By Scot Chisholm, CEO and Co-founder of Classy––a social enterprise that creates world-class online fundraising software for nonprofits, modernizing the giving experience to accelerate social impact around the world.
Related Webinar on January 12! 4 Fundraising Trends for 2021 and Beyond
The entire social sector learned a valuable lesson in 2020: even the most rigorous planning can’t insulate us from the need to be flexible and adapt to the changing world around us. At the same time, our industry has shown remarkable resilience in times of greatest need, and this year has been no exception.
Each year we write a fundraising trends blog post, just like this one, but unforeseen events and variables in 2020 made writing this year’s post, without a doubt, the most difficult yet. That’s partly because underlying trends that have been driving the nonprofit sector for years have completely changed.
However, we also saw other trends catalyze in the wake of changing circumstances that make it tough to predict where things will settle in 2021. All that being said, here are our picks for the upcoming year (and very likely, beyond).
1) Virtual Events Are Here to Stay
Arguably the biggest impact of the COVID-19 pandemic on the nonprofit industry was the cancelation of in-person fundraising events. In response, we saw an explosion in the number of events that made the pivot from in-person to virtual.
Many of these virtual events were born from a spirit of innovation and resiliency from organizations that were forced to evolve in a matter of days and raise much-needed funds in new ways. Upaya Social Ventures, for instance, shifted from an in-person gala to a virtual event in less than a week and raised 142% of their $200,000 goal, ultimately raising $283,000. Considering events typically have a 12-month planning cycle, this is a very big deal!
Virtual participation in fundraising events isn’t new to 2020; the pandemic has just mandated a full transition from physical to virtual for the first time in history. And, we believe, the virtual events trend is here to stay because it allows nonprofits to:
- Free themselves from geographic limitations and engage new attendees, speakers, and sponsors
- Lower the barrier to entry for participants (with less time off, no flights, and no hotel bookings)
- Reduce some of their major event costs, like venues
- Easily steward attendees, fundraisers, and donors to future engagement opportunities
This is something Classy can speak to personally, as we made the decision to pivot our annual conference, the Collaborative, into a fully virtual event this year. The Collaborative: Virtual Sessions drew in over 10,000 registrants and was, in many ways, just as successful as our in-person event.
2) Recurring Giving Will Be More Important Than Ever
As the COVID-19 pandemic continues to accelerate the move to online giving, organizations are quickly realizing the benefits of growing an online recurring giving program. In fact, many are starting to think of their traditional online fundraising efforts—like donation forms, peer-to-peer fundraising, and crowdfunding—as top-of-the-funnel activities that can ultimately drive recurring donors.
The actual giving experience for recurring donors is often better too, since the organization needs to work for the repeat support each month (not dissimilar to other subscription services in your life). The result is a win-win situation where donors feel like they are more tapped into the impact of the organization, and the organization itself is creating a more predictable revenue stream that powers them through uncertain times and sets them up for scale.
And the value of a recurring donor goes well beyond their monthly commitment (which is already 5 times more valuable than one-time gifts). The State of Modern Philanthropy 2019 found that one-time donors who converted into recurring donors were a lot more likely to make another one-time gift on top of their recurring gift.
What’s more, recurring donors typically make this additional gift within one year of their first donation. The State of Modern Philanthropy 2020 reinforced similar trends, revealing that organizations who raise over $50 million in total revenue had a healthy 26% of their online revenue coming from recurring gifts.
The data couldn’t be more clear: recurring donors are great for fundraising, and 2021 will be its biggest year yet.
3) Nonprofit and For-Profit Connections Will Continue to Get Stronger
One key lesson we learned in 2020 is that we’re truly stronger when we work together. This was evident in the new partnerships we saw forming between for-profit companies and nonprofit organizations during the COVID-19 pandemic. Perhaps my favorite, the partnership between Sweetgreen (a popular organic restaurant) and World Central Kitchen (an organization that provides meals in the wake of natural disasters) fed frontline medical personnel and vulnerable communities through COVID-19.
