Museum TrendsWatch 2020: Charitable Income

Rachael Cristine Woody

Rachael Cristine Woody

July 08, 2020

This post is the third of six installments on the American Alliance of Museums’ TrendsWatch 2020: Financial Sustainability. Read previous posts here: Museum TrendsWatch 2020: Financial Sustainability Introduction and Museum TrendsWatch 2020: Earned Income. This post will focus on “charitable income” for museums, an income stream that (on average) makes up 33% of revenue for most museums.

Summary

Charitable income includes money donated to the museum by individuals, foundations, granting agencies, or businesses. A museum with an over-reliance on charitable giving can prioritize focusing on donors and their expectations, to the neglect of their community of visitors (who have the potential to be cultivated into donors). For foundations, granting agencies, and even businesses there’s a mission attached to the dollars they give. Museums who receive money from these outside entities now have to meet these external agency missions on top of their own. This can cause the museum to “go off mission” while it attempts to achieve an external agency’s expectations in return for funding.

Challenges

There are several challenges present with charitable giving in the United States. The 2017 passage of the Tax Cuts and Jobs Act reduced the incentive for people to give. AAM reports this has reduced the percentage of taxpayers who itemize their taxes from 33 to 5%, leading to a projected reduction in giving somewhere between $13-billion to $20-billion. While there is news that 2018 saw charitable giving increase ($427.71-billion), when adjusted for inflation we learn that it’s dropped roughly 2%. And, of course, now we’re dealing with our second recession in 12-years due to the coronavirus pandemic. All sectors have been impacted and there will be steep competition for federal relief funds (in the form of grants) and charitable contributions. 

There’s also been a shift in who gives, why they give, and how they give. AAM reports there are fewer donors and an increase in mega donors (perhaps due to the 2017 tax change). Mega donors are identified by AAM as young, wealthy, and in the technology sector. A distinguishing attribute for these donors is that they prefer to invest in activities that will deliver large-scale and measurable change. And AAM posits that museums may be viewed as “too traditional”. Then there is the existence of “toxic donors”. Donors who made their money in a way that is controversial or unethical. (I covered this in A 2019 Recap of Museum Issues post). The report also indicates that those who grow up within a religious community are more apt to give. This learned philanthropy may decrease as attendance at these religious institutions decrease. Finally, there’s the influence of how technology facilitates giving. AAM reports in 2019 “arts and culture organizations received almost 10 percent of their total fundraising dollars online. In 2018, nearly a quarter of these donations were made via mobile devices.” While museums strive to make their website and CMS mobile-friendly, donation mechanisms are not always included in this effort, and if donors can’t easily give through a mobile site then your museum is at risk for leaving money on the table.

Opportunities

Though there is an increase in online and mobile giving, some analog and easily available methods of cultivating donors are still alive and well. Here is a list of methods that AAM has found (via various surveys) are still effective and museums should re-engage with:

  • Ask people (members and volunteers specifically) to donate. A survey in Australia revealed organizations don’t ask, don’t ask the right people, and don’t ask often enough.
  • Try to personalize the donation request. Pay attention to what members, volunteers, and donors are interested in and tie your request to supporting that interest.
  • Pay attention to your relationship efforts. A recent IMPACTS survey states that small to medium donors stop giving for these three reasons: 1. Lack of acknowledgement; 2. Weren’t asked to donate again; and 3. Lack of information on how their gift was used.
  • Use the data you have to analyze effective asking practices, identify opportunities, and do A/B testing to see which strategies are more affective with your audience.

Finally, there is the knowledge that we’ve reached an era of new donors: millennials. (I covered this in a recent post Do You Know the Millennial Museum Donor?). These next-gen donors are giving for different reasons and museums need to pay attention to who millennial donors are, what they want to support, and how they want to support it. There is an opportunity here to shift how museums engage with this next generation in order to better meet these donors where they’re at. There exists a powerful giving potential here if museums work appropriately to harness it.

Innovations

There are several trends emerging with the potential to innovate the charitable giving arena:

  • Social media and the utilization of peer-to-peer fundraising (via existing social networks) is on the rise. Last year’s #GivingTuesday (an annual campaign launched via email and social channels) generated $511-million.
  • Kickstarter, IndieGoGo, Facebook fundraisers, and other crowdfunding platforms are on the rise; though easy to use the success rate for these platforms is reportedly less than 37%. (Notably, this is a higher success rate than many national grants).
  • Along with social and online platforms, there’s the potential to incorporate chatbots into the donor cultivation and communication tool set. Chatbots are already being used at museums to answer basic questions and can be expanded upon to help fundraising efforts.

My Recommendation

Charitable giving takes a significant amount of staff time and resources. The rewards can be large, but as outlined above, they’re coming with increasingly difficult conditions. That’s not to suggest that charitable giving should be abandoned, but I do recommend museums critically evaluate who they’re engaging, how they’re engaging, and what the results are. The shift in donor generations from Boomer to Millennial is already a large reason to reconsider your museum’s current donor strategy. Museums must also contend with the shift in donor expectations for what their money goes toward and how they prefer to give (via online and mobile devices). Take the time to reevaluate your efforts and begin to experiment with new and innovative tools, while maintaining the effective analog methods outlined in the opportunities section.

Conclusion

Charitable giving has been and will be impacted by current events. It’s still unknown how far-reaching the pandemic’s effects will be on donors; some donors’ industries are more resilient than others during a crisis that requires the shuttering of non-essential work. Our approach to charitable giving already requires us to adjust to the Boomer/Millennial shift, and will require us to further adjust as we begin to understand how the pandemic has changed the charitable landscape for the near and future-term.

Rachael Cristine Woody

Rachael Cristine Woody

Consultant, author, and blogger Rachael Cristine Woody advises on museum strategies, collections management, grant writing and the future of museums for a wide variety of clients. Read Ms. Woody’s other blog posts, and check out Lucidea’s unrivaled CMS, Argus, that empowers museum professionals to make their collections more visible, accessible and engaging than ever before.  

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