Donors of Color Declining; Improving Trust Could Help

Nonprofits need to focus on building trust with donors of color and be mindful of the current economy when courting them, suggests two new reports from the Indiana University Lilly Family School of Philanthropy.

“The Giving Environment: Giving Trends by Race and Ethnicity” looks at how different groups gave from 2000 to 2018. The report found that Asian American, Black, Hispanic, and Native American donors, like the population at large, all saw declines in giving during that period.

The Great Recession marked a big change in giving patterns. “Between 2000 to 2008, two-thirds of Americans were actively involved in charitable giving,” the report says. “In 2018, this figure reached a record low, with less than half of all households making charitable contributions.”

This decline in giving differed along racial lines, with the share of Hispanic American and Asian American households who give showing the steepest slides, 23 and 21 percentage points, respectively.

“For nonprofits, think about how economic factors affect different groups, because not everybody has the same rates of recovery from a recession,” says Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy. “The second takeaway for nonprofits is that economic factors are only a part of that decline in donor donation rates. There’s also declining rates of trust. They have to look at how do they build trust across different groups.”

Both reports examine the issue of trust, with the second one, “The Speed of Trust: An Experiment Examining the Effect of Trust on Giving Among Members of Diverse Racial/Ethnic Groups,” detailing a trust experiment.

The experiment found trust is an important factor in giving, but views on trust vary along racial lines. “A charity’s trustworthiness before giving was more important to white participants than other racial and ethnic groups,” the report said. However, participants of color seemed to have more trust in individuals than institutions and were more likely to give to an individual in need than white participants.

“Communities of color are more likely to give to their neighbors, to their friends because they have a history with the person; they’ve built a relationship with that individual,” Osili says. “The lesson for nonprofits is how do you build that same type of authentic relationship with communities of color?”

“The Giving Environment” report offers three case studies that show how nonprofits have connected and built trust with donors of color in their communities.

Additional findings from the reports:

• Black donors gave the largest share of their income to charities in 2018. Black donors gave 3 percent, white donors 2.9 percent, Native Americans 2.3 percent, Asian Americans 1.9 percent, and Hispanic Americans 1.5 percent.
• While religious giving is still where people contribute the most, it is on the decline. Since the 2008 recession, the share of people who give to religious causes has steadily declined. “In this study, we observed giving rate declines between 15 and 25 percentage points for all groups between 2000 and 2018,” the report says. Secular giving also declined after the recession, but the rates varied, depending on ethnicity.