A Year Later. What we learned from a few thousand conversations.

As we reflect on the past 12 months since the release, we’re unbelievably grateful for the thousands of nonprofit professionals, board members, CSR ?and ESG leaders and academics with whom we’ve had the privilege of connecting, listening to, and learning from.

?

Like conducting a feasibility study where after 20 or 30 interviews key themes emerge, each conversation we had over the past year reinforced the key issues that pose a challenge to our important, yet seemingly challenged sector. Here are the top 10 themes we’ve seen in response to the Generosity Crisis.

?

You’re not alone. Throughout our travels, we made it a habit to ask nonprofit organizations whether their fundraising revenue goals increase each year, yet simultaneously are seeing the number of donors to achieve those goals has been decreasing annually. Not surprisingly, the image of a usually unanimous room of respondents raising their hands will forever be etched into our brains. The issues facing nonprofit professionals are broad and fairly uniform. Little did we know that within a month of release, our book, that the Fundraising Effectiveness Project would share that for the first time in 12 years, both the number of donors, AND dollars had gone down. Then, only 4 months later, the Giving USA report would shed light on the myriad ways in which charitable giving was being challenged, citing several historic lows in charitable participation. While our preemptive attempt to call attention to the issues, we wanted to do so in a way that felt solvable. Common to the feedback we received, was the feeling that “I knew something was wrong, but I thought it was just me.” Over and over again, we saw professionals and volunteers find comfort in knowing that they were not alone. Not an excuse for complacency, naming the problem first is the key to better understanding how to make change. You’re in good company. We must do this together.

?

The Generosity Crisis is not a fundraising issue, it’s an organizational issue. Perhaps unsurprisingly, throughout our conversations with nonprofit leaders, it became abundantly clear that volunteer Boards are largely unaware of the systemic issues facing charitable giving, and thus continue to measure a nonprofit's success by fundraising revenue rather than relationships. By no deliberate intent, volunteer boards continue to prioritize fundraising revenue goals as the key measure of success. Unaware that nonprofit leaders are essentially raising more money from fewer people, very few seem to understand the unintended consequences of this approach over the long term. Usually followed with a plea, “will you tell my board?”, nonprofit professionals feel that they are being asked to do more, with less - because they are. Over the past year, some of the best conversations and biggest epiphanies we’ve had are from volunteer boards that had no idea that their definitions of success may unintentionally be causing strain on relationships.

?

Many fundraising incentives reward transactions, not relationships. A simple quote that rang loudly for us over this past year is from Charlie Munger, business partner of Warren Buffett. The short but poignant statement, “show me the incentives and I will show you the outcome”, hits the overriding theme of the Generosity Crisis in the bullseye. Fewer quotes have better articulated the overriding condition that has led to practices that have incentivized revenue and transactions above relationships. If incentives are to fill the “leaky bucket”, then behaviors will follow. If incentives are created to create long-lasting relationships, the result will follow. While important, we found time and again that KPIs like retention and lifetime value are widely overlooked or undervalued as key drivers of fundraising success. While larger and more sophisticated nonprofit organizations value these metrics, they are uniformly presented below revenue KPIs, most smaller nonprofits shared that they are so focused on short-term goals that they have never considered the role of retention or LTV as it relates to their long-term viability. While all are important, the ranking in which relationships (retention or LTV) are presented in board reports, annual reports, and case statements shed light on organizational priorities. The takeaway, we must create incentives that prioritize relationships over revenue, mission over money.

?

The Generosity Crisis is a complicated, multi-nuanced confluence of internal and external factors. Hoping for a silver bullet, or to ratify one’s own biases, we have been asked time and again to share “the” reason most responsible for the systemic decline in charitable participation. Needless to say, the confluence of circumstances that has led to the 16% decline in charitable participation over the past 20 years is nuanced and ever-evolving. The myriad reasons are also not unique to the US, as many nations face the same decline in charitable participation. Understanding both the internal and external reasons why the decline has happened is our only hope of identifying ways in which to reduce the downward trends. Over the past year, we’ve engaged with nonprofit leaders from many countries to discuss creative ways that are inspiring a new reality. Central to this understanding is that doing nothing is no longer an option. In all of our conversations, we’ve seldom encountered organizations investing in Philanthropic R&D in an effort to overcome these challenges but see that as a proactive start.

?

Givers are now the minority. While we are faced with the sobering fact that less than half (49.6%) of individuals give to traditional charitable organizations, we often heard a rebuttal that giving was still alive and well, thanks to a few high-net-worth donors who essentially “fill the bucket”. While this is true, we also recognize that as a percentage, very few nonprofit organizations will ever receive a gift from a high-net-worth individual. The ramifications of larger gifts from fewer donors have significant implications, least of which is a less diverse philanthropic sector. Throughout our travels, it’s become abundantly clear that “just” giving is no longer enough. To envision an increase in charitable participation, we must now take the mantle of ambassador, advocate, and champion for charitable giving beyond our personal gifts. We must take an outsized responsibility in talking about and teaching best practices in charitable giving to our family, friends, and community.

