Generations and the New Normal

There’s been much talk at the current DMA Nonprofit Conference in DC around the decline in acquisition rates, with a few notable exceptions, in most nonprofit sectors. Since the recession of 2008, most nonprofits have simply not rebounded to pre-recession acquisition performance, although the rates for retention, renewal and reactivation of existing and former donors have returned to respectability. This is cause for alarm because failure to find new donors in sufficient numbers in any given year takes its toll on a nonprofit’s revenue intake 2 to 3 years down the road, when those new donors would normally begin to pay off their cost-to-acquire.

The notable exceptions? The environmental and animal protection sectors. More on this in a moment.

So what, exactly, is happening? The economy seems to be slowly improving. Consumer confidence seems to be returning. And housefiles continue to recover. There are actually fewer charities today than there were several years ago (the recession created a bit of a shake-out), so at least we know the competition for the charitable dollar has not dramatically increased since 2008.

Why are nonprofits finding it so hard to acquire new donors?

Here’s one possible explanation. (And I say, right up front, there’s no science behind this, only the reflection of someone who has been raising small sum gifts for nonprofits for a very long time):

1. In most nonprofit sectors, the great bulk of donors, which includes new donors, are aged 70-85. The WWII generation.
2. For many reasons, this group is particularly sensitive to economic stresses.
3. In 2008, many of them put a “hold” on new giving, and held it in place until they felt comfortable to return.
4. During this hiatus, the death rate at the top end of this group did not stop (obviously).

OK, you say, but that is always the case during economic downturns, and the industry usually recovers in some fashion. That’s because these “prime giver” segments are filled by new 70-85 year olds. And today, in fact, they are filled by even more of them. The first ranks of Baby Boomers now enter this segment and will continue to enlarge it for the next twenty years.

But what if Baby Boomers are simply not as generous as the WWII Generation? Statistics suggest this is so. And, in fact, early data on the giving habits of the X-Gens, followed by the Millenials, suggest this trend will continue.  Simply put, younger American generations seem to be increasingly less generous than those folks who survived the Great Depression and World War II, and who flourished during the post-war American boom.

Who knows why. Higher costs of living? Less discretionary income? Increased senses of entitlement? Decreased role of religion? Information overload? Probably all of the above plus much more. But whatever the cause, it seems to be happening, and perhaps the 2008 recession simply exposed it in more immediate terms.

Or maybe it’s that younger generations use a new lens on what constitutes charitable worthiness — which may be why the environmental and animal protection sectors seem to be weathering the storm better than traditional health, relief and religious sectors, among others.

Compounding the problem is the rapid evolution of information and business technologies, the explosion of which redefine the transactional landscape for giving. We all understand that 80 year-olds respond to long form direct mail, answer the phone at dinner, and write checks; furthermore, we know that Millenials respond to short digital messages, engage in social networks, and use credit cards. And that Boomers and X-Gens exist on the sliding scale between these poles. Clearly we need to craft appropriate messages and deliver them across appropriate channels.

But don’t allow the search for the right channel to obscure what may be the new normal, namely, that each donor generation is just not as generous as the donor generation that preceded it. As professionals, we may need to acknowledge this, and approach direct fundraising in totally new ways.