What challenges and opportunities await this year? We look forward with a SWOT Analysis of philanthropy in 2023.
From BDI CEO/President Michael J. Tomlinson
Y’all… we made it! It’s 2023… a brand new year of saving lives… helping to transform hearts… and releasing generosity from your community of supporters. It’s exciting and energizing… but also, there’s an enormity to forecasting what will come in this new year. As in 2022, we stand, possibly on a precipice, trying to get a glimpse of what awaits us in philanthropy in the year ahead. So, what should nonprofits expect in 2023?
When I look back at some of the predictions and trends mentioned last year, I marvel at how the philanthropic environment played out very much as expected. So looking forward to 2023, I expect many of the same Strengths, Weaknesses, Opportunities and Threats (or, SWOT) will remain with us – possibly with deeper swings and heightened spectacle.
A SWOT analysis of philanthropy in 2023 is a useful tool to establish both where we’re at now and what might be waiting ahead. As always, I want to start by sharing two important quotes that always kick around in my head when I engage in these types of prediction exercises: The first is from Mark Twain: “The more you explain it, the more I don’t understand it.” And the second is from my grandfather: “The more I learn, the less I know.”
I share those, tongue firmly in cheek, because my analysis is based on what we know conclusively about what to expect. With war still in play, the edge of recession closer than ever, inflation rising, and political division widening, we might see the first real pullback in giving results in 2023. Then again… we might not!
With all that in mind, let’s look at a SWOT analysis of philanthropy to see what nonprofits should expect in 2023…
STRENGTHS (3 bright spots in 2023)
• Your Work Changes Lives. Enough said… but I’ll go on. Even as we face some of the big challenges mentioned above, I’m reminded every time I step into one of your ministries – lives are literally being restored, hope instilled and souls saved every single day. Of course, it’s hard work! And that’s why we’re called to it – and why when we communicate the impact of investment, supporters will not disappoint. It’s their calling and ministry too.
• There’s (Still!) Giving Momentum to Life Transformation Ministries. Philanthropic giving continues to show increases, according to the Giving USA 2022 Annual Report on Philanthropy – even given rising inflation and our post-pandemic landscape. While individual giving may be on a slight downward trend in the year to come, many donors are now connected with and supporting organizations they weren’t before 2020. So let’s continue to intentionally engage our donors and keep them close to the heart of our causes.
• Full Digital World Immersion. Digital strategies are more important than ever – and maintaining donor giving, donor engagement and net revenue in your digital channels is critical to your organization’s health. This means leaning even more heavily into streaming video, the use of and engagement on social media platforms and targeted digital communications. A commitment to continuing to learn and integrate these digital tools into outreach will continue to be key in 2023.
WEAKNESSES (3 areas to watch closely in 2023)
• Faithful Giving. As in 2022, giving to religious affiliated nonprofits continues to shrink, possibly related to the drop-off of church attendance and a decided cultural shift away from Christianity in America. This means that we can’t primarily rely on a tithe culture to motivate giving. Fortunately, largely speaking, we don’t.
• Individual Giving Down. Over the last two years, nonprofits were blessed by generosity that grew in ways never expected. Even so, there’s reason for even some concern. While dollars given were up, for the fourth consecutive year, giving by individuals (67%) has fallen below 70%. As such, we must adopt an investment mentality and lean harder into new donor acquisition efforts to find, engage and invite new supporters into the fold.
• Social Volatility. You’ve no doubt experienced the growing rifts in culture across the U.S. and around the world. Social divide, political divide, racial divide… And the real cost of these divides is that it’s increasingly harder to assume we’re on the same page with anyone. More than ever, the love and compassion that undergirds our commitment to serve others must be outwardly evident and promoted so we don’t inappropriately get caught up in fights that are both distracting and disruptive.
OPPORTUNITIES (5 areas to build up in 2023)
• Building Deeper Relationships with Pandemic Donors. As BDI’s Executive Vice President Lolly Colombo noted earlier this year, a huge influx of new and reactivated donors came on in 2020. The good news is these donors are retaining better than average. While retention softened a bit in 2022, we’re still seeing engagement and support above the levels in 2019, which is encouraging. I believe 2023 will be a bellwether year for identifying whether these donors continue to behave like loyal supporters. For this reason, we must fight even harder for their attention and engagement this year.
• Keep Their Attention. It seems almost trite to list “continue to tell the story of your stewardship and impact often and urgently” as a key opportunity, but over and over, the BDI team hears these questions from nonprofit leaders: “Are we asking for help too often?” and “Are supporters tired of hearing from us?”
The short answer is NO! In fact, there’s a direct positive correlation between messaging frequency and giving, especially if the content informs, has heart and provides an on-ramp for the audience’s engagement. Social media platforms provide a particularly useful on-ramp in this regard – and for ideas on boosting your nonprofit’s social media presence, I recommend this webinar from BDI’s social media team.
