News & Views

On May 1, 2006 the team at EHL Consulting toasted the firm's 15-year anniversary. Since the early years, we've seen first-hand quite a few dramatic changes in the national nonprofit arena. As the times changed, we've been right there...keeping up with the trends and serving our clients accordingly.

So what has changed? And what has stayed the same? Here are our top 15 observations:

1. Technology: Organizational Efficiency. The worldwide web has revolutionized how we send and receive information, and its effect on nonprofits has been profound. Online services to match donors and nonprofit organizations, CD-ROM databases, and the ability to correspond electronically have revolutionized the manner in which we communicate and conduct fundraising campaigns of all types and sizes.
2. Technology: Cost Effectiveness. Technology allows nonprofit organizations to reduce costs in data entry and communication. The ability to accept donations online and to post e-newsletters reduces the need for paper mailings, which saves both time and money. However, technology requires continued investments in equipment, personnel and training. These costs will undoubtedly continue to escalate and place pressure on all of us to stay contemporary and knowledgeable.
3. Accountability. The enactment of The American Competitiveness and Corporate Accountability Act of 2002, commonly known as the Sarbanes-Oxley Act, occurred following several highlypublicized corporate accounting scandals. Although the Sarbanes-Oxley Act addressed issues in for-profit accountability, the ideas set forth translated into the need for increased financial responsibility within nonprofits as well.
4. Cause-related Marketing. Companies have shown they can increase profits by communicating to their consumers a commitment to worthwhile causes. Therefore, nonprofits must be savvy in approaching corporate funders with requests that creatively match their own needs with business or corporate philanthropic and marketing agendas.
5. Careers in Philanthropy. Fundraising has become a desirable career choice for many involved in fields such as development, marketing and public relations. As a result, we've seen more competition from highly skilled professional fundraisers. The Association of Fundraising Professionals now boasts over 27,000 members (a major change in the past 15 years!), and works to advance philanthropy through advocacy, research, education and certification programs.
6. Religion: Still #1. Contributions to faith-based institutions still rank at the top of the list of where the donated dollars are going. In fact, Giving USA says 35% of all contributions go to faith-based institutions. This has remained constant for more than 80 years!
7. More Money, More Competition. Giving USA found that charitable giving in the United States has increased every year over the past 15 years, but nonetheless, every year it becomes harder and harder for nonprofits to raise money. The reasons? The number of charities has risen from 375,000 twenty years ago to 850,000 today. More nonprofits are competing for available philanthropic dollars, making the field even more highly competitive.
8. Natural Disasters: Impact. In the aftermath of Hurricane Katrina (2005), we've observed a caring global philanthropic community that has donated more than $3 billion to provide emergency care and services to those affected. While we believe that the numbers of donors generally increased from a steady decline in previous years, we predict that the effect is not long-term.
9. Declining Government Support. According to research by the Aspen Institute, the Bush administration's budget proposals for fiscal year 2006 could reduce government spending in areas of interest to nonprofits by 21% by fiscal year 2010, at least outside the areas of healthcare and income assistance. This means that nonprofits will become increasingly important in providing human services that the government no longer performs. General philanthropic support for human services agencies declined until last year.
10. More Mergers. The "m-word" is shedding its stigma as nonprofits look to mergers to cut costs and maximize their abilities to provide services. With federal funding for human services on the decline and more competition for charitable support generally, mergers have become an alluring prospect to nonprofits hoping to operate more efficiently.
11. More Millionaires! A 2006 study conducted by Merrill Lynch estimates that there are at least 2.9 million millionaires in North America--a record high. The majority of charitable donations come from individuals, so as incomes rise, so will giving. The Boston College Social Welfare Research Institute predicts that individuals will donate $5.5 to $7.4 trillion in the 20 year period from 1998 to 2017.
12. Foundation Explosion. The Center on Philanthropy at Indiana University found that the numbers of new foundations have risen from 22,000 in the 1980s to 65,000 today. While foundations in the past tended to be established in bequests, a number of these newer foundations were set up by the living, many as a result of vast fortunes accumulated in finance and technology. Individuals like Bill Gates and George Soros, who have billions to give away, are changing the face of philanthropy.
13. A World of Knowledge. The internet holds an abundance of information to aid individuals and others in making intelligent choices about their donations. Increasingly, research tools exist to help people to become smarter donors and organizations to obtain more timely information about their prospects.
14. Tokens of Appreciation. A recent study in the Journal of Experimental Social Psychology showed that when asked to give to a highly worthy cause, donations tripled when donors were offered a product in exchange for their gift. New and creative ways to acknowledge appreciation for support resonate better than ever with generous donors.
15. Changing Face of the Nation. The demographics of the United States have changed as minority populations continue to grow. African-Americans and Hispanics each make up roughly 15% of the population, and immigration from Asia, Latin America and Africa outweighs immigration from Europe. These days, minorities and women command a greater amount of the nation's wealth, which will be reflected in their philanthropic activities.

Nonprofits must have highly organized campaigns and should take advantage of technology in order to connect with donors and maintain efficiency. There is clearly a strong philanthropic drive among people today, but a successful fundraising thrust will depend on keeping current and knowing how to manipulate resources in today's evolving environment.

1. Center on Wealth and Philanthropy; http://www.bc.edu/research/swri/
2. Giving USA Foundation; http://www.aafrc.org/gusa/
3. Women's Funding Network, Fund Forward; http://www.fundforward.org/
4. Foundation Center; http://foundationcenter.org/