The Forecast for Fundraising
January 11, 2022
When the pandemic struck, school leaders feared the impact on long-term sustainability would be harsh and swift—enrollments would plunge, fundraising would decline, and endowments would plummet. Two years into this changed landscape, school outcomes vary, but our worst financial fears as an industry were not realized.
The toll on mental and physical health, though, has been brutal. As we turn the page on 2021, community health and well-being and student learning supports are top of mind for school leaders, particularly amid another COVID-19 surge. At the same time, leaders must always keep long-term sustainability at the forefront, particularly now, as we face another uncertain year and a complex decade ahead. One important pillar in that is charitable giving. Will it sustain us at the same levels? Will giving to endowments and financial aid continue so that we can nurture institutions and their people?
A Look Back at 2020
The results from 2020 are promising. The human need to help took center stage during the first year of the pandemic. According to Giving USA’s 2021 year-end report, the strong stock market and collective spirit of generosity made 2020 the “highest year of charitable giving on record.” Not surprisingly, giving to human service organizations, those focused on areas like hunger and other basic needs, were a huge recipient of the largesse, receiving nearly 10% more than in 2019 (8.4% when adjusted for inflation). Giving to education was also up 9% (7.7% when adjusted for inflation) and strengthened by very large gifts, such as MacKenzie Scott’s unrestricted gifts to more than 20 historically Black colleges and universities.
According to Blackbaud Institute’s May 2021 “Charitable Giving Report Spotlight,” giving to K–12 education was down by 4.6% as donors focused their attention on other types of organizations. However, NAIS Data and Analysis for School Leadership (DASL) data shows that member schools had a near record year in 2020, with median giving per student averaging $4,520. 2021 is on track to be another strong giving year for education, but there is still plenty of uncertainty in the market that could disrupt that course. In a February 2021 blog post exploring the outlook for charitable giving in 2021 and 2022, the Lilly School of Philanthropy forecasts that total charitable giving will increase by 4.1% in 2021. According to the Fundraising Effectiveness Project’s 2021 Second Quarter Fundraising Report, the results from the first half of 2021 were on track to exceed 2020, with the estimated number of donors increasing by 0.7% compared to the same period in 2020, and the total amount donated rising by 1.7%. Given that December is the most popular month for giving and that the Omicron variant caused turmoil in the stock markets midmonth, we will not know the final results for some time.
A Look Ahead at 2022
Looking forward, what can we project about the strength of philanthropy in 2022 and beyond? Will donor fatigue set in? As the pandemic continues, will donors stay loyal to schools or switch their focus to more basic human needs?
In a December 2021 blog post for Giving USA, Jessica Browning, principal and executive vice president at Winkler Group, predicted that because of the projected growth of the stock market in 2022, giving will likely be strong. She also noted some other promising trends, including enhanced donor interest in long-term organizational sustainability. This presents a huge opportunity for schools to grow their endowments, but Browning warns that this trend may be short-lived; fundraisers will need to make a compelling case for why endowment giving needs to be a priority over the long term.
Browning also forecasts that the trend of fewer donors and larger gifts will continue for the foreseeable future. Midlevel giving has suffered since the enactment of 2017 tax laws; however, if proposed Biden-administration tax law changes come to pass, there may be new tailwinds for giving. For example, proposed capital gains tax increases could provide a huge incentive for donors to increase their charitable giving.
Another promising trend is philanthropic collaboration to accelerate giving and to push for reforms that could spur increased giving overall. The Giving Pledge, a campaign to encourage the world’s wealthiest individuals and families to dedicate their wealth to charitable causes, has been around since 2010. Fourteen additional philanthropists joined the group since December 2020, bringing the membership to 231 worldwide.
More recently, The Initiative to Accelerate Charitable Giving, a coalition of philanthropists, leaders of major foundations, and charities and nonprofits, was founded to fix the inefficiencies in tax law that keeps charitable dollars from the organizations that need them. Currently, they have three major priorities:
For private foundations: Close loopholes to better ensure that distributions qualifying for the payout requirement are available for use by working charities, and incentivize greater payout through reforms to the excise tax.
For donor-advised funds (DAF): Adopt measures to make sure that DAF accounts are distributed to working charities within a reasonable time.
For individuals: Incentivize greater giving by expanding and extending the new non-itemizer charitable deduction in a cost-effective way.
Although these trends are promising, there also are some headwinds advancement offices need to face and act on if we are to sustain our people and programs over the long-term.
Action Items for School Leaders
Staff turnover: We began to experience a shortage of fundraising staff after the Great Recession, and it has only intensified over the past decade. A 2021 study conducted by fundraising consultancy DickersonBakker found that, among the nation’s nonprofits, turnover among fundraising staff is a persistent problem, with more than one out of every four fundraisers staying in their jobs 18 months or less. According to the report, many nonprofits are struggling to fill open positions, with 30% reporting current vacancies in their fundraising teams. A 2019 Chronicle of Philanthropy study identified major drivers of staff turnover including people feeling tremendous pressure to succeed, little appreciation for their work, and an overall feeling of burnout.
Action step: School leaders should work to assess and address burnout in their communities—what it looks like, how prevalent it is, and so on. The Maslach Burnout Inventory is a great tool for understanding causation and targeting remedies.
Scenario planning: Accelerated change and a volatile economy will be our context for the foreseeable future. Traditional strategic planning may no longer be up to the task of helping leaders navigate through a complex landscape. If school fundraising professionals are to be effective in this context, they must engage in and incorporate scenario planning into their work.
Action step: There are many good scenario planning resources and frameworks available. The nonprofit consulting firm Bridgespan Group offers a user-friendly scenario planning toolkit to get started.
Polarization: Schools are not exempt from the widespread polarization in society today. Not only is it disrupting school, but it’s having an impact on advancement in the form of alumni pushback and major donors withholding gifts. Fundraisers are on the frontlines trying to manage these complex situations. They need insights to guide them.
Action step: Active listening and understanding have never been more important as we seek to honor diverse points of view in our communities. More in Common’s “Hidden Tribes of America: A Study of America’s Polarized Landscape” report may shed some light on the underlying ideologies that are driving behaviors.
As we enter the third year of the pandemic, anxiety and burnout have never been higher. There is much work to be done in managing the day-to-day life of our schools, while at the same time planning for the future. If we are going to make progress on our short- and long-term goals, we need to make room for things to be imperfect. We can achieve our goals effectively, but we must also make room for ourselves to be human.
Donna Orem is NAIS President.