• Confidently Compete. The competition for donor dollars between organizations who all may do good work can seem unsavory at times, un-Christian even. That’s simply the wrong way to look at it. Here are the facts: Resources are finite. People’s attention is finite. Not all nonprofit and ministry work is of equal value and impact. We don’t have to adopt a position that we’re robbing others’ opportunity – in fact, if we don’t put our very confident and best foot forward with a strong case of support, we’ll lose a share of donors’ philanthropic portfolio. As BDI’s Chief Operating Officer Phil Stolberg wisely says, “Never apologize for your pride and passion for your cause.”
• Storytelling Tools are Better (and Cheaper). It’s a wonderful time in history to be doing what we do together. There are more ways and places to engage supporters than ever in my three decades in communications marketing. At the same time, I think there’s an over-emphasis on tools and channels and an under-emphasis on effective storytelling that moves the heart. That’s why my answer to the perennial question about which methodology or platform is best to use is, “All of them.” And in 2023, make sure to keep the story of your guests and your organization at the center of your outreach.
• Encourage and Inspire. If you ask me, this is the “secret weapon” of the most effective and tactical fundraising strategy. Don’t forget or under-emphasize that donors are not just impacted by, but also recipients of your ministry. The opportunity to play an active part in what changes the world for good is a HUGE blessing to them. As such, make it a point to continue sending notes and newsletters, emails and posts, that demonstrate need and invite financial participation. Each will be a POWERFUL encouragement that all is not lost in our communities and with our people.
THREATS (3 pressure points in 2023)
• Economic Recession. I mention this first because I know it’s on a lot of your minds right now. Because +60% of giving to nonprofit organizations and +70% of giving to ministries comes from individuals, extended economic recession is a great threat to philanthropy. And guess what – there’s no consensus as to where we are or what to do in this recessionary environment right now. In 2022, we saw increasing inflation, unemployment and stunted spending because interrupted global supply chains are still disrupting the flow of production.
That said, we really won’t know until March 2023 how the all-important year-end fundraising season performed in 2022. Wisely, many of my NPO leadership colleagues are in a “wait-and-see” mode until we have more results in hand. As we await those results, I still encourage you to develop and sustain engaged relationships with your supporters – it’s crucial to your ministry making the cut as your supporters make their giving decisions in the face of both recession and inflation.
• Tax Changes (Increases). With federal legislation, tax increases will have impacted Americans’ capacity to give, to some extent, in 2022 and may continue. As a result, nonprofits should expect in 2023 that this will dampen some supporters’ ability to be as generous. However, there’s no reason to fret about the things we have no control over. There’s also historical evidence that there will likely be less of a “drop off” of giving as there will be redistribution. So as I said previously, let’s compete!
• Crisis of Trust. A threat that has culture-wide implications is the growing crisis of trust with organizations, whether it be the church, the state or the corporations (Twitter immediately comes to mind) that are the very foundation of business in America. This trend puts loyalty to brands, and even long-standing relationships, at risk. It’s easy to leave (or to cease supporting) an institution. It’s much more difficult to leave behind or to let down people with whom we’re connected.
Especially for community-based ministries, we must step out from behind the safety and anonymity of the organizational brand and push our key people out into the limelight. Leadership, directors and advocates need to carry our messages forward person-to-person, meeting eye-to-eye and heart-to-heart, staking our name and reputation on the trustworthiness of the investment appeal.
In Summary: Bullish or Bearish in 2023?
They say to never end on a down note. But if you’re like me, while it’s nice to know what leans in our favor, it’s more important to understand what we’re up against. For BDI and in our work with nonprofit ministries, I’m overwhelmingly confident that we can rise to the known (and yet unknown) challenges with agility and patience, and thoughtfully respond to whatever awaits us in 2023.
Your fundraising development communications work is as nourishing as meals, as safe as shelter, and as INSPIRING as coming to believe in oneself again. The return on our investment (ROI) for these efforts should only partially be measured in dollars raised.
Viewed this way, nonprofits should expect an unbelievable opportunity in 2023 to vastly expand the reach and impact of ministries. Through every update and appeal, we’re advertising the greatness of our Heavenly Father and we are changing history and restoring America.
I’m wildly excited for the journey – reaching shared goals and winning means the expansion of life-changing and life-affirming ministry. I love NFL head coach Mike Tomlin, for his no-nonsense and patented response for why he anticipates victory, no matter the opponent:
“We expect adversity, but we’re equally confident in our professionals who will take the field. We do not seek comfort in the battle, but instead we will trust our talent’s ability to perform and make the requisite splash plays to win.”Mike Tomlin, Head Coach, Pittsburgh Steelers
Ultimately, that’s why I’m most bullish and expect additional GOOD FUNDRAISING TIMES in a challenging and competitive climate this year. Because I believe in you. I believe in us. And it doesn’t hurt having the best GM in all creation. May the Lord guide and strengthen us as we run on the field once again.
Michael J. Tomlinson