In 2020, we continued to see the lines blur between the for-profit and nonprofit sectors, and we expect this to continue into 2021. On one hand, consumers and employees alike are demanding that businesses add more purpose to their profit-centric model.
On the other hand, we see nonprofits borrowing heavily from successful for-profit companies in search of a more scalable and sustainable growth model. Both are great, in our view, as we believe the world needs more cross-sector collaboration to solve its most pressing social and environmental problems.
And while this trend has been developing for the past few decades, the convergence of COVID-19 and the global social justice movement provided a tipping point. We predict a further convergence of the for-profit and nonprofit sectors, and the continued rise of social enterprises and B Corporations in 2021 and beyond. The result will not only be more frequent and more meaningful collaborations across the aisle, but the emergence of a more conscious form of capitalism.
So, even if you’ve never sought out cross-sector partnerships, consider doing so in 2021. There’s never been a larger demand.
4) You Need to Meet Your Supporters On Their Turf
It’s always been important to proactively engage donors where they spend their time. But the move to a more virtual world in 2020 underscores the need to double down on your efforts and meet supporters in the places where they spend the most time online. Start by strengthening your social presence on established platforms like Facebook, Instagram, LinkedIn, and Twitter, while initiating a presence on new platforms like TikTok.
Livestreaming is also an area to explore in 2021 given the trends we saw this year. Engaging supporters through live video allows for new sources of revenue and engagement for nonprofits. When you livestream content, it provides a simple way for supporters to feel intimately connected to the impact of your organization. For example, we saw the Cleveland Clinic livestream the kickoff parties for their big annual endurance event, VeloSano, to build momentum through launch. We also saw organizations like St. Jude Children’s Research build relationships with online influencers to get the word out—like their partnership with DrLupo, who leveraged his 3.6 millions followers on Twitch to raise over $2.3 million.
Livestreaming isn’t just for the largest nonprofit organizations. You can embed live streams directly onto your Classy campaigns in minutes, so there’s really no excuse not to add this dynamic element to your fundraising efforts in 2021.
5) Remaining Nimble Is Now a Strategic Imperative
We learned in 2020 that the fundraising environment can change at any time, and it can change fast. Whether you’re pivoting quickly to raise funds in the face of adversity, or shifting your strategy in a (now) mostly online world, organizations need to continue to diversify their efforts to stay nimble in the event of future changes. If your fundraising is all events-based, consider adding an annual crowdfunding campaign around Giving Tuesday. If you’re heavily reliant on website donations, consider making a small bet on peer-to-peer fundraising.
Then work on connecting these seemingly disparate efforts. As we see in The State of Modern Philanthropy 2020, donors typically return to take a second action of some kind well before the one-year mark:
- 189 days after engaging with a crowdfunding campaign
- 184 days after engaging with a donation page
- 192 days after engaging with a peer-to-peer campaign
- 185 days after engaging with a ticketed event
Being nimble also means you know when to pause and reflect how to best go from a small bet to a large one. For example, when COVID-19 hit, Hope for Haiti had to stop and evaluate whether or not they should still move forward with their Hike for Haiti Challenge. Instead of pivoting away from the investment they had already made, they leaned into it and took the already virtual event from one weekend into a month-long campaign. The result was $100,000 raised—10 times as much as their event in 2019.
This year showed us that diversifying your fundraising strategy has never been more important; in many cases, it was the difference between an organization thriving through crisis, or shutting its doors. We don’t yet know what’s in front of us in 2021, but staying nimble has now become a strategic imperative for most organizations.
The Future Is What We Make It
This past year has been one of the most challenging we’ve faced as a sector, but that doesn’t mean we can’t learn from it. In many ways, we came together in the face of adversity on a scale never before seen.
As we double down on lessons learned, remember that the future is never set in stone. The future is what we make it. As a unified social sector, we can all make 2021 one of the best years yet. Onward and upward!
The State of Modern Philanthropy 2020
Deconstructing the Online Donor Journey
This new iteration of Classy’s annual report provides the latest trends in online donor behavior, while also continuing conversations from our 2019 report on how, and when, donors come back. download The State of Modern Philanthropy 2020.