An Age-Old Trap for Fundraisers

I live in one of those neighborhoods the Prism geo-demographers used to classify (maybe still do) as Bohemian. This reflects the diverse range of households by age and family composition, and is probably why so many street fundraisers are dispatched here – at least four a day on our main crosswalk.

Being in the business, I’ve observed a pattern with these fundraisers to button-hole contemporaries – 18 to 24-year olds – and almost never anyone over, say, 35. It must make for very hard and un-remunerative work.

Because as new government data on consumer expenditures shows, our most productive targets are older, much older.  Looking at discretionary spending gives us a keen sense of what the Recession did to younger Americans as compared to those much older.



You can’t blame street fundraisers for aiming at the wrong target; it’s quite natural for them to gravitate toward their peers. But you can blame those managing them and, in turn, the organizations that contracted the companies managing them. I suspect they’ve been swayed by the notion that better opportunities will come from lowering the average age of their donor bases.

But they’re wrong. There is sound evidence that giving, like eating out, comes from discretionary income encouraged by consumer confidence.

According to recently published data from the Federal Reserve Bank of St. Louis,[1] the bull’s eye is, in fact, the Silent Generation. Especially the core of that generation, people over 75. This may come as a shock to a lot of fundraisers and nonprofit managers and, I dare say, most of their board members who haven’t experienced major donor fundraising for themselves. But as Bloomberg’s Business Week declared in their coverage of the report late last year, “…the Silent Generation has been in the sweet spot of America’s economy for half a century.” And they still are.

Despite the exciting technologies of social media and news-making, but incidental, giving by young people, the pay-off in fundraising is still a matter of engaging donors with resonating cases of support for building value over the long term.

What makes the Silent Generation so valuable? It’s what the St’ Louis Fed calls their “cohort experience.” Cohort experience identifies a common set of experiences that bind a generation together.

Silents were born during or just after World War II to parents who had experienced the Great Depression. From 1962 through 1991, when they were in their prime working years, the U.S. economy grew at an average annual rate of 3.5%, compared with the rate of 2.6% since. Most were employed in situations with defined benefit pension plans paid by their employers.

Silents also experienced relatively soft landing retirement. By the time the Great Recession began in 2007, almost all of them were over 65. That, as the St. Louis Fed’s William Emmons wrote, “makes them the richest generation we have ever seen.” They were hurt by the stock market plunge, but diversified retirement portfolios spared them the worst. Same story with the mortgage crisis as they had mostly paid theirs off.

Capitalizing on the value of Silents is principally a matter of engaging those who are already supporting your organization and, ideally, have been for a number of years. For most organizations it is too late to find and engage new donors over 70. So reliable age and long-term giving data on the Silent donors you have are essential to the task, complemented by research and CRM analyses that tell you about each donor’s specific interests in your mission and program.

Also be aware that Silents-in-waiting – 45 to 54-year-olds –are a lot poorer than they used to be. Their median net worth was nearly cut in half after 2007, prompting the St. Louis Fed to conclude;

“While it is too soon to know how cohorts born in recent decades will fare over their lifetimes, it appears that the median Baby Boomer (born in the late 1950s and early 1960s) and median member of Generation X (born in the late 1960s and early 1970s) are on track for lower income and wealth in older age than those born in the 1930s and 1940s, holding constant many factors other than when a person was born.”

[1] The Economic and Financial Status of Older Americans: Trends and Prospects, William R. Emmons and Bryan J. Noeth, Center for Household Financial Stability Working Paper, Federal reserve Bank of St. Louis, September 2013.

What’s the Size of the Wallet You’re Trying to Share?

American advertising has always been far more enamored of youth than the marketplace of goods and services justifies. It seems that nonprofit fundraising – especially since the emergence of electronic social media and the reintroduction to the United States of canvassing – has been drinking from the same punch bowl.

So disappointment is being heard with greater frequency about the impressive numbers of signers on to causes who prove to be deadbeat donors, or what The Economist years ago presciently dubbed slacktivists.

In other quarters and conversations, there’s mounting concern that the decline of the historically generous American middle class portends grave consequence for certain kinds of nonprofit organizations.

One behalf of our clients (and those we’d very much like to have as clients), we keep exploring sources of information that will help us and them understand how the fundraising environment is changing and how to do more productive fundraising in the new environment.

It was such an exploration that led to The Roles of Discretionary Income in Charitable Giving, a paper we invite you to study and encourage you to critique.

The paper carries the message that while there’s a new way to target donors with greater accuracy and efficiency we need to invest more money and energy in getting the data and information required. For the most part current practices fall woefully short.

Climate Change

Farmers and ranchers in California are experiencing the worst drought of their lifetimes. For the near term, they’re hunkering down, selling off cattle or letting fields go dormant and hoping the federal government provides some serious relief. Some — or perhaps many — hearing talk of the impact of global warming and knowing statistics are building a stronger foundation under that theory, are thinking about a future away from the ranch or the farm.

Farmers and ranchers have significantly greater stakes in their professions and therefore significantly greater commitment to hanging on and figuring out what to do. But while ranchers and farmers are increasingly tempted to get off their ranges and (literally) out of their fields, the ever expanding nonprofit sector has emboldened fundraisers to stay in the field, just keep moving.

Unbeknownst it seems to most in the nonprofit sector there’s been a situation unfolding for about twenty-five years that now shows change to be more on the order of global warming than regional drought. The declining financial capacity of the middle class means the decline of the most generous of donors and the need to shift fundraising business models as radically as in the 70s and early 80s they were shifted into models that capitalized on the emergence of unprecedented middle class financial capacity.

Here’s a look at contributions as percentages of household adjusted gross income in three ranges.

Table for blog 53 march 1 2014

It’s the lowest of theses ranges where we find the median household income of donors, where what we can consider middle income donors account for approximately 30% of household and 27% of income. The two ranges above account for approximately 20% of households and 51% of income.

The problem is that the financial capacity of that $50,000 to $99,999 population has been shrinking for  a long time. While certainly exacerbated by the Great Recession, the trends have been longstanding. In a column last week, with only incidental reference to the nonprofit sector, David Brooks characterized the situation as capitalism facing “its greatest moral crisis since the Great Depression,” noting, “…the share of the economic pie for the middle 60% of earners¹ nationally has fallen from 53% to 45% since 1970.”

Meanwhile, also last week, came news that with its sale to Facebook, WhatsApp will share among its 55 employees a windfall that will amount to an average per employee of $345 million. I mention this not only to underscore the contrasts between current harvests in the Great Imperial Valley and Silicon Valley but to foreshadow further examination the nature of fundraising business model change whose mandate appears immediate and demanding.


¹ By which I take him to mean households with adjusted gross incomes between $25,000 and $149,999.