Welcome to July’s Fundraising Talks. It’s hard to believe we are already halfway through 2024. Now is the time to evaluate our accomplishments and challenges from the first half of the year and plan for the rest of 2024. 

According to Giving USA 2024: The Annual Report on Philanthropy for the Year 2023, giving in 2023 by individuals, foundations, bequests, and corporations increased in current dollars but “remained flat or declined when adjusted for inflation.” The estimated total giving from all sources was $557.16 billion to U.S. charities in 2023. The 2024-2025 Philanthropy Outlook Report, published earlier this year by the Indiana University Lilly Family School of Philanthropy, shares encouraging data that total charitable giving is expected to rise in 2024 and 2025. However, certain factors such as the upcoming election might impact total giving. 

Recently, BWF disclosed key results from the 2024 Giving USA Report. The report reveals that individual giving remains the largest source of donations, but bequest giving was the only source to outpace inflation, growing to $42.68 billion in 2023. Foundations gave $103.5 billion, driven largely by strong market growth that increased the value of assets held by foundations. Donations received by education totaled $87.69 billion, human services received $88.84 billion, health received $56.58 billion, environment/animals received $21.20 billion, and arts/culture/humanities received $25.26 billion. This data seems promising, but without continued efforts by development professionals to engage and cultivate relationships with individuals and other funding sources, it will be difficult to stay optimistic.

Last month we shared insights from the Blackbaud Institute on key charitable giving behaviors of Gen Z. Similarly, the 2024 Bank of America Private Bank Study of Wealthy Americans provides information on how younger high-net-worth individuals are shifting from traditional investment strategies. The key findings in the Bank of America report are based on a study of 1,007 high-net-worth (HNW) individuals who were at least 21 years old and had at least $3 million in investable assets, excluding their primary residence. Factors such as rising inflation and interest rates are impacting the financial decisions of wealthy individuals. With the much-anticipated Great Wealth Transfer expected to happen through 2045, about $84 trillion is projected to be passed down from the baby boomers to future generations.

Some key findings and trends identified by the report are as follows:

1. 72 percent of individuals between the ages of 21 to 43 do not prefer traditional investment strategies such as stocks and bonds. Real estate investments, crypto and digital assets, and private equity rank as the top three investment choices for this younger group. 

2. Almost half of the younger generation (48 percent) prefer to receive their financial content from social media, whereas 55 percent of individuals over age 44 prefer online articles for financial information.

3. All wealthy individuals agree that capital gains taxes, dividends, and fees are principal factors when making investment decisions. The younger generation also places significant consideration on the sentimental value of investments, the intended use of proceeds, and a company’s ESG track record, more so than the older generation.

4. All generations have concerns about the potential use of AI and the quality of information generated by AI. However, younger wealthy individuals show more confidence in the use of AI to improve investment returns. 

5. For most wealthy Americans, philanthropy is a priority, though there are differences in how distinct groups of wealthy people express their intentions to give. The report categorizes wealthy individuals into three groups: legacy wealth, head start, and self-made. Legacy wealth includes “those with an upper-class upbringing and an inheritance.” Head start includes “those with an upper-class upbringing and no inheritance, or a middle-class upbringing with some inheritance.” Self-made includes “those with a middle-class or poor upbringing and no inheritance.” Research indicates that younger individuals in the legacy wealth group are more directly involved in philanthropic activities such as volunteering and fundraising, while self-made individuals focus more on direct giving. 

Fundraising professionals should use these findings to develop strategies that enable nonprofits to invest in strong relationships with donors. There has been a drop in the overall number of donors, which means fundraisers should focus on strategies to increase donor retention. Strategies that connect with wealthy individuals from different generations should be created to ensure effective fundraising.

As always, please feel free to reach out to us with questions, comments, or any assistance with fundraising research!

Best Regards,

Sapna and the USM Advancement Research Team