The pandemic changed business, leading to more remote workers, digital nomads, shrinking offices and a reappraisal of everything from real estate to reality. Crowds often dwindled at events. No sector has been more impacted than nonprofits and fundraising.
“The pandemic has made more people aware of the nonprofit sector and of giving, so in that sense, that was one benefit of the pandemic,” said Island Harvest President and CEO Randi Shubin Dresner.
Fundraising today is very different from just a few years ago and conversations with charities (even that word has been replaced by nonprofits) show a very different post-pandemic fundraising world amid inflation and talk of donations as “investments” rather than “contributions.”
“Long Island’s nonprofits work tirelessly to improve the quality of life for all of us,” President and CEO of the Family and Children’s Association Dr. Jeffrey Reynolds said. “While businesses and our elected officials come and go, nonprofits are a steady force, providing vital jobs, protecting our most vulnerable and making Long Island even better.”
Few areas depend so much on a nonprofit economy as Long Island, where local and national groups, as well as nonprofit hospitals and educational institutions, employ thousands. That also means a lot of local fundraising.
Dr. Kimberly Cline, president of Long Island University, itself a nonprofit, said the sector provides “essential programs that uplift Long Island’s residents.”
“Not-for-profit organizations are active in communities throughout Long Island to support our neighbors in need and are also a major regional employer,” said LIA President and CEO Matt Cohen. “Their sustainability is critical to a vibrant economy.”
“Fundraising has been a little more challenging this year,” Reynolds said, because some segments of the economy worsened as the cost of living increased.
“We are holding our own by doing more online campaigns, more peer-to-peer fundraising through events like the New York City Marathon and keeping our real-time events shorter and tighter,” Reynolds said. “The days of five-hour chicken dinners in hotel ballrooms are long gone.”
Fewer and bigger nonprofit donations
Different sectors within the nonprofit world face different challenges. Hospitals must manage reimbursements while boosting fundraising. Educational institutions cultivate alumni, and arts groups vie with healthcare and the environment.
“The arts are often undervalued and overlooked, yet they play a critical role in sustaining and enriching our region,” said Long Island Arts Alliance Executive Director Lauren Wagner.
Shubin Dresner said they are receiving larger gifts from fewer people and “don’t know why.”
“Contributions come as a result of a lot of work. Our staff make calls, visits and give lots of tours,” Shubin Dresner said. “We build trust with our prospective contributors and maintain relationships with those who are ongoing supporters.”
Ken Cerini, managing partner at Bohemia-based accounting firm Cerini & Associates, which works with many local nonprofits, said it has become tougher to get small donations.
“The rank-and-file donors (under $100) have gotten squeezed, and larger donations have been increasing,” he said. “This makes it harder for smaller nonprofits who don’t have access to high-net-worth individuals.”
Shubin Dresner said many small contributors “move up to larger givers over time,” but Cerini said most people give only once.
“More than 50% of donors do not make a second contribution to a nonprofit,” Cerini said. “Nonprofits need to better show impact, let donors know how their funds were used, and personalize their asks to better align with what their donors are looking for.”
While government funding helps, Reynolds said it “hasn’t kept pace with the demand for services on Long Island or the cost of programs,” fueling fundraising.
“The needs are increasing, especially among less affluent families and if funding remains the same, we are left scrambling to cobble together the dollars necessary to keep up,” Reynolds said.
Fundraising transparency
Charity Aid Foundation America (CAF America), a grantmaking group, said “rather than donating blindly,” donors “want to see measurable results,” such as how many people are helped, how funds are used and outcomes achieved.
“We find people want to be sure that they know where their investment is going,” Shubin Dresner agreed. “We spend time talking with them and, when possible, giving them tours of our work so they can see the impact of their contributions.”
She added that many people like giving “to particular programs and services rather than to a general fund.” They break out expenses, such as trucking, to raise funds for their transportation and logistics program.
“This offers us an opportunity to create a concrete report for our funders to show them how and where their funds were used,” Shubin Dresner said.
Michael Magro Foundation co-founder Terrie Magro agreed that “transparency and impact reporting are critical,” since donors want to “see the tangible outcomes of their contributions.”
The Michael Magro Foundation provides a pie chart showing where funds went, such as rent, mortgage, utilities, car loans, insurance, and parking fees at hospitals and clinics.
“Each area has a percentage of the dollar that was spent that year,” Magro said.
Tax deductions aren’t as big motivators as they once were, Cerini added, since the standard deduction is often greater than itemized deductions.
“As a result, the charitable contributions they make do not really have a significant impact on their overall tax position,” Cerini said. “Individuals with larger itemized deductions tend to be those with greater incomes. This may be why we are seeing a greater level of contributions coming from the wealthy.”
