Our Abila experts have researched and crafted Key Fundraising Predictions for 2016 to help you gain a clear understanding of the challenges facing your sector in the coming year, and how you can turn them into real advantages for your organization.
Below is a deep dive into Fundraising Prediction #1 – A Shift in Giving Models
Giving by individuals is estimated to have increased by 5.7 percent in 2014, according to the most recent Giving USA™ Report. There’s no denying, your individual donors will continue to be vital resources to furthering your mission. However, take a closer look at the report, and you’ll see that giving by individuals is growing at a slower rate than any other donor group measured.
This trend will likely continue, making it disadvantageous to your nonprofit to rely so heavily on one wellspring. Similar to an investor diversifying his or her investment portfolio, nonprofit leaders will need to diversify their organization’s funding streams.
Here are some options you should consider:
According to the latest edition of Key Facts on U.S. Foundations, the country’s 86,192 foundations hold approximately $715 billion in assets. Another resource, Giving USA, reports foundation giving in 2014 increased to $53.7 billion – an 8.2 percent increase from 2013. And, the just released report from The Giving Institute, The Philanthropy Outlook, predicts that giving by foundations will see the largest growth rates in 2016 and 2017.
Private foundations are nonprofit corporations or charitable trusts created by donors, who retain personal control over their giving choices. A foundation’s grant-making efforts can be wide-ranging, supporting a variety of social issues, or directed toward one specific issue or organization. Its governing board determines where the money goes. Private foundations are tax-exempt organizations, so they benefit from certain tax advantages.
To find out about grant giving foundations that may be interested in your cause check out Foundation Center, which maintains a comprehensive database of U.S. and global grantmakers and their grants.
Donor-advised funds, or DAFs, are charitable giving vehicles administered by public charities created to manage charitable donations on behalf of organizations, families, or individuals. Participants can use cash, securities, or other financial instruments to open an account in the fund. DAF participants surrender ownership of anything they put in the fund, but retain advisory privileges regarding how their account is invested and how money is distributed.
Donor-advised funds have experienced phenomenal growth in both distributing and collecting money. In fact, 5 percent of all giving now comes from DAFs. There are currently 220,000 DAF accounts, residing in any number of institutional homes. DAF participants receive the maximum available tax deduction, while avoiding excise taxes and other restrictions imposed on private foundations.
For more on donor-advised funds, read our blog, and check out The Giving Institute’s Gurin Forum 2015 – “The Future of Donor-Advised Funds.”
Corporate giving in 2014 increased to $17.77 billion – a 13.7 percent increase from 2013, according to Giving USA. It’s safe to say for-profits are starting to understand the value of attaching their name to a worthy social cause, including boosting brand recognition and employee morale, not to mention gaining significant tax and other financial benefits.
Corporations typically support charities in one of two ways: either through a corporate giving program or corporate foundation.
Corporate giving programs are not separate legal entities, and consequently, aren’t subject to laws governing exempt organizations. They generally align with a company’s business interests, and are typically limited to programs that benefit their employees, their families, or communities in which they do business. One example is employee matching gifts programs, which are increasingly common vehicles for giving. About 65 percent of Fortune 500 companies offer matching gift programs, according to Double the Donation. More than 15 million individuals work for companies with matching gift programs.
Corporate foundations are private foundations that derive their grant-making funds primarily from the contributions of a for-profit business. The company-sponsored foundation is a separate, legal organization, sometimes with its own endowment, and is subject to the same rules and regulations as other private foundations.
These are just a few ways the giving landscape is changing and evolving. There are other emerging trends on the horizon worth exploring, including how today’s wealthy donors are crafting their philanthropy. Using vehicles like social entrepreneurship, venture philanthropy, giving-while-living creeds, and limited liability companies is growing in popularity among the country’s mega-donors. Stay tuned to Forward Together for more on the topic.