In terms of the overall culture of giving, there’s some good news to report: the August 2023 JBWere NAB Charitable Giving Index reports that charitable donations by Australian households rose 10% in FY 2023, surpassing the previous high recorded in 2019.

Likewise, charitable giving by high-net-worth households, Private Ancillary Fund (PAF) establishment and corporate community investment have all grown.

However, an estimated $3 billion in donations has been lost over the past three years. Not only have we seen a significant drop in giving, recovery has stalled within the general population as many Australians dealt with cost-of-living pressures. This puts increased pressure on structured giving, including private ancillary funds (PAFs), public ancillary funds (PUFs) and trusts.

The takeaway here is that the growing gap between the rich and poor “is as true in philanthropy as in life” says JBWere’s John McLeod.

“Most people say we’re at the peak in terms of interest rates at the moment so we’re likely to get a little bit of pressure relief on cost of living. But the longer term trend is a fewer number of givers, giving more.”

Interestingly, a lack of money is not the only consideration. The data also suggests a perceived lack of time and energy, with many reporting feeling busier with the return of office working, commuting, travel and social events – a change which may also be affecting volunteer rates.

What does this all mean? There are a number of opportunity areas for arts organisations to consider incorporating into their fundraising and marketing strategies based on these giving trends.

OPPORTUNITY: HIGH INCOME DONORS

Giving among high-net-worth individuals plays a pivotal role in supporting the arts and there is enormous potential for people earning over $500k pa.

While the proportion of taxpayers claiming a donation has fallen, the average tax-deductible donation has increased; and almost half of individuals in the $500k – $1 million bracket did not make a tax‑deductible donation in 2019–20.

OPPORTUNITY: MID-VALUE DONORS

Mid-value donors are a highly dependable segment that generally can afford to give donations ranging from $250 to $10,000.

They have demonstrated resilience in the face of the ongoing cost-of-living crisis and possess both the financial means and a genuine interest in supporting charitable causes, including the arts.

While mid-value donors have been able to maintain and even increase their contributions during challenging times, the post-pandemic environment has prompted significant shifts in how they make their giving decisions.

For this segment, giving becomes a powerful way to respond to overwhelmingly negative news. In the midst of the cost-of-living crisis, giving presents an opportunity to address perceived societal injustices and contribute to rebalancing society.

Mid-value donors seek to feel valued, clever, compassionate, safe and secure. Nurturing these emotional connections in your fundraising can create a lasting impact.

OPPORTUNITY: THE CHANGING WAYS OF GIVING

McCrindle’s 2023 report, NFP Insights: Empowering Impact, sheds fascinating light on giving behaviour in the not-for-profit landscape, including:

• Donors are increasingly ‘opportunity givers’ – a trend driven largely by younger donors that refers to giving in response to a pressing need or being approached for support, versus ‘committed givers’ who donate on a frequent or regular basis.
• Younger donors care more about the global and addressing the root causes of issues, while older donors care more about the local.

You should consider both the current and likely future makeup of your donor base when preparing your key messages and communications strategy. For example, if you’re targeting Gen Y and Z, focus on a sense of urgency and global impact.

OPPORTUNITY: UNDERSTANDING MOTIVATORS

Understanding what drives people to support (or block) your organisation will give you an edge when fundraising.

McCrindle’s research suggests that trust in your organisation and its reputation are important factors for all your donors, but especially for older supporters; while an online community connected to your campaigns and the ability to make one-click donations is more important for younger donors.

Significant blockers to support include management of finances, too frequent requests for money, cost of living pressures, poor customer service and a sense of being taken for granted.

The good news is that only one factor on that list – cost of living pressures – is out of your control!

OPPORTUNITY: LEVERAGING DATA

One way to maximise your fundraising potential is by using your data.

Identify and categorise the most promising and relevant donors in your database, then use that information to craft targeted communications that resonate with each target audience.

For example, do your supporters skew older? Research suggests that audiences over 55 are the most likely age group to experience no barriers to arts attendance and support, so a campaign focused on this cohort may be particularly effective.

