Nonprofits have a mission connection problem

The Philanthropy 400, The Chronicle of Philanthropy’s annual ranking report released in October 2010, showed that the nation’s 400 largest nonprofit organizations suffered an 11-percent drop in giving last year, the worst decline the organization wrote in the two decades since The Chronicle of Philanthropy started the ranking.

If you look at the list closely, you’ll see that The Philanthropy 400 is made up of a diverse group of organizations, although most are older and more established nonprofits.  Those on the list this year include some colleges and universities, health charities, hospitals, foundations, youth organizations, media, religious groups, and wildlife and environmental groups, to name a few.  Some on the list had significant increases in giving last year; others had substantial decreases.  I expected that the diversity of the groups within the listing would create some variances, but I was curious to know if any one category saw larger-than-average increases or decreases.

The report does not provide an analysis by category, so I added a “category type” to each organization on the list and reviewed my own using data I pulled on November 30, 2010[1].

Breaking the organizations into the categories below, here’s what I found using the data to compare the change in private giving in 2009 over 2008:

The greatest overall giving gains were in the Education, Health/Medical (Research/Other), Foundations/Trusts, and Children, Youth & Family categories.  The most significant overall declines in giving appear to be in the Health/Medical (Hospital), Outdoor and Environment, and Humanitarian (nonfood).

Within each of the categories, there could also be significant variances. For example, within the Military category, support for veterans organizations (DAV and PVA) showed a decline, while support for active troops (USO) showed improvement. This made sense to me in the case of the Military category, given our current military actions, but variations in other categories made less sense.

I would agree that this data suggests directional trends in some categories of nonprofits, specific causes, and perhaps for some individual organizations, although I’m not convinced that giving overall giving is down as reported by The Chronicle of Philanthropy.

The data provided in this report is merely a snapshot.  Many on the list have different fiscal years, and the data is updated on www.philanthropy.com as new data is provided.  In fact, my review of November 30, 2010, data, for example, suggested that overall giving was up 5% over the previous year, while the October written report from The Chronicle of Philanthropy indicated an 11% decline, as mentioned earlier. Also, no consideration seems to have been given to specific events within the life of an individual organization that might have triggered larger-than-usual donations within the year, such as a milestone anniversary.

As with all research, we could manipulate the data to support whatever giving position we chose to take on the nonprofit sector as a whole.  The reality is there’s a deeper problem that our Nation’s largest charitable organizations are not adequately addressing: Our culture and our demographics are rapidly evolving, and most of these organizations are not keeping pace with the evolution. New generations may have a mission connection problem.

In fact, most have spent years cultivating the Greatest Generation and the Baby Boomers but haven’t put much effort into reaching Generation X or Millenials (Generation Y).  Of those that have put forth an effort to reach the younger generations, the majority have used the same approaches that have proven successful for the older audiences.  Unfortunately, just because it has worked, does not mean it will continue to work. These cultural and demographic changes have created a whole new set of needs, values, and expectations of younger donors that are not aligned with those needs, values, and expectations of older donors.  Moreover, the speed of change is too high.

Speed and change are the two things most nonprofit organizations fail to do well.

The misalignment of these needs, values, and expectations between nonprofits means that the message and the mission of many organizations are no longer connecting in a meaningful way with new generations of prospective donors. Without the connection, there’s no love for the organization or its mission.

This lack of a mission connection is the underlying reason, not the economy, for the decline in giving to a majority of The Philanthropy 400, and for many nonprofits and educational institutions that didn’t make this list.

The question now is this: If you think your organization has a mission connection problem, what are you going to do about it?

[1] The Chronicle of Philanthropy updates its online data regularly.