Showing Impact and the Future of American Giving: A Q&A with EHL Consulting

Following the release of the 2013 Giving USA report, we caught up with one of the region’s leading fundraising consultancy firms, the EHL Consulting Group to get their take on the findings.

Managing Director Robert Evans, who spoke on a panel about the report, and Director of Communications Lansie Sylvia sat down with us to share their reactions and thoughts on the general state of charity, philanthropy and fundraising.

What are some of the most significant statistics from the Giving USA report?

Lansie Sylvia: I think the percentage of giving as a component of the GDP stalling out at two percent is really problematic. Americans are still the most philanthropic people in the world, but one of the reasons for that is that in other countries, especially in Nordic countries, a lot of social services are taken care of by the government.

Other countries have a much higher tax code. In America, historically, we have relied on the philanthropic sector, or the third sector, to fill a lot of those gaps. So considering the recession and considering how many cuts from federal and state budgets have come down the pike that impact nonprofits, the fact that charitable giving has not been stepped up in relation to that is very interesting.

Bob Evans: I’m very concerned that in two out of the last three years giving to religion has declined. If you look back 50 years ago, giving to religion represented half of all giving. Today its one-third, but the pie is much bigger today than it was 20 to 50 years ago. We know that people of faith are the best donors. People give to churches, synagogues, mosques, and almost everything else, and its not with blinders on. So with the decline of attendance at worship services, there has been less giving [overall].

How then can houses of worship, given their importance to overall charity, improve their ability to fundraise?

BE: For one, houses of worship are very immature in their techniques for asking for money. As some houses of worship are maturing and even bringing on a director and development staff, they are seeing the results. Clergy, regardless of denomination, are usually not trained to ask for money. Some clergy have had an education in fundraising, but in general most are afraid to ask for money from a congregant.

But for charity as a whole, how can we improve fundraising as attendance at houses of worship declines?

BE: I think we are definitely a more secular nation, no question about it. But we are still a faith-based country, and houses of worship are experimenting with different ways of engaging their members and getting them involved. I’m very optimistic that with a real strategy we can turn it around, but it takes a plan and it takes recognition that there is a problem. Again, it doesn’t matter which denomination. They are all dealing with the same problem.

Were there any particular trends in the report that made you optimistic?

BE: We are thrilled to see a return to better giving for arts and culture, the environment, and animals. These organizations are at the lowest end of the recipient part of giving across the country, but the fact that people are giving again to the arts is a very good sign that the economy is improving and that people are recognizing that we need a well-balanced society. Its not just feeding the homeless or dealing with children at risk. A well-rounded culture improves society.

Robert Evans, Managing Director and Lansie Sylvia, Director of Communications of EHL Consulting Group. (Photo by Brad Gellman)

So you might say there has been an expansion of what is considered the domain of charity?

BE: Absolutely, but on the other hand we are very concerned about the reallocation of some other priorities. The traditional umbrella organizations in America, which would be United Way, the Catholic charities, the Jewish Federations, the Combined Federal Campaign, are deteriorating rapidly as a giving priority for donors. Donors increasingly want to touch the organization they are working with, and in an umbrella campaign you can’t.

You are putting money in a big pot that gets dispersed. So one of the challenges to these traditional organizations is to change how they approach donors. Some of them are succeeding by making donor-centric asks instead of a need-centric ask.

LS: I think that the internet has really contributed to this by helping to democratize giving. Now that so many more organizations are able to spread their message further, you have this opportunity to meet the donor where the donor is. That being the new paradigm, its also up to the organization to constantly feed information out to the donor and demonstrating impact and [return on investment].

What we are looking at is a new language of giving, looking at giving as an investment instead of just a nice thing to do. The organizations that are becoming increasingly successful are understanding that change and are meeting the donor where they are. The best organizations have always been donor-centric and have tried to raise money based on the donors needs and the donors desires.

Now that the national conversation has turned towards ideas like social enterprise and impact investment, the smartest nonprofits are understanding that there has been a language shift and are starting to talk to their donors about investment-based giving. Its still charitable giving, however you slice it, but the way that nonprofits are meeting donors halfway with investment-based language is really important and an interesting trend to look out for over the next couple of years.

What are some of your other concerns about the current dynamic between donors and charities?

BE: I think the real challenge is that the nonprofit community has not really ‘stepped up the ask.’ They are not showing impact and vision well enough, so that the story, the cases for giving, have not been compelling in the eyes or minds of donors. So we’re seeing very lackluster conversations, because there’s not enough creativity on the part of the nonprofit executives of America.

Donors are responding by saying we’re not going to make big gifts yet. They are socking away enormous amounts of money in donor advised funds. We saw a 70 percent increase in giving to donor advised funds, which is essentially a bank account for future giving. Donors are saying we want to give. We want to make an impact, but we’re not liking what we’re hearing.

On the part of the nonprofit sector, does this come from a lack of creativity in their activities or in how they present their activities to donors?

BE: I think a big part of it is presentation. Donors are asking different things today than they were, over the past three to five years. Some of the nonprofits in America have been slow to respond and react, and they are still uncomfortable in conveying information that has not been conveyed before: budgets, salaries, how much nonprofits are spending generally. This information had been pretty secretive for a long time, and its been a turnoff to newer, younger donors who want to see how their dollars are being used.

What does EHL do to contribute to his reform in the nonprofit sector?

BE: We are really trying to shift how the leadership of nonprofit organizations perceives the fundraising exercise. To be donor-centric is a major mind-shift, especially for organizations that are older and grew up doing things the same way year in and year out.

The real challenge right now is accepting new methodologies and new approaches, starting with using technology effectively. We are still seeing a lot of resistance to using new software, and I’m not even talking about crowdsourcing and stuff like that. What we try to talk about with our clients is how to show impact. How do you show impact? What is happening to the people you are serving? How are they different tomorrow versus today? And what does your gift mean in terms of propelling that change? In the old days, you could just hand in a donation. Today, you can’t get away with that.

If we were to ask you for a gift of $100 dollars, let me tell you how many lives that its going to change and what good it will do.