2020 Philanthropy Predictions – Part II

Below is the second in a four-part series devoted to philanthropy predictions for the 2010-2019 decade.  The first three predictions in Part I focused on how technology will change our work over the next 10 years.  Part II below is focused on how donor expectations and the regulatory environment will impact our work.

So, without further delay and direct from my crystal ball. . .

2020 Philanthropy Prediction 4:  State and federal regulations will demand more accountability and transparency.  By in large, state governments serve the regulation role for 501 (c) (3) organizations.  Currently, only nine states (Delaware, Wyoming, Iowa, Idaho, Nevada, and Nebraska, Indiana, Vermont, and South Dakota) have no regulations in place for 501 (c) (3) organizations.  And while there is evidence to suggest that these states have experienced no more fraud, complaints, or abuses than the 41 more regulated states, the general momentum emerging from for-profit accounting scandals and fraudulent investment schemes (think Madoff) suggest that the next decade will witness a tightening of 501 (c) (3) regulations.

This trend will impact our work in a variety of ways, including, more sophisticated reporting on gift revenue, expenses, and ultimate program support.  However, the area which I believe is most ripe for enhanced oversight is the execution of life income gifts, especially annuities.  As currently structured in most states, life-income gifts such as the ubiquitous CGA, are backed by the good faith and assets of the organization.  However, look for more strident state oversight into which organizations can write CGAs, even to the point of seeking state approval before each CGA can be implemented.  Nightmarish to be sure, but the language has already been considered in at least a few states.

2020 Philanthropy Prediction 5:  The role of donor stewardship will change. While donor stewardship is practiced at most organizations, the level of sophistication varies.  This will radically change over the next 10 years.  The primary reason why organizations will ramp up their stewardship efforts will be because donors will require it.

What will donor stewardship look like by 2020? For thriving organizations, it will not be enough to craft eloquent correspondence expressing gratitude for gifts.  Instead, donor stewardship in 2020 will integrate personalized, donor-driven “thank-yous” with robust and experiential gift reports.  Donors will expect regular (i.e., more than the annual report) and personalized reports on how their giving has impacted those you serve.  Additionally, more donors will expect to become engaged in the work of the organization.  In the higher education world, the first wave of “helicopter parents” has emerged.    It is these same individuals and members of their age cohort, who, as they grow with age and resources will become “helicopter donors.”   They will want to invest their time, talent, and treasure – not just one.  The role of stewardship, then, will be much less about thanking donors and much more about involving them comprehensively in the life of the organization.

2020 Philanthropy Prediction 6:  Annual giving will become more important, the Annual Fund will not. Annual giving programs, or the processes used to solicit donors for gifts each year, will grow in importance as organizations implement research-based recommendations showing the link between consistent annual gifts and major and planned gifts. Recognizing donors who make consecutive annual gifts (regardless of amount) will become a hallmark of thriving organizations.

However, donors will continue to grow more targeted with their giving.  Therefore, while the Annual Fund may continue for some organizations, these will amount to a collection of multiple “funds” which will allow the donor to designation her gift to support specific areas or programs of the organization.  For the truly thriving organizations, Annual Funds will dissolve as organizations will personalize annual giving requests based donor-driven metrics.  Even when implementing solicitations for new prospects, organizations will opt to present funding options based on prospect-defined characteristics (demographic data primarily) as opposed to a general Annual Fund request.

In essence, then, the future will be more tightly monitored by governing bodies as well as by donors.  All of our constituencies will expect to experience more transparency and involvement in our work.  While these developments may appear daunting, they also present us with opportunities – opportunities to work better and to serve better – what more could we ask for?

You’ll see more opportunities regarding major gifts in my next posts. . .

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