Kelly Browning, CEO of the American Institute for Cancer Research, possesses an abundance of the one trait I value most in fundraisers and nonprofit executives — curiosity.

Seldom does any significant fundraising conference or nonprofit gathering take place that Kelly’s not sitting in as many sessions and asking as many questions as is humanly possible.

And each time I run into Kelly he has one or more terrific questions to pose — and almost always a trenchant observation or two as to the possible ‘what’ or ‘why’ by way of an answer.

Recently, over a sandwich, he asked me if we were seeing any dramatic drops in acquisition, retention and net income among organizations that depend on an extraordinary number of older (70 years +) donors.

I answered with an emphatic “yes.” Over and over The Agitator and, for the past 5 years, The Target Index of National Fundraising Performance, have chronicled this decline.

The decline is especially noticeable in the ‘Health’ sector for groups like Kelly’s AICR and almost all the other 17 organizations included in that part of the Index. (Among the groups: Alzheimer’s Association, American Diabetes Association, American Heart Association, Easter Seals, March of Dimes, Juvenile Diabetes Research, etc.)

As the Target analysts note:

“Health sector revenue and donor growth have both lagged overall Index median trends significantly over the long term. From the twelve months ending Q1 2008 to the twelve months ending Q1 2013, health organizations had cumulative revenue declines of 23.3% compared to a decline of only 7.4% for the Index as a whole. Over the same five-year period, health organizations had a cumulative donor decline of 28.9%, compared to a decline of only 12.6% for the Index as a whole.”

I beat Kelly to the draw with the question: “Why?”

He chewed thoughtfully on his sandwich, swallowed, then delivered a two word answer:  “Quantitative easing.”

Brilliant! Why didn’t I think of that?

‘Quantitative easing’ or ‘QE’ as it’s known on Wall Street is the policy currently being used by the U.S. Federal Reserve and central banks in other countries to stimulate national economies. QE typically involves central banks buying government bonds in order to lower short-term interest rates.

What in the world does this have to do with fundraising? With older donors?

Millions of donors who are above 65 depend largely on social security and interest from their bond portfolios (the investment of choice as folks retire). So when interest rates on certificates of deposit or the yield on bonds goes down, they have lots less income to live on — or to give to charity.

Here’s an example of how QE affects a typical donor.

  • Assume your 70 year old donor receives an annual social security payment of $22,000. (The maximum is $31,000 a year for folks retiring at age 66 this year) and has a portfolio of Treasury notes of $400,000.
  • In 2008 — the year the Great Recession hit — that donor received $22,000 from Social Security, plus an additional $16,400 in Treasury note interest (4.1%) for a total income of $38,400.
  • By 2013, although her Social Security income was roughly the same, her income from Treasury notes had dropped from $16,400 to $7,600 for a total income of $29,600 — an annual difference of $8,800.

Any wonder why acquisition rates and gift size are down among older donors? Any wonder why 54% of American donors say they’ve stopped giving because they ‘can no longer afford it’?

While quantitative easing may be boosting the stock market and perhaps stimulating house-buying and business start-ups for younger folks, you’re probably seeing its negative effects among many of your own older donors.

In the current economic climate, the fear of older donors that they will outlive their money is real and in many cases terrifying.

Put yourself in these donors’ shoes and offer sensible giving alternatives — lower frequency of requests, smaller monthly installment giving, perhaps a paid up life insurance policy, a bequest or charitable annuity, etc. — that meet their need to stay charitably involved yet fit within their financial comfort zones.

What steps are you taking?


P.S. To Kelly Browning, who appears to be nowhere close to retirement, an Agitator Raise for both his curiosity and his interesting take on the reason behind the 23.3% decline in revenue for health organizations over the past five years.

This article was posted in: Demographics, Planned giving / legacy marketing.
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