How Tech is Shaping the Future of Philanthropy

How Tech is Shaping the Future of Philanthropy

By: Erin Arend SVP Corporate Development, DonateStock

Technology is a catalyst for innovation across nearly every sector of business, but the pandemic accelerated and amplified a wave of new tech solutions across even the most traditional industries. Suddenly, with a worldwide quarantine underfoot, all human interaction became virtual. Zoom became a verb and everyone, millennials, and aging boomers alike, had to inherit a digitally native lifestyle.  

It’s no surprise that the nonprofit industry, traditionally reliant on live and in person annual galas, was ripe for a significant technology upgrade. What is surprising, however, is that amid some of the world’s greatest challenges, emerged some of our greatest technological advancements and the nonprofit industry is perhaps one of the largest beneficiaries. Today, the nonprofit ecosystem has embraced innovative business practices powered by pandemic inspired tech, with even more opportunities on the horizon. 

But before we look ahead, let’s take a brief look back at how donor participation has shifted over time. Charitable giving used to be a simple transaction, often characterized by families writing an annual check to support their charity of choice.  With roughly 1.5M nonprofits now in the US, and a range of social values across different generations, philanthropy looks a bit different today. There is a new generation in control of wealth and more socially motivated generations aging into discretionary spending incomes. Today, donors are more involved personally and even professionally through corporate social responsibility programs. Moreover, the focus for all generations, including boomers and millennials, seems rooted in relationships with an eye on measurable impact. 

So, it would appear that the rapid rollout of tech-based solutions was rather timely for the nonprofit sector, as donor behavior is much more nuanced today and requires a more sophisticated range of tools for acquisition, stewardship, and retention. The pandemic just happened to be the force that drove rapid adoption as nonprofits had to adapt in order to be successful.  Suddenly, nonprofits had to rely on technology for all donor interaction.  

Live events became virtual and then evolved into hybrid options. Interestingly, nonprofits saved money with the shift to virtual events, and many were able to retain and even expand their donor base through digital outreach. Today, live events have largely resumed but most organizations continue to offer hybrid models as this allows for larger participation and lower overhead.

Donor acquisition, stewardship and retention also shifted to digital first strategies. Online chat became a staple feature on many sites; targeted email and text campaigns became tailored to specific donors; and suddenly, nonprofits valued their CRM systems for critical segmentation data and more targeted digital outreach rather than for direct mail campaigns.  

This digital forward trend inspired many tech-based solutions to emerge and help streamline digital fundraising, especially as donors became more comfortable donating online. Fundraising platforms for example integrated more functionality so that nonprofits could lean on these platforms for all communications, campaigns, events, and all forms of online fundraising including peer to peer, text to give, auctions, online giving, and more.  Additionally, online platforms bolstered partnerships with fintech companies who developed solutions that offered donors more ways to give, extending beyond cash and credit, with new offerings such as venmo, crypto, stock gifts, and DAF’s. With all donor interaction under one digital umbrella, nonprofits gleaned much more sophisticated data about their donor profiles, empowering more sophisticated targeting for all donor relations. 

With all of these new tools, how well are nonprofits equipped to face the many challenges ahead, such as inflation, market volatility, an unstable housing market, and news stories focused on Russia and a potential recession?

Interestingly, nonprofits now have the ability to customize messaging and address their donors’ special interests and concerns.  Donors still want to support their favorite causes, but they will be more strategic with their investments.

The “recession” narrative will encourage donors to hold onto their liquid assets. As inflation climbs, the value of cash gets diluted, which translates to a stronger portfolio of non-cash assets. This shift away from cash benefits nonprofits and platforms that now offer new ways to give non-cash assets such as stock or crypto.  Households 45+ actually have 8x more stock than cash and it’s largely discretionary.  Even in a down market, stock is a strong currency for investors to donate.  The majority of appreciated stock that investors donate are from 5+ year holdings. Additionally, non-cash gifts tend to be 5-6x larger than cash and as a result, organizations that grow their non-cash gifts, grow their topline revenue faster than those that rely solely on cash. 

As capital gains continue to rise, financial advisors are eager to educate their customers about the tax advantaged benefits of stock gifting. Few donors are actually aware of the benefits of stock gifting. So, together, with partners like DonateStock and financial advisors, Nonprofits can educate their 45+ donors about this savvy way to give. 

DonateStock provides additional benefits directly to nonprofits and through partnerships with giving platforms:

1. DonateStock provides an easy button that allows donors and financial advisors to give within minutes to any nonprofit and at no cost.  
2. DonateStock’s 501c3 brokerage account allows all nonprofits to lean into stock gifting.
3. DonateStock provides a free platform with marketing tools that help push out custom assets, campaign specific emails, resources that socialize the benefits of stock gifting and articulate the measurable impact made possible with stock gifts.
4. DonateStock provides a dashboard that tracks all gifts and automates the reconciliation process, removing the heavy lift for nonprofits. 
5. DonateStock follows up immediately upon receipt of the gift to thank the donor, nurturing an ongoing relationship

This is just one example of how tech is shaping the future of fundraising, but it embodies the key opportunities that nonprofits can harness thanks to technology-based solutions surrounding the nonprofit sector: 

Thanks to tech advancements, nonprofits can:

1. Leverage new partnerships to tap into new revenue streams
2. Segment and target donor communication (prospects, current, or long standing)
3. Lean on technology-based solutions to streamline and automate manual processes, so they can deploy their resources to the frontline and focus on the work they do best.

What’s unfolding next are unbelievable AI driven solutions, allowing for nonprofits to identify and predict their donors’ behaviors and curate specific opportunities based on their unique constituencies.  This tech will reduce waste and tailor business practices based on donor interests, which will benefit both donors and nonprofits. 

These are exciting times. Technology helped NASA divert an asteroid. Imagine what technology can do for nonprofit endeavors around the world. The silver lining on the heels of the pandemic is that the nonprofit sector is poised to take advantage of a suite of new, donor-savvy solutions, untapping billions in revenue. Today, rather than bracing for change, perhaps there is a new mantra, thanks to tech-based solutions.

Embrace the change and change the world. Together (powered by tech) we can.