What Fundraisers Should Know About Big Donors’ Thinking Right Now

If it seems like ultra-wealthy donors have been in a state of big-giving paralysis for much of the year, that’s because they were, say philanthropy advisers. Affluent donors have been holding back on big gifts, overwhelmed and unsure how to deploy their giving amid political and economic turmoil.

Charities that lost federal support — especially those seeing an increase in demand for services due to economic uncertainty, jobs loss, and rising prices — have inundated rich donors with requests. There has been an uptick in big gifts over the last month, and there will likely be more as year-end giving starts to kick into high gear, but those who advise America’s wealthiest donors say major-gift fundraisers should keep in mind that their top donors remain uncertain about where and how to give effectively.

Wealthy donors want to support their favorite causes and step in to help newly struggling charities, their advisers say. However, many felt something like whiplash earlier this year because the charitable landscape was changing at a dizzying pace. As soon as donors considered giving to a nonprofit or a new cause, some other cause would get attacked and defunded, says Stephanie Ellis-Smith, CEO of Phīla Engaged Giving, a philanthropic advisory firm in Seattle.Stephanie Ellis-Smith, chief executive officer of the philanthropic advisory firm Phīla Engaged Giving.

“Most people are just trying to figure out how they can remain useful and focused,” Ellis-Smith says. “We are now seeing increasing conversations about upping how much folks are actually giving and they’re re-evaluating their budgets.”

Even as some rich donors start to give more, many are simultaneously questioning whether organizations they have long supported will be forced to shutter because of federal funding cuts, says Jonathan Foster, who leads Angeles Wealth Management, an advisory firm in Los Angeles. If a nonprofit loses federal funding, donors worry their giving won’t make much of a difference, he says. They’re further stymied by whether to take a chance and support a charity that might be on shaky ground or give to one that is more sustainable.

“If organizations you’ve historically supported now have massive removal of federal support, are you going to be the little Dutch boy with your finger in the dyke? Is the dam going to break, and if so, is that where you want to put your charitable dollars?” Foster says. “I think those dialogues are ongoing.”News_DiMentoAdvisors-02.png

Fundraisers must be honest and straightforward with their big donors about the charity’s needs and future prospects — even if they are in danger of shutting down, philanthropy advisers say.

Ellis-Smith said fundraisers shouldn’t be afraid to ask donors directly for big gifts. If federal cuts are causing a charity to close, nonprofit leaders should inform their supporters. Or, if a nonprofit is pushing to stay open, leaders should tell their big donors exactly how much support they need to stay operational.

Fear Factor

Current political and cultural forces are changing how wealthy donors are thinking about their giving, according to advisers. Ellis-Smith says her wealthy clients feel an urgency to give to nonprofits and causes they haven’t previously supported as well as to emergency funds added a link to Stephanie’s most recent emergency funds update, if that’s ok -AS*yes, good – thanks. mdand requests for larger donations. But she says she has seen fear creep into their giving decisions for the first time.

Her firm has always discouraged anonymous giving, but that has changed because some clients are concerned about being targeted by politicians or the public for causes they support. About 10 percent of the rich donors she advises have started giving some of their gifts anonymously for the first time.Security is a real concern, so we’ve backed off our position on anonymous giving.

Security is a real concern, so we’ve backed off our position on anonymous giving.

“Security is a real concern, so we’ve backed off our position on anonymous giving,This is an excellent quote. I’m going to make a pullquote. nw” Ellis-Smith said. “It doesn’t feel great, but it’s a casualty of the moment and I’m not going to begrudge anybody for legitimate fears.”

Foster has heard similar unease from his clients and says that fear is now the “elephant in the room” for a lot of rich donors mulling how and where to give.

“If your inclination is to give money to organizations that, let’s say, are not Trump-friendly, now you’re on a list and identified as being associated with it,” Foster says. “If you’re a donor to causes in the cross-hairs of this administration, are you gonna be out loud and proud about it, or are you going to be supportive but keep your head down?”

Liberal philanthropists are not the only fearful donors, Foster says. His conservative clients that give to causes in favor with the current administration worry they will be targeted when politics swing in the opposite direction. Regardless of his clients’ politics, many are worried their charitable giving could affect their reputationMisjudged doesn’t seem quite right here. Is he saying they’re worried their gifts will be misunderstood? Or are they just worried if their gifts are public? nw**that is in the eye of the beholder — they’re worried their giving could affect their reputation depending on who is doing the judging. md.

“Uncertainty creates giving paralysis, and I think the way that manifests itself this year is people decide they’re going to give but maybe they’re going to do that more quietly,” he says, “or through their donor-advised fund so they get it locked in, and then they’ll figure out where it goes later.”

Leaning In

Nick Tedesco, who leads the National Center for Family Philanthropy, said the affluent families he advises, many of whom give through family foundations, are reevaluating their giving practices. Some are ramping up their giving, he said, while others are debating whether to switch previously restricted grants to unrestricted or operating grants. Still others are paying out a multi-year pledge now rather than over time as originally planned.Nicholas Tedesco, president and chief executive officer of the National Center for Family Philanthropy, talks at an event on September 20, 2024.

Ty Pleas & Co

“Families are asking what’s possible when demand outstrips supply, and there’s an acknowledgment that philanthropic capital can’tIt sounds like he was searching for the word he wanted here. Does this work? nw*yes that is fine. md meet the needs with sufficiency,” Tedesco says. “They’re asking how to then amplify their own charitable contributions by way of collaboration with partners and peers and thinking about providing resources that go beyond financial means, like technical assistance.”You might want to stop this quote at “… peers.” since the story doesn’t get into the idea of providing technical assistance. nw*I think its better to keep — it might give a fundraiser an idea to ask for that kind of support. md

Tedesco said some chose to give quietly to avoid attracting the kind of negative attention some of Foster’s and Ellis-Smith’s clients are concerned with. Yet in the last couple of months, he’s seen more wealthy families giving publicly to show solidarity with struggling charities.

“It’s been heartening to hear from families that there’s a recognition that they can absorb the risk that their nonprofit partners cannot,” Tedesco said. “They recognize it is imperative for them to be vocal, to be present, and to be consistent in their partnership.”

He said this is the time for nonprofit leaders and major gift fundraisers to “lean into” the relationships they have with their existing supporters.

“Be honest about your needs and embrace partnerships with funders,” Tedesco said. “They want to be in a relationship, a partnership with the charities they support. My words of advice to nonprofit leaders are to pursue honest relationships and embrace a partnership with funders that asserts what the organization needs.”