Mar/Apr 2010

Next Generation of American Donors: Changing the Art and Science of Fundraising?

by Tad Druart, Director, Marketing and Communications, Convio

Anecdotally and intuitively, nonprofit professionals know that changing demographics and technology are driving a shift in charitable engagement, yet questions abound.

How do donors of different generations learn about nonprofit organizations? What are their preferred channels for engagement? What are the most appropriate channels for fundraising? Who and what influences their giving decisions? What will the on-going value of direct mail be versus online and emerging fundraising channels such as social media and mobile?

While much has been written about the differences between the generations, there has yet to be an in-depth study on the charitable giving habits, preferences and differences for Gen Y, Gen X, Boomers and Matures. Until now.

Convio, Sea Change Strategies and Edge Research have announced the results of a first-of-its-kind national research study into the charitable giving behaviors and attitudes across Gen Y, Gen X, Boomers and Matures. Some of the key findings will change the way nonprofits approach the art and science of fundraising. The full report is now available.

Probably the biggest finding is that while direct mail will remain viable, when one looks at the data it will not be the dominant channel for soliciting and collecting gifts that it is today. While 77 percent of Matures rely on direct mail as their primary giving channel, only 54 percent of Boomers, 43 percent of Gen X and 26 percent of Gen Y report giving through the channel.

“The majority of nonprofit marketing spend and tactics today are focused on mature donors, as they remain the mainstay of today’s charitable giving,” said Vinay Bhagat, chief strategy officer for Convio. “This research and the decline in donor acquisition rates indicate that the marketing model needs to shift to attract the next generation of donors while supporting continued direct mail success. Charities need to move away from a solely direct response focus to a multi-channel approach with a heavier emphasis on online marketing, emerging channels such as mobile and social media, and empowering supporters to market and fundraise with and for the organization. Online marketing programs that have mostly operated as a silo must be integrated with traditional campaigns.”

The study surveyed 1,526 donors to nonprofit organizations in the past 12 months to learn how different generations learn about, engage with and donate to charitable organizations. With Boomers and Gen X consisting of 60 percent of the donor population and taking a more prominent role in supporting charity, the study suggests that peers will play a bigger role in influencing donations, and that technology is driving greater expectations of engagement through multiple channels, including online, face-to-face and mobile. Boomers and Gen X report a variety of channels such as ecommerce, online giving, event fundraising, tributes, monthly debit programs and even mobile/text donations as viable channels. Gen X and Gen Y are also more likely to participate in third-party/vendor programs where a portion of the proceeds from their consumer purchase goes to charity (programs like the Gap Red Campaign) at 25 percent and 27 percent respectively, compared to 17 percent for Boomers and 12 percent for Matures.

 “The research indicates that future fundraising will move from a direct mail-focused environment to one that is multi-focal and requires strong collaboration across departments and channels,” said Mark Rovner, principal of Sea Change Strategies. “The next generation is telling us that moments of awareness, persuasion and action may each be happening via different communications channels. In an industry where direct mail has been the workhorse of nonprofit fundraising, we are facing a future where no one channel is likely to dominate.”

Donating goods or items is the number one form of support across generations (Gen Y - 55 percent, Gen X - 67 percent, Boomers - 66 percent, and Matures - 68 percent). Fifty-two (52) percent of all respondents reported making a donation when checking out at a retail store such as a grocery store. While small spontaneous gifts were cross-generational, Matures report that they have well-established commitments to charities, actively budget for their giving, and are reluctant to add new charities to those they support. For the next generation donors, Boomers and Gen X giving is more spontaneous and based on who asks them to donate. They are more likely to support a charity when friends or family ask versus an appeal directly from the charity.

“With changes in technology, the economy, and demographic make-up of donors, organizations are trying to cut through the clutter and make the right investments for their future success,” added Pam Loeb, principal for Edge Research who conducted the study. “It is important to recognize that we are living in a multichannel world. Marrying traditional channels with emerging ones will have a lasting benefit as organizations attract and inspire the next generation of donors.”

Study authors and research leads will be presenting the findings at the Annual Association of Fundraising Professionals International Conference in Baltimore, on Tuesday, April 13, from 1:30 pm to 2:45 pm in Ballroom 4. More information will also be available at the Convio booth at AFP (#1123), as well as at the Convio station at the annual NTEN Nonprofit Technology Conference in Atlanta, GA from April 7-10, 2010.

To learn more about Sea Change Strategies, visit: www.seachangestrategies.com
For more information on Edge Research, visit www.edgeresearch.com