Charities will find it increasingly difficult to secure reliable streams of income if they fail to adapt to the changing demands of younger donors and evolving technologies, according to a new survey.

It’s become harder to recruit new supporters in recent years, the annual survey found. Donors have become less responsive to mass solicitations made via direct mail, email, and telephone—and they tend to support fewer causes as they age. Meanwhile, social media, the preferred communication mode for donors under age 35, have yet to generate significant fundraising returns.

Still, adding to the pressure on fundraisers, charities can no longer afford to ignore social media. If they do, they risk missing out on future donations from young people whose ability to give will improve as they earn more and replace baby boomer donors who are retiring in increasing numbers.

The survey findings are included in a report by Cygnus Applied Research, a consulting company that serves fundraisers.

Young donors whose best-earning years are still ahead show remarkable promise philanthropically, the researchers found. More donors under 35 (46 percent) said they plan to increase their gifts to charity this year than donors aged 35 to 64 (30 percent) and donors 65 and over (21 percent). Donors under 35 are also more willing than their older counterparts to support new causes and rally others to do so.

“Charities need to invest in young donors today without expecting an immediate payoff,” says Penelope Burk, who wrote the study. If charities form relations now with potential donors under 35, she added, “they will be at the front of the line in five to seven years.”

Board Room Culture

Ms. Burk and her colleagues suggest several ways for charities to engage people under 35. Among them: Recruit young people to serve on nonprofit boards. Moreover, charities need to add a group of young trustees because “it’s too easy to sideline one or two young people on a board,” says Ms. Burk.

The report also recommends that nonprofits form committees of people under 35 to design and hold fundraising events, increase volunteer opportunities for young people, and hire fundraisers age 34 or younger to engage their peers. “Don’t just hire them to carry out rote tasks,” Ms. Burk says.

The survey conducted for the report, the sixth of its kind, received responses from 16,847 American donors to 63 questions assessing their giving habits and preferences.

More than half of the donors in the survey, 55 percent, expect to give about the same this year as they did last year. In an encouraging sign for the coming year-end giving season, four times as many donors said they will contribute more this year, compared with those who said they will give less in 2014.

While response to mass fundraising appeals is waning, direct mail is still a valuable tool for many charities, Ms. Burk says. Evidence shows that more than a third of donors who receive a direct-mail solicitation later make a gift online to that charity, she says. And direct mail remains the most popular fundraising vehicle, according to the new survey, with 43 percent of donors reporting that they made at least one gift in the mail last year.

Because it’s so difficult to tease out the effects of different solicitation methods, Ms. Burk and her colleagues say that charities should resist evaluating their development officers based solely on the type of fundraising they do, such as direct mail, and the expectation that donations will go up every year.

“New technologies are making some solicitation methodologies more popular and others less so,” they write. “Guide staff towards a more collaborative approach. That will make it possible to raise more money.” That advice is one of many things that Ms. Burk recommends in an earlier book, released last year, about what charities can do to recruit and retain fundraisers.

Fostering Collaboration

One simple way to foster collaboration, Ms. Burk says, is to evaluate fundraisers based on whether contributions from all sources increase. “What causes donors to say ‘Yes’ is less important than the fact that money is coming in,” she says. What’s more, she adds, collaboration among fundraisers, rather than competition for donors, is what prompts supporters to graduate from making modest gifts to bigger contributions.

Along with age, religious beliefs accounted for the biggest differences among donors in the survey. Donors who said they were “actively religious”—that is, members of an organized religion who practiced their faith on a regular basis—gave more than double the amount given by others who defined themselves as either nonreligious or “spiritual.”

However, philanthropy could be negatively affected in coming years because the number of people who actively participate in organized religion is shrinking. In the survey, 45 percent of donors age 65 or older said they were actively religious, but only 32 percent of donors under 35 did.

Among the survey’s other findings:

• Donors’ participation in marathons, bike-athons, and other charitable athletic events that involve raising money for a cause is stable or growing.
• There is room to increase the number of monthly gifts; just 30 percent of donors said they give that way.
• Donors who give away $10,000 or more annually were less likely than other donors to say they’ll contribute more this year. As the holiday giving season approaches, charities “may need to focus more on rising gift values among their ‘second tier’ generous donors, as those at the highest giving levels appear to be somewhat less likely to give more in 2014,” the researchers write.
• As in previous years, donors have increasing intolerance for charities that bombard them with solicitations. Among donors who said they’d stopped giving to one or more charities in the past two years for reasons not related to personal finances, 68 percent said oversolicitation was the reason, up from half of donors who stopped giving for that reason in the 2013 survey.
• High fundraising costs were increasingly irritating to donors, with 58 percent of those who stopped giving citing such overhead costs as the reason, up from 20 percent last year. However, nearly half of donors could not define what an appropriate fundraising cost would be. Among the others, the average response was that charities should spend no more than 15 cents to raise a dollar.

Despite donors’ growing irritation with too-frequent solicitations and high fundraising and overhead costs, Ms. Burk and her colleagues caution charities against cutting fundraising budgets and shrinking staff levels.

Instead, charity leaders should try to correct imbalances in spending too much time and money on mass solicitations at the expense of major and planned gifts, which have a much lower cost relative to the returns they generate.

An electronic version of the complete 2014 Burk Donor Survey is available online. The executive summary is free but the full report costs $75. The annual surveys for the past six years—which cover topics such as how donors respond to different numbers of contacts—are available for $149.