By Avrum Lapin
The landscape of philanthropy has changed, largely due to the intersection of demographic shifts, advancements in technology and cultural influences. Each of these factors, while seemingly not transformative alone, together have impacted deeply on charitable giving and on communication and the “business side” of philanthropy. It is widely accepted that the way in which individual and family donors, foundations, and funding institutions donate, evaluate, and allocate has shifted dramatically over the past decade. Understanding why the changes have occurred will better prepare both funders and nonprofits to successfully navigate the future and more completely achieve their noble and compassionate missions.
To better understand these shifts, and the environment in which they are occurring, The Lapin Group has interviewed several colleagues, all leaders in the philanthropic community, whose experience and breadth of knowledge give insight to the forces driving change. Through this series of one-on-one discussions, several key themes emerged.
Data Driven Society
The use of available technology has percolated so quickly into our everyday lives that it is subtle and almost unnoticed, yet has a major impact on the way in which we communicate and conduct our public, business, and private lives. Though most of us hardly stop to notice or think about the constant changes that envelop our everyday interactions, heads of foundations, individual philanthropists, and nonprofit executives all remark on the way that conducting their business has quickly evolved due to the rapid advances in technology. Aside from the expectation for instantaneous communication and access to information, raising expectations, palpable changes have included video conferencing, reliance on email communications, and online submission forms for grant applications. Data and technology have often replaced traditional means of communication such as face to face meetings, hard copy submissions, phone conversations, and even hand-written checks.
Perhaps the most significant transformation has been in the reliance on data and so-called objective measures for evaluating nonprofits and the impact of their programs and activities. Data, meaning a set of values of quantifiable variables, has become an essential ingredient in the business of the philanthropic marketplace as it quantifies and monetizes impacts and creates a more objective platform for funders and nonprofits. Donors and grantors have become increasingly data reliant for both the application and evaluation processes, demanding that nonprofits show in quantitative terms how funds are used, the grant’s impacts, and advancements and achievements of their stated missions.
As Naomi L. Adler, Esq., CEO, Jewish Federation of Greater Philadelphia explains, “we use data exhaustingly. It informs both the case for giving and the evaluation process.” The use of and access to data creates a process where simply having a good feeling about something – or even anecdotal evidence of impact - is no longer the main motivation in making decisions regarding significant support.
It is not only funders who look to reports and data to conduct business. In fact, a report conducted by the Center for Effective Philanthropy found that a remarkable 76% of organizations polled are using data to inform their performance and 71% want more and better data. The reliance on data has created objective measures for evaluation and decision making. As Caren Yanis, President at Crown Family Philanthropies, explains, “the evolution of philanthropy is data driven.”
Though in many cases technology has improved and streamlined communications, it has resulted in a reliance on technology and in many cases data driven decision making. “Data driven” refers here specifically to progress in an activity being compelled by data, rather than by intuition or personal experience. As an Executive Director for a medium size Mid-Atlantic family foundation was quick to point out, “this cannot be all reduced to numbers. Some outcomes are qualitative and can’t be measured with data points.” So there is still a place for handwritten notes and handshakes, as well as using more intuitive measures for evaluations. This part of the equation cannot be forgotten, especially as many nonprofits’ missions are focused on hard to quantify goals such as improving quality of life, and influencing thought.
As data collection and technology naturally advance, philanthropic leaders must determine how best to balance the traditional and the contemporary. Skewing too far into data will only show part of the picture when it comes to assessment. However, nonprofits and funders alike would be wise to invest in technology infrastructure and effective data collecting. Without those essential tools, it will be hard to tell their stories to modern audiences.
Perhaps nowhere is the rising dependence on technology more of an issue than when viewed through the lens of generational transition and differences. As “Baby Boomers” age, a new generation of donors and leaders are emerging in leadership positions. Donors ages 35-55 are now assuming roles as leaders and decision makers in funding and recipient organizations. This younger generation is much more comfortable with technology and data than their predecessors. Emerging leaders also have a greater bias toward seeking quantifiable results and more data driven evidence of impact.