?

Nonprofits are competing for connection, not dollars. Of the many takeaways we’ve experienced in the past 12 months, the one that strikes home most consistently is when nonprofit leaders fully understand the forces at play that deter charitable participation. Nonprofit professionals are consistently surprised, then relieved once they fully embrace the idea that they are no longer competing for a finite amount of discretionary dollars, but instead are competing for connection. While the average person receives 333 emails per day, looks at their phone 344 times a day, scrolls 300 feet per day, sees 5,000 to 7,000 ad images per day, has 12 subscriptions, and makes purchases based on values – it’s no surprise that nonprofit fundraisers are facing an uphill battle for connection. The simple notion that connection serves as the currency of the attention economy means that nonprofits must find new and novel ways to move past the many distractions that dissuade giving and form a new, and radical type of connection. Understanding the factors behind radical connection is the first step toward moving past transactional relationships to a more sustainable and strategic type of philanthropy.

?

Old habits die hard. “Insanity is repeating the same mistakes and expecting different results.” Sound familiar? The quote is from the 1981 handbook from Narcotics Anonymous. This sentiment is all too familiar for a vast majority of nonprofit organizations that we connected with over the past year. Yet, when asked what “keeps us up at night”, it is the recognition that nonprofit organizations see the effects of the generosity crisis yet continue to do things the same way. Meanwhile, more non-givers become apathetic toward charitable organizations each year. To overcome the declines in charitable participation, we’ve seen nonprofit leaders challenge their organizational biases and make new and creative commitments to prioritize relationships. The opportunity must be for nonprofit organizations to amplify generosity, not become a barrier to it.

?

Trust is greater than relationship. In fact, it’s the essential element that serves as the basis of a thriving giving ecosystem. Of all the “ah-ha” moments over the past year, the one that continued to surface was the increased importance, yet lack of effort taken to reimagine areas in which trust could be increased. Gladly plagiarized from Chris Pritcher , CEO at RKD Group , the notion that to increase the number of people that would support your organization, trust is the central tenet. However, few organizations have taken the time to challenge existing practices and “whiteboard” new and novel ways to increase trust with their community of supporters. Probably the lowest hanging, yet transformative fruit you can take with your team, is to find ways to increase trust with your supporters. Through this simple exercise, we’ve witnessed teams come up with amazing creative approaches that drive to the heart of building the framework for what is central to increasing retention and lifetime value.

?

AI is the only scalable solution to reversing the Generosity Crisis. Throughout all our conversations with professionals around the world, our hope was that at any given day that we would hear something so innovative and profound that we could point to. Only 12 days after the release of the Generosity Crisis, ChatGPT was released, unleashing argueably the most prolific advance in technology in our lifetime. Having invented and worked in Predictive AI (machine + deep learning) for many years, it became immediately clear that combined, Predictive AI and Generative AI would become the recipe for a more TARGETED + PERSONALIZED form of Precision Philanthropy. This leads us to a conclusion that building a Responsible AI Framework for fundraising that protects and prioritizes trust is the single greatest imperative facing the modern nonprofit. It is incumbent on anyone using AI within a nonprofit context to take the Hippocratic Oath of responsible AI, "to do no harm".

?

Warning Label Needed. Almost immediately, we heard from readers that they loved our work, yet found the first 100-pages quite sobering. In retrospect, we would have been wise to include a warning label with our book, something like, “Warning: The first 100 pages of this book will be depressing. Reading with a box of cookies next to you is highly recommended.” Flatteringly, we have been complimented by our conviction to share the “hard things” in a way that names the problem, yet also provides actionable insights that provide hope that another book on the crisis of generosity would never again be needed. While there are many ways to deal with a “crisis”, our belief is that understanding the problem is central to any ability to solve for it. Called “a book of hope” by Dr. Arthur Brooks, we’re unbelievably grateful for those who are willing to power through the first 100 pages and then challenge their own organization’s ability to beat the odds. In summary, if the gravity and complexity of the Generosity Crisis doesn’t make you uncomfortable, then we will not have achieved our goal.

?

We leave you with the two questions that we pose at every opportunity. In light of the many challenges our sector faces, and the opportunities to reimagine a thriving charitable giving ecosystem, we encourage you to take these questions to your teams, your boards, and your supporters. Wrestle with the awkwardness of silence, embrace the discomfort, and challenge each other when answers are too small.

?

1. What happens if we don’t change?

2. What will it take to change?