According to a recent Citibank report, asset-giving may be the next big thing in philanthropy. According to the bank's 'Philanthropy and the Global Economy' report, digital assets can be a massive funding opportunity because they are not taxed, a feature of blockchain technology, and can provide donors with a degree of transparency regarding their donations.
According to the report, this means that philanthropic organizations should look to these donors and leverage their wealth, which could be worth up to $2.4 trillion in the future. The report's author, Amy Thompson, believes this will help increase annual philanthropic donations in the aftermath of the cost of living crisis.
The top reasons for giving for high net worth investors are to express their deep values and to collaborate with charities that make a difference. Charitable giving is often a family affair among the wealthy, with nearly half of HNW and UHNW investors developing a charitable strategy with their families.
Funders are embracing trust-based philanthropy as they become more aware of their communities' challenges and seek new ways to make an impact. This approach promotes greater power sharing between funders and grantees, resulting in strong relationships in which both parties are held accountable to one another.
This power shift will gain traction as more foundations, large donors, and even ordinary donors embrace it. Larger unrestricted grants and fewer restrictions on nonprofits are examples of this.
It also entails ensuring foundation staff or philanthropic advisors are representatives of the communities they seek to support. This will aid in developing genuine relationships, allowing community organizations to do their work more effectively and confidently.
As a result, trust-based practices aid in the dismantling of bias and inequity structures that have become entrenched in philanthropy over time. Through a rigorous approach that prioritizes relationship-building and power-sharing over transaction and control, the system contributes to a more equitable nonprofit-funder ecosystem. Trust-based charities can promote a healthier social sector by allowing nonprofits to plan, grow, and innovate in response to emerging needs.
Donors are risk-averse because they want to ensure that their contributions have an impact. They don't want to risk their money on a high-risk "long-shot" wager.
They also want to get the most bang for every dollar donated. This means they should only donate to charities that achieve precisely what is expected for every dollar donated.
These donors are also more willing to contribute to broad-based causes, such as a new group or unproven solutions. This is especially true for donors deeply rooted in their religious tradition.
According to behavioral economics, people make decisions based on perceived value and may be more risk-averse than gain-averse. This is reflected in their preference for capital preservation over capital gains and their preference for more conservative investments over risk-seeking individuals.
To begin, recurring giving is an excellent way to keep donors engaged and support organizations they care about. Furthermore, it is a simpler and less expensive fundraising strategy than one-time donations.
Nonprofits providing various giving options, such as monthly and yearly contributions, will be in a better position to retain and attract donors in 2023. They may also be able to increase revenue in the future as more donors choose to make regular contributions.
Fundraising is an ever-changing field that necessitates adaptability on the part of nonprofits. They will need to understand and adapt to a wide range of new trends by 2023, including online giving, recurring giving, and marketing technology.
Another critical area for nonprofits to concentrate on is their community. They must maintain contact with the people they serve and learn about their priorities. Nonprofits can tailor their outreach to those most likely to respond to a particular cause or issue if they understand their community.