As we approach the 60th anniversary of Bob Dylan’s seminal song 2023 seems to be a year of seismic change around the world and within the fundraising world, and yet are we ready for this in the global non-profit sector?
We began 2023 with the war still raging in Ukraine, as it still does, and it with war and destruction continuing in early 2024 in Gaza/Israel; a global political shift to right, the likelihood of Donald Trump being elected again as the US President and the certainty of Vladimir Putin being re-elected for a fifth term of office and Xi Jinping is in his third five-year term as China’s president with right to remain ‘President for life’. So, what is changing and how and how does the non-profit sector adapt?
At Daryl Upsall International when either undertaking an evaluation of the performance of a client’s current fundraising programme or a market assessment for potential fundraising expansion, we will also take a focused look at the context in which non-profit fundraising takes place. When I ask the audience during fundraising presentations around the world, “when did you last look at your PESTLE?” I am referring to a review of the Political, Economic, Social, Technological, Legal and Environmental context they are operating in and specifically how this will affect their fundraising programmes.
So let us look at the PESTLE for fundraising as we move into 2024.
We began with “Political” but what also is changing here that impacts our sector? The decline of both the hard and power of the West and at its core, its democratic values internally and externally, is leading to a reduced social space for nonprofits to operate in countries such as India, China, Russia and parts of Africa; reduced state provision in health and social services; rolling back of hard fought for rights for women and their reproduction rights, increasing political push back on LBGTQ+ rights and freedom of expression. Whilst so called “woke” culture has created problems of its own, slogans from political leaders such as wanting a “war on woke” can be seen as the start of the war on freedom of expression.
Many of us, especially “Boomers” in the Global North, such as myself, have lived through multiple periods of economic crisis and downturns, but have also seen and experienced the rise in the average wealth of the middle classes, increasing levels of disposable income and an expectation that this long-term trend would continue for us and for those in the Global South. This trend has enabled the significant rises in fundraising income for non-profits in the last few decades. The middle class were and are the core of the critically important monthly donors.
However, in recent years and especially in the last 12 months it has become clear that the economic paradigm has changed and the wealth trends shifted. The long-term decline of the middle classes a reality, food poverty a reality in the rich countries of the North and starvation rising in the South. Both of which are occurring largely out of sight and out of the media’s attention, but placing new strains on the non-profit sector.
Social, Economic and Political are, of course highly interrelated as those experiencing a declining standard of living and tougher financial conditions, resulting from the economic situation, often seek scapegoats (inevitably immigrants, legal or illegal); either lose faith entirely with the political system of seek political quick fixes on offer by the radical extreme right. Demographic social trends such as the aging population and with an explosive increase in the cost of pensions, health and social care place ever greater tax burdens on the younger generations, most of whom lack the financial security and certainty of their parents and grandparents.
Where will they find the will or ability to donate to charities and make long term donor commitments in the future? Older donor audiences, such as Boomers, are benevolent, emotional, loyal and have an in-built sense of duty to do the right thing, including donating to causes they believe in. Meanwhile, younger audiences (Gen X, Millennial) need to be convinced, as they have a strong sense of injustice and seek to take moral responsibility but require an authentic and trustworthy message to convince them to support via donating or seeking change through advocacy.
So, are we, as a sector, REALLY shifting in how we communicate and appeal to supporters away from “one message suits all”?
In 2023, we are living in increasingly hostile, polarized societies, in which according to the Edelman Trust Barometer, business is more trusted than charities, governments or the media. Indeed, globally trust in non-profits is declining overall.
At the same time the richest 1% of the global business leaders more than ever concentrating and consolidating their wealth and as a recent study Oxfam found, the richest 1% emit as much planet-heating pollution as two-thirds of humanity. According to The Wealth Report 2022 by Knight Frank The number of wealthy households will double over 10 years, exacerbation the economic and social divides we face, whilst at the same time HNWI giving is and will increasing be the biggest growth area in fundraising for the major international non-profit organisations, if they can get their act together.
Many INPOs are struggling with how to steward and manage international major donor relationships as UHNWI’s are no longer “located” in any one country. They may pay little or no tax as tax domiciles of one country, have their business HQ in another, their money in another and their foundation in another, whilst their wealth is generated globally. The ongoing arguments as to who/which national INPO office manages the UHNWI donor relationship continues to take up too much of non-profits’ time and energy.
Among the most discussed, reported on and at the same time welcomed and feared themes in 2023 is the Technological changes being brought about by the take-off of Artificial Intelligence (AI). Is AI a saviour of humanity or its greatest existential threat? Does it benefit non-profits in their mission and their fundraising or threaten it?
On the positive side, AI has been used to make breakthroughs in cancer research in the last year, helping to create a drug that could potentially treat liver cancer; guided engineered immune cells to seek out and tirelessly kill cancer cells and developed a treatment for an aggressive form of cancer in just 30 days and demonstrated it can predict a patient’s survival rate using doctors’ notes.
In fundraising generative AI can already increase internal efficiencies, whilst predictive AI is increasing the effectiveness of donor engagement and identifying who, when, how and what should be communicated with an individual donor. The immediate impact of predictive AI will be bigger than generative AI, which to date is not really delivering so much impact in the sector. In social/digital fundraising it plays a critical role in developing a pathway for lead generation and conversation to donation. However, many non-profit organizations are often not prepared for the quick pace of digital change and there is a real need for the upskilling of central and local teams in this area.
On the Legal front, CEOs and the senior management teams are also fearful of making internal change as we have seen a rise in disgruntled non-profit employees challenging them in social media and through legal means when changes to work patterns, locations or structures are proposed.
Finally, Environmental factors and where and how these are impacting the fundraising world. As I write COP 28 has concluded, for better or worse. At least carbon fuels got into the final text. As a veteran of COP 3 and Kyoto Protocol in 1997, during my time at Greenpeace, I see far too little action on reversing climate change, which is unquestionably am existential threat to humanity and the species we share this fragile planet with. Climate Change is already massively impacting the mission and work of almost all areas of activity that the non-profit sector is engaged with including heath, overseas development, disaster relief, wildlife conservation and poverty issues. Even in the USA the media attention is increasing with a 200+ % increase in mentions in media in 2023 alone.
The funding sector, notably foundations, is responding significantly as massive funding flows are going to climate change including the creation of new coalitions and climate focused non-profit advocacy organisations. In In 2022, the growth in giving to climate has increased by 25% compared with the overall philanthropic giving growth of only 8% and this trend has continued throughout 2023 as foundation funding for climate change mitigation has more than tripled from USD $900 million in 2015 to USD $3+ billion in 2021 and rising. Is this increase in funding coming at the expense of other cause? Only time will tell.
So, as we end one year and begin a new one, let’s recognise the challenges and opportunities we face as a sector. Let’s understand, use this knowledge and awareness to adapt, change, evolve and grow strong to avoid being left behind for times are indeed a changin’.
Come senators, congressmen, please heed the call
Don’t stand in the doorway, don’t block up the hall
For he that gets hurt will be he who has stalled
‘Cause the battle outside ragin’
Will soon shake your windows and rattle your walls