This change has been gradual as any demographic movement tends to be, but the changes have been stark, and have altered the business practices in both nonprofits and among individual and institutional funding organizations. Ms. Adler explains, “the Federation is trying to use generation specific media to communicate across the generations.” The younger generations are more at ease using technology and communicating over different media. This awareness may result in something elemental – providing hard copies for a Board meeting for older members while making the same information available digitally for others. One foundation executive explained, “different generations want information delivered in different mediums: texting is preferred for 33-46 year olds, Gen X wants everything online and the older generations want hard copies.” These observations are important as they lead to greater engagement, more effective operations, and a better understanding of individual needs.
Direct mail and printed material are becoming less important. Only 10% of people under the age of 35 will open direct mail, according to NextGendonors.org. “The internet and electronic communications have rendered printed brochures no longer necessary,” remarked the president of a prominent New England-based family foundation. In terms of communicating to the public, organizations are finding that they might use several different mediums such as social media, text, email and physical newsletters to reach all of their constituents.
Among other things, increased mobility and technology are weakening local attachments and nonprofit brand loyalty, and globalization is expanding philanthropic interests. Where and how people donate to nonprofits has also changed. Online giving grew 9.2% in 2015, according to the GIVINGUSA’s Charitable Giving Report. In this same report, it is noted that younger generations tend to give to fewer causes, focusing on those that achieve results in their area of interest, but also have less of an allegiance to the charities that they support.
Organizational leaders must be cognizant of these shifts as they position themselves for the present and future. Foundations and donors are looking for compelling stories that show immediate and clear impact. Nonprofits need to learn to communicate on various platforms and in a language that will be understood by many generations at once.
Competitiveness of the Marketplace
As organizations endeavor to best chart a path to greater communication and more targeted use of data and technology, it is also important to take a broader view of the nonprofit sector. To many, it feels as though the nonprofit marketplace has become more crowded, and indeed it has. Approximately 1.41 million nonprofits were registered with the Internal Revenue Service (IRS) in 2013, an increase of 2.8% from 2003. According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the U.S. in 2015, further illustrating the upward trend. There are a greater number of nonprofits competing for grants, donations, and support. Foundations, donors, and trusts are being inundated with requests and are often overwhelmed by the number of causes vying for attention. Increased competition has given rise to more sophisticated and innovative methods of nonprofits conveying their mission and showing results and impact.
Nonprofits have become increasingly sophisticated in their grant writing, submission of applications through web portals and other electronic means, and communication activities. Several online companies cater to nonprofits and provide quick grant searches and application details. Sites like Foundation Center, GuideStar and CitizenAudit provide information for both donors and nonprofits to get quick and easy data. In addition, large American foundations have developed a standard suite of intellectual property options for their grantees and program-related investments through DigitalIMPACT.io, a resource created through the Stanford Center for Philanthropy and Civil Society. This program has standardized how data is collected and shared and has “leveled the playing field” for many nonprofits. Some foundations, such as UNICEF and Bloomberg Philanthropies, have hired “data scientists” to aid in the data collection and review process. These developments have created a more competitive landscape for nonprofits.
As grants become data driven, relationships are no longer a prerequisite for application. However, as one foundation president was quick to point out, relationships with donors are still the bedrock for funding decisions. Indeed, according to The Foundation Center, the top 1% of recipients captured close to half of grant dollars.
Ms. Yanis of the Crown Family Philanthropies has found that technology has been the solution to many of the issues facing foundations. She pointed to the use of online grant applications as way of cutting down on requests that were outside of their giving priorities. “The use of online grant applications has created an easier experience for both the funders and the grantees. This online process results in more targeted proposals and saves the staff time and effort when the applicants are pre-filtered.” Many foundations and other giving institutions have relied upon online applications as a way to streamline the application process.
Other funders have narrowed the application process altogether in a response to the increased applications and number of requests. Nearly $16 billion of the $46 billion distributed every year is not open to solicitation, as many grant seekers need an invitation to apply. According to Foundation Center, of the three-quarters of family foundations (which represent 90% of all foundations), 77% do not consider unsolicited requests. When asked to list the reasons why not, 72% said they "already know who they want to give to;" 37% indicated "they are afraid of being inundated with requests;" and 28% "prefer to be anonymous." This marks a shift in the way money is allocated.