OPPORTUNITY: BUILD YOUR ACTIVE/ENGAGED SUPPORTERS

Engaged givers open your emails, give to you on a regular basis and often participate on the frontline (through volunteering, advocacy etc). They are 2.2 times more likely to give financially at least monthly and 1.8 times more likely to have given $200 or more in the previous 12 months.

These donors currently make up just 30% of all givers – and this number must grow if you want to increase both donations and your database.

Your plan for growing your engaged supporters should include:

• Gen Y: currently Australia’s largest generation (21% of the population), they comprise more than a third of the workforce and are the most formally educated generation ever.
• Boomers: they still hold most wealth, so don’t forget them either!

A tip from John McLeod: use your existing engaged donors as much as possible – promote the what and why of their giving, find out why they’ve supported you, and use that to engage their peers.

“If they see other people who are their equal doing it and understand why, they’re more likely to give themselves.”

Keep your active supporters engaged with the cause, offer a range of ways of getting involved and provide opportunities to share their stories with others.

OPPORTUNITY: INTERGENERATIONAL WEALTH TRANSFER

Australia is expecting an unprecedented $2.6 trillion in intergenerational wealth transfer from 2021 to 2040. John McLeod says this means two things for the arts:

“First is making sure your existing donors know that leaving you something in your will is an option. It might not be something they’ve ever thought of, so make sure that seed is planted.

“Second, when these wealthier parents do pass on their assets, how do you get their children interested in attending and then supporting what you do? You need a strategy there. And that’s going to be a useful topic for the next 20 years.”

JB Were’s major Bequest Report focuses on bequests and intergenerational wealth transfer.

LET’S TALK TACTICS

Arts organisations should consider the following general tactics to adapt to the current economic environment and changing giving landscape:

• The case for support

Consider updating your key messaging and case for support to reflect the current circumstances.

“One of the challenges for arts of course is to make it known to the donors why their support is important. Unlike most sectors it’s probably not quite as obvious,” John says.

“Especially now when people may be asking, where’s the need gap? We’re paying to come along to events, why do they want us to donate as well? That case should be built into the ask.”

Share real-life stories and case studies about the impact of the cost-of-living crisis. Behind-the-scenes content, statistics and interviews may give your supporters a better understanding of the work you do and how their support helps.

Promoting and celebrating stories from diverse professions, communities and backgrounds helps to demonstrate the value of philanthropy, foster a culture of giving, and highlight the personal benefits of giving, including improved wellbeing, physical health and happiness.

Creative Australia has more information on crafting a compelling case for support.

• Communications and channels

Create highly personalised communication materials that exude authenticity and remember that often the channel of engagement can be different from the channel of giving. For example, mid-value donors are highly likely to give online even in response to a traditional offline communication.

Finding creative, meaningful ways to stay connected keeps communication channels open and shows your supporters that you value them.

Donations are likely to pick up again when people are able to give more, so don’t drop the ball!

• Report on impact

Put effort into regular reporting back to your donors on how their gifts have made a difference.

• Thank people with speed and humanity

Don’t rely on the same standard approaches to thank you communications – mix it up a little.

Remember to show appreciation for whatever your supporters are able to give. This can be as simple as a social media shout out or personal thank you letter, or something that requires more resources such as a ‘supporter of the month’ program.

Always thank supporters for their ongoing commitment, not just for their most recent gift.

• No donation is too small

Let your supporters know that small donations are valued and still make a difference. For some, a small, regular donation might feel more manageable.

Consider providing opportunities for non-financial support like volunteer opportunities or peer-to-peer fundraising.

---

References and further reading

Parliament of Australia, ‘The Impact of COVID-19 on the Arts’

JB Were, ‘JBWere NAB Charitable Giving Index’

Creative Partnerships Australia, ‘Giving Attitude 2.5 Private Sector Support Survey: Pandemic Edition’

Creative Partnerships Australia, ‘Building Your Case For Support’

Fundraising and Philanthropy, ‘Weathering the storm: How mid-value donors are tackling the cost-of-living crisis’ (subscriber paywall)

Australian Charities and Not-for-profits Commission (ACNC): Cost of living issues impact the Australian charity sector