Philanthropic giving by U.S. corporations surged last year compared to 2020, a positive sign for Michigan nonprofits that tend to rely more on corporate donors than individuals compared to other states.
Two recent reports track the current giving climate as well as trends from 2021, a year that also brought significantly more optimism among nonprofit leaders compared to the widespread uncertainty in the early months of the COVID-19 pandemic.
Nationwide, charitable giving remained relatively stable in 2021, increasing 4 percent from 2020 but decreasing 0.7 percent when adjusted for inflation, according to the Chicago-based Giving USA Foundation, which annually tracks giving trends. However, corporate giving jumped nearly 25 percent last year, or 18.3 percent when adjusted for inflation, compared to 2020.
More favorable stock market conditions and economic recovery after 2020 pandemic-related slowdowns contributed to the relative success in fundraising last year, according to Giving USA.
A separate annual report from Michigan-based Montgomery Consulting Inc. tracking the state’s fundraising climate showed that Michigan continues to deviate slightly from national trends, including a greater reliance on corporate donors. While corporate donors make up 4 percent of overall giving nationwide, gifts from corporations make up 18 percent of overall giving in Michigan.
Michael Montgomery, adjunct professor at University of Michigan-Dearborn and owner and principal consultant of Montgomery Consulting, said Michigan nonprofits will likely continue to depend on these donors for the foreseeable future.
“We do not have a strong tradition of individuals making major gifts, and that holds down what Michigan nonprofits raise from individuals,” Montgomery said. “On the upside, our state is still home to some of the largest and most generous U.S. corporate givers, which pushes giving by that sector up from what it might otherwise be.”
Nationally, about 5 percent of all giving by individuals in 2021 was classified as “megagifts” of $450 million or more. Megagifts are rare in Michigan, but 2021 saw two notable exceptions: Dan and Jennifer Gilbert’s $500 million donation to the city of Detroit, and an anonymous $550 million gift to Western Michigan University. Both set state records for donations to a city and to a higher education institution.
The tide is slowly changing, but it remains common for Michigan nonprofits to have never received a seven-figure gift, Montgomery said.
Many of the largest corporations in Michigan, including the 17 Fortune 500 companies based in the state, are known for their significant charitable contributions. Montgomery estimates that most direct about 15 percent of their annual giving to organizations located near their headquarters.
Meanwhile, individual donors still dominated giving both nationally and in Michigan in 2021, but while they made up close to 70 percent of total gifts nationally, individual donors in Michigan contributed just 53 percent of total gifts.
For specific sectors, fundraising nationally for nonprofits in health care and the arts improved in 2021, while nonprofits in education and human services struggled compared to 2020.
In Michigan, arts and culture organizations are more dependent on individual donors and less dependent on corporate donors than are Michigan nonprofits overall. Human service organizations in Michigan, on the other hand, depend even less on individual donors than do Michigan nonprofits overall, instead relying heavily on gifts from foundations.
Last year also brought more optimism among nonprofit leaders who during the early months of the pandemic struggled to determine how COVID-19 would affect giving.
Montgomery Consulting’s survey results from April 2020 revealed 87 percent of nonprofit respondents expected the fundraising climate to get worse. The same survey administered this year shows just 20 percent expect the fundraising climate to get worse, while 43 percent expect little change. A full third expect it to improve — almost three times as many as anticipated improvement pre-pandemic in 2019. Montgomery’s survey included 64 respondents from a sample of various nonprofits based on size, location and mission.
Montgomery said the optimism is warranted. Michigan nonprofits faced a record slump in fundraising improvement in 2020 but rebounded last year as 59 percent reported improved results — the highest rate in the last five years. Even in 2020, most Michigan nonprofits reported about the same fundraising results as the year prior, with just a 2-percent increase in those reporting worse results over 2019.
Despite overall growth and rising optimism, one-third of Michigan nonprofits reported that they failed to meet their 2021 fundraising goals — the same percentage that failed to meet 2020 goals. Some are struggling to recruit new donors: Nearly three out of 10 respondents reported somewhat or many fewer donors in 2022 than in the year prior, up from just 10 percent in 2021. While 53 percent gained donors in 2021, only about 38 percent reported gaining donors in 2022.
Montgomery said the trend of declining numbers of donors “is neither surprising nor overly worrisome — 2020 saw tremendous growth in the numbers of American donors. I think this is just that trend ending with no larger meaning.”
To fundraise successfully this year, Montgomery said Michigan nonprofits should ask early, in as personal a way as possible, and for amounts that are aggressive but not unreasonable.
“Whenever possible, make donors aware of the cost of producing the outcomes they most value so they have a reference point allowing them to see how what they give helps power what you do,” Montgomery said.
News coverage in the nonprofit section of MiBiz is made possible by advertising support from the Grand Rapids Community Foundation. GRCF is a leader in funding, initiating and leading programs that benefit the greater Grand Rapids area in arts and social engagement, education, health, neighborhoods, economic prosperity and the environment. This advertisement has no effect on editorial consideration in MiBiz.