Donations, he said, “tend to follow the trajectory of the stock market,” so when “the market is up, donations tend to be up too.”
The main event
Events remain a big — but expensive — source of fundraising for many Long Island groups. The Michael Magro Foundation’s recurring events, such as golf tournaments, car shows and soccer tournaments, yield greater than 55% of net revenue.
They’re also introducing “new and different events that appeal to different age groups,” such as basketball for 4th graders to adults, according to Magro. And third-party events help.
“A group or corporation adopts an idea and runs the event for the charity, and the charity gets the profit after expenses,” Magro said.
On Long Island, inviting can be costly, although galas and golf, tennis and other outings are still major economic engines. Island Harvest doesn’t want to host more than two events annually due to cost, Shubin Dresner said. Alternative events can cut costs while boosting contributions.
Island Harvest invites prospective donors to large food distributions and food drives.
“This offers us an opportunity to use it as a way to bring prospective contributors in to see the impact of supporting our organization,” Shubin Dresner said.
Reynolds said after a pause in events during the pandemic, they are proliferating as charities compete. “Now those events are back, and there are more than ever before,” he said. “I’m not sure that’s a winning formula going forward.”
Online Fundraising face
Being there has become less important than being online. Donors often donate online, due to the “convenience and accessibility of digital platforms,” according to CAF America. They point to fundraising from websites, social media, and mobile apps as the new norm.
“The Covid-19 pandemic accelerated this shift, making it essential for nonprofits to have a strong online presence,” per that group, which noted that social media campaigns, email newsletters and virtual events are key.
Nonprofits are seeing a pilgrimage to online platforms, particularly for younger donors who get information online — and then invest in their chosen causes. Cerini said Baby Boomers still respond to mail, but “other generations are much more likely to respond and give through online outlets.”
“We are seeing a large increase in the number of online gifts,” Shubin Dresner said. “Even if we are engaging people, most tell us that they will fulfill their gift online.”
Magro sees “digital transformation” as a big opportunity with groups embracing “data-driven and technology-enhanced approaches.”
She said “tailored communications based on donor preferences” can help retain donors. Reynolds said virtual fundraising has become the main thing, while events run up high costs.
“Event fundraising is the least efficient way to raise money, so we’ve doubled down on social media, email and community ambassadors in an attempt to become more efficient,” he said.
Generation Inflation
Magro said “inflation and fluctuating markets may constrain donors’ disposable income,” making it harder to secure large gifts. And donor fatigue due to “the sheer number of causes competing for attention can dilute donor interest.”
While everyone from retail to restaurants hikes prices to compensate for inflation, that’s not easy for nonprofits. According to the “2024 Giving USA Report: Key Trends for Fundraisers,” 2023 estimated charitable giving in the United States topped $557.16 billion, up 1.9 percent from the prior year. Adjusted for inflation, total giving dropped 2.1 percent.
“This discrepancy highlights the ongoing impact of inflation on the charitable sector,” according to the report
Individual giving reached $374.40 billion in 2023, up 1.6%, but down 2.4% adjusted for inflation. Giving by foundations grew by 1.7% to $103.53 billion, down 2.3% adjusted for inflation.
Cerini said inflation is up 21% over four years, putting huge pressure on the nonprofit sector.
In this together
Government contracts and grants help, but nonprofits point to challenges not simply in getting contracts, but getting compensated.
“Government is funding, but it’s a very long and difficult process,” Shubin Dresner added. “They don’t always pay on contracts quickly and the vouchering process can be tedious.”
Cerini said “delays in government funding, inadequacy of government funding to cover costs, and the need for discretionary funding” complicate government contracts. “Unfortunately, we’re seeing an increase in restricted contributions,” he added of another complication.
Shubin Dresner said “many corporate teams are making generous gifts to be involved in team building volunteer activities” on their farm, in their warehouse and in the field distributing food.
One thing, however, is more true than ever: Nonprofits work together. LIU partners with many nonprofits and groups say they are stronger at collaborating than competing.
“In a sector defined by limited resources, collaboration makes us all stronger,” Wagner said.
Something else may remain true: Relationships rule.
“The key is effective communication,” Cerini said. “It’s about building relationships with your donors.”
Fundraising has to be more than an afterthought. Finding financial fuel needs to be a core component of a nonprofit’s work.
“Fundraising staff need to be caring, genuine, believe in the mission of the organization and be able to ‘sell it’ by speaking about it well,” Shubin Dresner said. “We’re asking people to make an investment in our work and the accomplishment of our missions. We must be able to speak clearly about it in a way that a prospective contributor can see themselves able to become a part of the cause and mission.”
Read more: 20 nonprofits to donate to this holiday season
