Philanthropic organizations, nonprofits and public media -- organizations that depend on charitable giving by corporations, individuals, and other foundations are facing significant challenges. While most people are aware of the short-term struggles facing these organizations as a result of the economic downturn and cuts in government spending, most don’t realize they face a bigger, long-term, and structural challenge. This challenge relates to the significant demographic changes taking place in the U.S. -- population changes that threaten to undermine the viability of many of these organizations.
The donor base of most philanthropic organizations, nonprofits and public media is overwhelmingly made up of Baby Boomers -- aging Anglo Baby Boomers to be exact. Talk to the senior leadership and member development staff at one of these organizations, particularly the larger, more established foundations, and they will confirm my assertion. I’ve met with countless nonprofits and foundations over the years, and I keep hearing the same thing -- they are worried about the coming demographic donor cliff -- the fact that their donor and member base is an old, white and shrinking demographic.
You don’t have to look too far into demographic data to understand the situation. More than half the population growth in this country from 2000 to 2010 came from Hispanics. More than half of the babies born this year are minorities (a misnomer in itself). The Hispanic market is one of the few demographic groups growing in this country -- the rest are other minority groups.
Some astute visionaries at these organizations see the writing on the wall as their current donor base gets older. They need to make themselves relevant to the next big demographic bulge -- the multicultural Millennials. Specifically they see the need to connect with younger Hispanics, the largest swath of these Millennials.
Unfortunately, charitable and nonprofit organizations face some significant challenges with Hispanics. Most Hispanics grow up in families and/or come from countries where giving to church was the norm and the only form of institutional giving they know. In an interrelated way, most Hispanics have no family history or connection to charitable organizations and other nonprofit organizations. Hispanics, generally have very little connection with most charities or causes. While Hispanics are generous in their giving, most giving occurs in “nontraditional” forms -- namely remittances to family in Latin America and financial support for larger extended families -- sometimes referred to as personalismo.
However, Hispanics represent a significant opportunity for charities, nonprofits, and other member-support groups. Looking at Experian Simmons data, we know 47% of U.S. Hispanics donated to a charity or philanthropic organization in the last 12 months (Experian Simmons, Fall 2011 NHCS Adult Survey). Considering how much Hispanic giving is “nontraditional,” we can estimate the majority of U.S. Hispanics -- more than 25 million of them -- give to charities. When we consider the fact that “generation 1.5” (Hispanics who came to the U.S. as children) and second-generation Hispanics do not have as strong a connection to their parents’ home country -- and therefore do not send remittances -- clearly there is an opportunity with more than 60% of Hispanics born in the U.S. to be a more traditional option for their philanthropy.
So how do nonprofits, public media and philanthropic organizations stay relevant in an increasingly multicultural world?
I would suggest most nonprofits, particularly the largest, oldest and most well established, have to reinvent themselves, while staying true to what made them successful -- a tricky balancing act for sure. These organizations need to fundamentally evolve to become more relevant to Hispanics from the ground up. This involves much more than creating a Spanish website, launching a Hispanic direct response campaign, or switching out photos on your marketing materials to include smiling Hispanic families.
A couple of important places to start:
The path forward to a more diverse donor and constituent base is not a simple, quick fix. Long term problems require long terms solutions and commitments. However, the upside and ROI are there. Most importantly, the downside is irrelevance.