An October 2015 opinion piece in the Chronicle of Philanthropy noted that 72% of US charitable foundations do not accept unsolicited grant proposals, a significant increase from just four years ago, when that number was 60%. This is an important change that resonates across all sectors of the nonprofit world.
Rising Role of Women in Philanthropy
Another shift is the demographic make-up of the nonprofit sector. Just as generational differences have impacted the communication mediums and messaging and the business of philanthropy, so too has the rise of women in the nonprofit world. While most large nonprofits remain male led in terms of both the senior professional position and in board leadership, the number of women working at nonprofits has increased significantly over the past decade. Women today make up 82% of workers at small organizations, 74% at midsize groups, and 59% large ones, says Naomi Levine, former executive director of the George H. Heyman, Jr. Center for Philanthropy and Fundraising at NYU’s School of Professional Studies. Women may not yet be the majority of the CEOs, but they are effectively making and influencing many decisions for nonprofits, foundations, and private funders. This is aside from the involvement of women as individual donors and decision-makers at nonprofits and foundations.
Women’s approach to fundraising, management and funding is often different than their male counterparts. Gone are the days of nonprofits getting $1 million over a round of golf or cigars. This gives rise to the need for data rich proposals and evaluation methods.
Many women donors want their gifts to have an impact and they want to make sure their giving is not reactionary, but is thoughtful and planned. The 2011 Bank of America study, which was performed by researchers at what is now Indiana University’s Lilly Family School of Philanthropy, looked at the attitudes and behaviors of more than 800 US women with household income greater than $200,000 and/or net worth (excluding their primary residence) of at least $1 million. “High-net-worth women are more likely than men to report that they give when they believe their gift will make a difference, when they know the organization is efficient in its use of donations, and in order to give back to the community,” the report highlighted. This need for impact correlates with the current generational trends as well as the rise of use of data.
Women also tend to communicate in different, often more contemporary, ways than men. According to Ms. Adler, CEO of Philadelphia’s Jewish Federation, “women’s philanthropy is leading the use of social media.” This points to the fact that nonprofits must reflect upon and embrace demographic changes that are not only generational, but also gender focused. Language needs to be tailored to both sexes as messaging needs to fully include women.
Women are not only working in the nonprofit sectors more, but they are also major donors themselves. According to the Women’s Philanthropy Institute (WPI), women make up 47% of this country’s top wealth holders (those with assets of $2 million or more) and these women control nearly $5 trillion in assets. Accordingly, nonprofits seeking donations and support need to look beyond gendered stereotypes in order to maximize their reach.
The idea of results-focused and impact-related giving has become a force within the philanthropic community, due to several different causes, including generational and gender shifts, the rise of technology and the influx of new and diverse nonprofits. These factors have touched a wide range of facets of the philanthropic arena.
According to the Foundation Center, “in recent years a new wave of business-oriented, often younger philanthropists have entered the field and brought with them notions of social investment, metrics, and assessment.” New philanthropists and nonprofit leaders have created a trend among many donors and foundations to design their own strategies and guidelines. These trends have impacted not only how nonprofits communicate, but also how they operate and how they are funded and evaluated. Understanding these trends will enable donors, foundations, and nonprofits to be more agile and nimble in responding to the changing environment, meeting the real needs of stakeholders and constituents, and advancing the expectations of the philanthropic community.
 The reference to Naomi Levine’s comments and these statistics were taken from an article that appeared in the Chronicle of Philanthropy on April 28, 2014, “Lack of Women in Top Roles Hinders Nonprofits, Female Nonprofit Workers Say,” By Maria Di Mento
Please feel free to contact us at The Lapin Group at 215-885-1550 or firstname.lastname@example.org to discuss this further. My colleagues and I welcome your comments and emails. Let us know what you think.
Avrum Lapin is President at The Lapin Group, LLC, a full service fundraising and management consulting firm for nonprofits in Jenkintown, Pennsylvania, outside of Philadelphia. The Lapin Group, a member of the Giving Institute, inspires and leads US-based and international nonprofits seeking fund, organizational, leadership, and business development solutions, offering contemporary and leading edge approaches and strategies. Avrum is a frequent contributor to eJewishPhilanthropy.com and speaker in the US and in Israel on opportunities and challenges in today’s nonprofit marketplace.
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