The Chronicle of Philanthropy recently published an article citing some warning signs nonprofits and fundraisers should be aware of as we move further into 2022. I agree with their assessment that as we move into 2022, the fundraising environment may be shifting and not for the better.
Of the four issues they cited, I’m most concerned about three:
- The volatility of the stock market
- The rapid rise of inflation
- The drop in consumer confidence
Let’s unpack these three and why they show we might be heading into some stiff fundraising headwinds.
The volatility of the stock market
Giving USA has consistently shown that the stock market is a leading indicator of giving in America as seen in the chart below. Of concern in these early days of 2022 is the increased volatility of the stock market and what it could mean for giving should the volatility increase.
Back in 2018 when the stock market imploded at the end of the year, we saw how that had a direct negative impact on giving – which means this is definitely something to watch.
The rapid rise of inflation
The significant jump in inflation is of special concern as it directly impacts how much disposable income a household has available to spend. With inflation at a 40-year high, many households are feeling the pinch, which could affect how much people are able to give.
What could offset this, at least for a time, is the record savings rate of 2020, which reached a high of 13.7% compared to 7.5% in 2019 (which is about the average savings rate in America). This represents somewhere between $2.35 trillion and $2.85 trillion that households socked away in 2020. These “reserves” could help buoy donor behavior, but the level of consumer confidence indicates that may not be the case.
The drop in consumer confidence
As the Chronicle reports, consumer confidence has dropped dramatically over the last 12 months. Quoting the University of Michigan’s Surveys of Consumers, consumer confidence is down 14.9 percent in January compared to one year ago. Of special concern is that 4.8 percent of that drop is from December 2021 and January 2022.
This significant drop in consumer confidence combined with the spike in inflation and the volatility of the stock market is a harbinger of potential fundraising headwinds in the coming months.
So what to do?
- Stay on message. Keep your donors connected to your cause and the outcomes they are making possible through their support.
- Ensure a regular cadence of communication. Your donors love you, but not enough to be thinking about you 24/7. They think about you when you show up, so make sure you don’t pull back on communicating with your donors.
- Give donors a reason to continue their support. Make sure you are offering compelling reasons for donors to continue their support, not the least of which are stories of lives being impacted through their ongoing support.
Don’t make a drop in donated revenue a self-fulfilling prophecy by pulling back. Lean into these next months.
+ More Insights from Dunham+Company: “Why Is Storytelling Important for Fundraising?“