The Modern Nonprofit: Strategic Shifts to Engage Gen Z and Millennial Donors
Haskel Canagarajah is a third-year majoring in Finance and minoring in Health Policy and Administration at Penn State University. Haskel is currently the Vice President of Consulting Services for the Nittany Lion Consulting Group, where he acquires clients, oversees 50 student consultants working on 8-12 client projects a semester, and engages in initiatives to grow the organization. Outside of NLCG, he serves as the Donor Relations Coordinator for Penn State THON, the world’s largest student-run philanthropy. Haskel is entering his 5th year in a fundraising development focused role and has advised several nonprofit initiatives in the past.
Today’s nonprofit landscape is changing, and it is imperative that mission-based organizations engage in strategic changes if they want to achieve their impact targets. In a time when many still consider baby boomers to be in the majority, it may come as a surprise that millennials, Gen Z and those younger now make up over half of the American population, and with their increased presence comes a shift in how organizations attract and retain supporters (Frey).
To name some notable changes: over the past couple of years, increased activism by young individuals has taken center stage on global news headlines, especially with the George Floyd controversy. In addition, as a result of the COVID-19 pandemic, the world has seen a dramatic increase in the use of technology, both in work and social contexts. Finally, technological optimization has allowed for groceries, food, and transport to all be a tap away.
In a society where it has become just as easy to give back to the community as it is to order an Uber, tremendous growth opportunities are present for nonprofits who capitalize on the interests of Gen Z and millennial donors. So, what are the major trends nonprofit professionals need to be aware of and what are the strategies to capitalize on those trends? Three major findings stick out and will be discussed in this article:
- Donors are more invested in the causes they support and exhibit less transactional behavior.
- With an overload of donation opportunities, connection to people and the cause of the nonprofit ultimately drives giving by Gen Z and Millennial Donors.
- It’s not all about the cause: Transactionally simple platforms have a competitive advantage with younger donors.
Donors Today Are More Invested
What nonprofit professionals are noticing with this new cohort of Gen Z and Millennial donors is that they strive to be more connected to the causes they support. While in previous generations, it may have been common to see a large portfolio of nonprofits supported by one individual, it appears that younger donors want to avidly support a smaller number of causes with greater effort. As a result, less transactional behavior is exhibited, which can be defined as the interaction between the donor and the nonprofit being strictly monetary based. Instead, younger donors expect to develop long term relationships with the nonprofits they support. This results in three specific shifts to be aware of: younger donors perform more initial research before donating, they expect to feel part of a community when engaging with a nonprofit, and they increasingly seek volunteer opportunities.
Firstly, with information more readily accessible than ever, younger donors can perform more research than many of their older counterparts. In fact, 40% of Gen Z and millennial donors conduct significant research into a nonprofit before they feel comfortable giving money (Changing Our World). In the book “Generation Impact: How Next Gen Donors Are Revolutionizing Giving,” authors Sharna Goldseeker and Michael Moody call younger donors “Generation Impact” because many are hyper-focused on actually “seeing the needle move” (Nylen-Wysocki). They write that many want to see the impact their support will make prior to donating and some are curious about an organization’s model for creating change. For nonprofits, this carries two recommendations: organizations need to have a tightly controlled and consistent brand and they need to place priority on displaying their impact through a multi-channel approach. To address the former, it’s best to look at the risks of having a loosely controlled brand. For potential donors, a confusing brand that gives off contradicting messages will have them questioning what the nonprofit does, which lowers trust. With a plethora of giving opportunities present, donors will feel more confident giving their hard-earned money to a nonprofit with the highest trust factor. To address the latter – to build impact credibility – nonprofits not only need to display hard facts about their work through their marketing materials and website, but they need to ensure there are more channels for potential donors to see what impact they’ve made. This includes articles that center around their work, testimonials by those that have been affected by the nonprofit’s efforts, and a positive presence on charity rating sites. Doing so is paramount as research shows that 42% of Americans don’t trust charities, so showing tangible impact can reverse the thoughts of these individuals, resulting in higher contributions (Harrison).
