Harnessing Young Donors’ Philanthropy

Donor Demographics and Their Impact on Philanthropy and Fundraising, Young Donors • Views: 3589

A common but dangerous assumption in fundraising is that donors are what they give. In other words, at any moment in time a donor giving at the low end of the scale is a donor capable of that level of giving; someone who gives well above the norm is a major donor or a prospect for that category. That assumption plus the tendency of fundraising to reward donors who give generously and ignore or minimize expectations of those who don’t, contribute to early attrition and keep most retained donors giving well below capacity.

As a group, young donors are the ones most likely to be sidelined by this narrow view of philanthropy because their gift values are at the bottom of the generosity scale. But their actual ability to give plus their willingness to engage tell a different story.

The average household income of employed donors under the age of 35 who took part in this year’s Burk Donor Survey is $81,000, on par with over half of older employed survey respondents. But their charitable contributions last year were a mere 10% of the value of gifts offered by middle-age donors and 9% of those over the age of 64. Looking only at gift value, it would be easy to conclude that young donors are not as committed to philanthropy, but that would be a mistake.

Why young donors’ gifts are disproportionately modest

In all questions in the survey related to giving motivation, young donors are the most optimistic about both their personal and their philanthropic future. But two factors outside not-for-profits’ control are currently limiting young donors’ ability to give more generously. They are student debt and under-employment.

Student debt has a substantial impact on young people’s finances and it is almost certainly holding them back from giving more generously. 37% of households headed by someone under forty currently have some student debt. And, of substantial interest to fundraisers, the typical net worth of young, college-educated heads-of-households is about $65,000 but only about $8,700 for those carrying student debt.(1) Compounding the impact of student debt is under-employment — 32% of US workers between the ages of 18 and 29 are working in jobs well below what their age and education should afford them.(2)

While not-for-profits cannot control these two factors, certain fundraising practices compound the problem. These three resonate strongly among young respondents in this and previous years’ Burk Donor Surveys:

  • Relying on direct mail and other more traditional solicitation techniques that do not influence young donors to give;
  • Meting out information based on previous gift value, misunderstanding that all donors, regardless of what they gave before, use information on what was accomplished with past donations to determine whether and how much they will give the next time;
  • Under-utilizing communications technologies compatible with younger donors.

Young donors are a boon to fundraising

In spite of debt, under-employment and a fundraising system geared to an older demographic, young donors are very philanthropically-minded. They also give in ways that are a decided advantage to not-for-profits’ bottom line. The following characteristics, most strongly present in young donors, should make any fundraiser sit up and take notice:

  • Young donors’ giving is far less likely to be influenced by economic concerns. They have a positive, can-do attitude concerning their philanthropy;
  • They are more willing to take on new causes. 41% of Burk Survey respondents under 35 supported more causes last year than the year before compared with only 24% of middle-age donors and 19% of donors 65 years or older. This is a critically important factor for any not-for-profit trying to build up their volume of donors and/or diversify their donor pool.
  • It is less expensive to communicate with young donors than with older supporters. 65% of donors under the age of 35 stated a preference for email over print communication in the Burk Survey versus only 30% of donors age 65 or older.
  • The margin of giving increase was higher among donors under 35 last year than for all other donors in the Burk Donor Survey. 61% of young donors increased their giving in 2013 compared with only 47% of middle-age donors and 42% of donors over the age of 65.
  • Young donors’ expectations for their philanthropy this year are similarly positive. 46% of survey respondents under 35 plan to give more in 2014 than they gave in 2013 versus only 30% of middle-age and 21% of senior donors.
  • Retention is better among young donors. 45% of all Burk Donor Survey respondents stopped giving to at least one not-for-profit last year, but when this group was analyzed by age, the difference was dramatic. Only 26% were under the age of 35; 45% were between 35 and 64 and 52% were 65 or older.

Investing in young donors is a brilliant fundraising strategy

Our highly educated, philanthropically-minded young donors may be working at Starbucks today, but they won’t be for long. Currently, Gen X (age 34-48) and Gen Y (age 14-33) make up 57% of the workforce. Baby Boomers, who currently hold most of the management-level positions represent 38% of the workforce.(3) But, the oldest of this cohort is now 68 and, while many boomers have delayed retirement due to loss in net worth caused by the last recession, this generation will still be stepping aside in large numbers soon. The average age at which still-employed boomers expect to retire is 66(4), so within the next five years and definitely within the next ten, Gen Xs and Gen Ys will swiftly move up the employment and income ladder. This means that not-for-profits that start building solid relationships with younger donors now will be front-of-the-line when these donors start giving at a major gifts level.

Being donor-centered will ensure your future with today’s young donors

While there are many things that distinguish young donors from their middle-age and older counterparts, respondents of all ages agree that a donor-centered approach inspires them to stay loyal and give more generously. Being donor-centered means:

  • acknowledging donors’ gifts promptly and in a meaningful way;
  • assigning every gift, regardless of its value, to a specific program, project or area more narrow in scope than the mission as a whole;
  • providing a report on what has been accomplished, in measurable terms, before asking for another contribution.

When young donors in the 2014 Burk Donor Survey were presented with a giving scenario based on this donor-centered model, 76% said they would give again the next time they were asked; 58% said they would make a larger gift, and 72% would continue to give indefinitely as long as they got those three things every time they gave.

The future is bright

While not-for-profits raised over $335 billion last year, it appears there is still much more money out there — 40% of Burk Donor Survey respondents said they could have given even more and, once again, young donors led the way. 50% of respondents under the age of 35 said they had more money to give but were holding their philanthropy back.

So, my only question to my wonderful fundraising colleagues is this: What are you waiting for?

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More information on what would inspire young donors to give more generously is featured in The 2014 Burk Donor Survey report, available here: http://cygresearch.com/the-burk-donor-survey-2014/

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(1). Survey of Consumer Finances (SCF), Pew Research Center, Washington, DC, 2012
(2). Gallup’s US Underemployment Rate in the Workplace, Princeton, NJ, May, 2012
(3). Employment Status of the Civilian, Non-Institutional Population, by Age, Sex and Race, US Bureau of Labor Statistics, 2012
(4). Generations and the Great Recession, Pew Social and Demographic Trends, Pew Research Center, Washington, DC, Nov, 2011

 


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