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Trends in annual giving

Published:  12/11/2015

Originally published in the December 11, 2015 AHP Connect

The following article is based on an AHP webinar, “Trends in annual giving: Practical approaches to meeting your institution’s and donor’s needs,” presented on June 17, 2015, by Ann Thompson-Haas, FAHP, principal and lead consultant at Larkwood Consulting, LLC, in Oakland, Calif. and New York, N.Y.

Major gifts may get the glory, but it is important not to overlook the importance of annual giving. Annual gifts have always been the foundation of successful development programs, having built and sustained most health care philanthropies that exist today. Now, says Thompson-Haas, annual giving has renewed significance as a key tool in a more refined approach that balances the art and science of a year-round strategy for giving.

Thompson-Haas discusses eight major trends to consider when developing your foundation’s annual giving program:

  1. The global financial crisis reset the bar. As a result of the 2008 financial crisis, annual giving donors cut the number of organizations they donated to down to approximately five or six. Donors became more mindful of who they were giving to, making the pool of recipients more competitive. It is important to note, however, that giving has recovered: Donations to nonprofit hospitals, health care systems and related facilities in North America increased by $378 million during the 2014 fiscal year, advancing to a record total of $11.123 billion, according to the 2015 AHP Report on Giving.
  2. Annual giving is more than a fund. Annual giving is not just about money, but also about donor development and relations. Only when you have received a second donation should you acknowledge that you have officially acquired a donor. After receiving the second gift, your focus becomes long-term retention and relationship development. In this way, annual giving helps build a pipeline of donors for major and planned gifts.
  3. Donors are changing. There is a generational shift taking place and the people who will soon be the largest population of donors are inherently different than the ones we have known for the last 20 years. We are still focused on traditionalists—those above the age of 70 who donate because they use health care and believe it is the right thing to do. They need little convincing in comparison to baby boomers, who make up the largest group of future health care donors and want to be told why they should donate to your organization. “There is more competition, so everything we do, we have to do more mindfully,” says Thompson-Haas.
  4. Retention is wobbly and a top priority. About 10-30 percent of first time donors renew within health care philanthropy. Donor retention and consistent giving can possibly predict the likelihood of a major gift. Thompson-Haas offers these tips for increasing retention:
  • Seek to acquire donors who are likely to renew.
  • Renew first time donors within one to three months of their first donation.
  • Contact donors more than once a year to renew.
  • Expand your donor engagement.
  • Remember 60-90 as key numbers. This is the perfect donor age, as well as the perfect number of days within which to contact donors for a second donation. Sixty to 90 days after the patient experience is also a good time to contact patients and families about making a first gift.
  1. Technology is offering new tools, channels and challenges. Online giving and donor engagement is increasing, although it is growing more slowly for health care philanthropies than for other nonprofits. Thompson-Haas has a simple rule of thumb for social media: Use the platform for its intended purposes. Facebook, the number one platform used by baby boomers, is intended for connecting with others. Presence on social media is important in order to engage, connect and build trust with donors. To break it down, 90 percent of your digital content should explain why people should donate and 10 percent should be dedicated to channels that people can actually donate to.
  2. Use of annual giving tools is targeted and data driven. In order to address current trends, it is important to increase your data capacity for use with annual giving tools. Increasing data capacity translates to more data about the donors in your system, including age, income, etc. Using the RFM (recency, frequency, monetary value) predictive model can be helpful when calculating who will donate more. Tools can profile your donors and refine lists, which ultimately lowers costs and increases your program’s productivity.
  3. Organizations that integrate mindfully are the ones that succeed. Integrating your annual giving, major gifts and planned giving functions makes it easier to move donors through the pipeline. Thompson-Haas emphasizes the importance of integration and relationship-building, since 20 percent of donors account for 80 percent of donations.
  4. The future is bright. Thompson-Haas offers the following tips to take advantage of the increase in giving:
  • Identify your organization’s mission.
  • Clarify your target donors.
  • Identify available resources.
  • Pinpoint the trends you can leverage the best.

Thompson-Haas says it’s not “one size fits all” when it comes to creating a successful annual giving program. View the trends above as a teaser menu from which to select what will work best for your organization.

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The Report on Giving is a yearly survey project that the Association for Healthcare Philanthropy conducts to collect data on health care-related philanthropic activities.
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