Secondly, in order for nonprofits to receive consistent support from younger donors, it is imperative for them to build a sense of community where the donor and the nonprofit feel connected past the transaction date. Many nonprofits struggle with this, as Joe Scialabba, manager of Annual Leadership Gifts at Penn State says, “When 50% of people that donate don’t give back, we need to look at ourselves as the nonprofit world and say we’re missing something.” To improve this, the two most important actions to take are: sending regular communication to donors and changing the language used to interact with supporters. When it comes to sending regular communication, this should take the form of not only thanking donors but also providing updates regarding the tangible achievements that the individual’s donation is making. Aidan Cliff, the Development Director for Penn State THON, a nonprofit that raises 10+ million dollars every year, says “You [the nonprofit] want to be consistently inconsistent,” when it comes to maintaining relationships with donors. What this means is that nonprofits should be continually sending out communication, but they should alter their strategies every year, so their moves aren’t predictable. This can vary between calling your donors, gifting them with handwritten thank you notes, sending personalized emails, and more. Joe Scialabba added that communication such as, “I was thinking of you today because your donation did ‘X’ for us,” is important because it is centered around specificity and authenticity. In addition, these benefits should be provided to all donors, as inclusivity results in better communities. Scott Harrison, the Founder and CEO of Charity: Water states that this was one of their keys to success; “People could not believe that a charity would bother reporting to them on a $20 gift” (Harrison).
Another suggestion to build relations with donors is that nonprofits shift their language use. Instead of overusing the word “donate” which implies that only a transaction is taking place, modern nonprofits have begun to use words such as “invest” or “partner” which carries more weight and makes a donor feel more connected to the cause.
Thirdly, for several reasons, offering volunteer opportunities to younger donors is a must. Research suggests that 70% of Gen Z and millennial donors would rather donate time than money (Changing Our World). While money has significant benefits, it seems clear that a shift is taking place with donors in that they believe giving their time to a cause carries a higher impact. Why might this be? Aidan Cliff stated, “I think purely a lot of them have less disposable income, so they’re much more interested in giving time.” Research confirms Cliff’s thoughts, as 55% of donors who have not donated money were not able to because they did not have the free cash to do so (Changing Our World). To make accessible volunteer opportunities, nonprofits can employ a variety of strategies, such as bringing volunteers on staff to help with internal coordination, having one-time volunteer opportunities at events, and offering remote roles. Ultimately, providing the most avenues for engagement results in utilizing a nonprofit’s supporter base the most effectively, helping drive the mission forward.
Connection Drives Giving
For decades nonprofit professionals have been aware that for donors, the number one motivation for their giving is feeling a personal connection to the mission or people that support it. However, for younger donors, inspiring that connection takes a different route than it has for other generations. Specifically, peer to peer campaigns have seen resounding success and are the future of the nonprofit world. Secondly, videos and storytelling are more important than ever and can be a significant competitive edge for the nonprofit that masters it.
Research has shown that peer-to-peer campaigns see twice the transactional volume than general donation pages do, a statistic that proves these campaigns will be at the center of the nonprofit world for years to come (Classy). At first glance it’s evident why these pages succeed: people donate to their peers’ campaigns because they are people they trust, and so if a friend or family member supports a cause, you are more likely to support it because the credibility is already established, and you want to continue to develop the existing relationship. But in an age where there are so many peer-to-peer campaigns out there, there are more layers to success. The primary insight is that nonprofits can’t completely leave people to fundraise on their own, there needs to be central coordination. A nonprofit’s job in the peer-to-peer fundraising space is to enable advocacy and help supporters garner donations. Will Vincent, the Alumni Engagement Director for Penn State THON talks about the first step of this: “If they [the supporters] lose that passion and connection to THON, when they try to pass that on to one of their peers, it’s not going to be as effective. They need to be inspired and if we do a good job to keep that passion alive in our donor base, they’ll have no trouble passing it on.” Supporters can be inspired through staying in regular contact, offering them invites to exclusive events, and expressing the benefits that come when they become a voice for the cause.
Once that is kickstarted, the next step for the nonprofit is to enable their success through providing tips and creating materials. The materials can range from toolkits to communication templates to a platform where they can create a fundraising page for donations. Further, Aidan Cliff says holding events that provide motivation to boost fundraising totals is crucial, from providing incentive funds to creating capital campaigns, nonprofits simply need to create moments where donors are encouraged to come together as a community and raise money. When a nonprofit is able to provide support to their individual advocates, peer to peer campaigns see resounding success.
Secondly, when it comes to driving connection, storytelling through visual mediums attracts younger donors more effectively. Being able to master this results in great benefits for nonprofits, namely that they can convey their impact more efficiently and also tug on the heartstrings of potential donors. Joe Scialabba, who has also consulted for nonprofits, said, “People say all the time ‘I made a gift that really meant a lot to me, and it didn’t seem like it meant much to them’ But it did, and that is what’s sadder because we know that 99% of charities do really good work, but they don’t tell their story well.” To do this well, there are several tips that nonprofits should keep in mind: they should focus on building relatable characters so that donors can empathize better with what they may be going through. Further, telling a sequential story that builds up to a central impact moment develops continual interest by the viewer and builds emotional connection, leading to inspiration. Finally, framing stories in a hopeful, positive light is crucial. Charity: water, considered one of the leading nonprofits who have mastered storytelling, identified this as one of their keys to success as many nonprofits have tried to use guilt to motivate donors to give. The latter can lead to donor burnout and turnover, but hopeful messaging creates a cycle where donors want to keep giving to see positive trends (Riewer). Consider watching Charity: water videos to gain a better understanding of the gold standard in nonprofit storytelling.
Transactionally Simple Platforms Win
While it isn’t all about the money, as we head into 2022 with optimized services across the globe, nonprofits need to make sure that they are effectively leveraging technology to create simple user experiences that allow inspired donors to act. Younger individuals want donation experiences that provide the least resistance possible and allows for a feeling of immediate contribution. In fact, 54% of Gen Z and millennial donors will have less trust in how a nonprofit uses its funds if the donation process is not simple, 34% higher than baby boomers (Classy). There are two recommendations to ensure nonprofits are on the cutting edge with donation collection: Have digitally optimized platforms and create a recurring giving program for interested donors.
When it comes to having digitally optimized platforms, younger donors want to donate quickly and so nonprofits should limit the inputs they provide to a minimum. A nonprofit should only ask for the basics (name, donation amount, billing information, etc.) and if other data is needed, they should branch that data out into a separate follow-up survey. They should also simplify steps, for example offering buttons for preset donation amounts can help donors decide what to give, having a credit card scanner instead of having to manually enter all the information could do wonders on the user experience end, in addition to other strategies. Finally, nonprofits don’t necessarily need to create their own platforms, outsourcing to other fundraising management platforms is a cheap alternative that likely comes with more expertise compared to trying to create a platform in-house.
Finally, making repeat giving simple should be a priority for all nonprofits. Having a recurring giving program that pulls from user’s bank accounts monthly (should they opt for it) is an easy way to receive sustainable donations and limit the actions the donor takes. Further, making common activities such as corporate employee matching easy from a process standpoint should also be focused on by Finance and Development staff at nonprofits, as that continues to make the lives of donors easier, thereby increasing trust.
Ultimately, nonprofits are complex organizations that constantly need to evolve like commercial businesses. While these are just some of the recommendations that can revitalize nonprofits and heighten performance as a new generation takes over the majority of giving, understanding the trends of your donor base will yield more specific results that advance the cause. With the right blend of tactics and an in-depth understanding of why donors give, nonprofits can reach their impact targets and revolutionize our society for the better.
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Frey, William H. “Now, More than Half of Americans Are Millennials or Younger.” Brookings, Brookings, 14 Aug. 2020, https://www.brookings.edu/blog/the-avenue/2020/07/30/now-more-than-half-of-americans-are-millennials-or-younger/.
Harrison, Scott. “The Spring – the Charity: Water Story .” Youtube, https://www.youtube.com/watch?v=bdBG5VO01e0.
Nylen-Wysocki, Erin. “Generation Impact: How Next Gen Donors Are Revolutionizing Giving.” Candid, https://philanthropynewsdigest.org/off-the-shelf/generation-impact-how-next-gen-donors-are-revolutionizing-giving.
Riewer, Tyler. “Raise More Money by Telling Better Stories.” Nonprofit Storytelling Conference, 13 Mar. 2018, https://nonprofitstorytellingconference.com/importance-of-storytelling/.
“Understanding the next Generation of Donors .” Changing Our World, https://www.changingourworld.com/wp-content/uploads/2019/11/Next-Gen-Report_FINAL-1.pdf.
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Aidan Cliff- Development Director, Penn State THON
William Vincent – Alumni Engagement Director, Penn State THON
Joe Scialabba – Manager of Annual Leadership Gifts, Penn State University