The complex social issues nonprofits attempt to solve require a diversity of solutions. Funding those solutions will happen as nonprofits embrace the democratization of philanthropy. Philanthropy in the United States is intrinsic to democracy and freedom as it allows citizens to support organizations which form a civil society separate from government. Names like Rockefeller and Carnegie evoke the plutocratic era of philanthropy during the turn of the century. Plutocratic philanthropy exists today through names such as Bezos, Scott, and Gates but the vehicles used to democratize philanthropy are changing the giving landscape. The increase of giving through donor-advised funds (DAFs), crowdfunding, and point-of-sale fundraising allows philanthropy to expand beyond the ivory tower of traditional wealth. People with varied economic backgrounds united by the love (philos) of humanity (anthropos) are now invited to the philanthropic table through these new methods of giving.

It is essential that nonprofit leaders understand these increasingly popular methods of giving to strategically integrate these methods into their development plans. By understanding the donor landscape and the surge to democratize philanthropy, nonprofit leaders can implement practices to expand their donor base. Donor populations are shifting, and astute nonprofit leaders know that millennials now outnumber baby boomer donors. Nonprofit leaders must adapt their development plans to account for this wealth transfer which will land in the hands of Generations X and Y. Increasingly, those donors are utilizing DAFs, crowdfunding and point-of-sale to support the causes for which they are passionate.

Many individuals are choosing to establish donor-advised funds rather than creating family foundations to manage their charitable giving. The appeal of the donor-advised fund comes from a variety of elements. Donor-advised funds provide donors an immediate tax benefit and serves as an investment fund which can increase a donor’s charitable impact. Most fund providers do not have a minimum to establish a DAF. The growth of DAFs in the last two years is remarkable and in 2022 the value of grants made by donor-advised funds reached $52.16 billion.

Technology advances have led to increased digital giving and crowdfunding has become a powerful fundraising tool that democratizes philanthropy. Donation-based platforms are among the most common platforms used by individuals and organizations to raise money quickly for a charitable cause. Many allow nonprofit organizations to raise money directly. One advantage of crowdfunding is the exposure nonprofits receive through social media. People share campaigns on their channels giving greater exposure to nonprofit organizations.

Known as “checkout charity,” point-of-sale campaigns ask consumers to make small donations when checking out at stores and restaurants or ordering online. Point-of-sale giving hit $749MM in 2022 and provided nonprofits vast exposure to potential donors. Point-of-sale donations flow into nonprofits without increasing their development staff expenses. The benefit of strengthening their reputation, gaining more exposure to their mission, and reaching a new demographic are compelling reasons for nonprofits to leverage this giving tool.

Nonprofit leaders can take advantage of increased giving through DAFs, crowdfunding, and point-of-sale charity by implementing the following:

Donor-advised Funds

• Educate: teach your team about DAFs, learn which fund providers your donors utilize, share information with your donors about ways to make tax-efficient decisions about their philanthropy.
• Communicate: make it easy for donors to give to your organization through their DAFs by using clear language on your website; share the impact of their donation.
• Relationships: build relationships with financial advisors and staff members of community foundations who are the fund providers for DAFs. Leverage relationships your board members have with the financial institutions.

Crowdfunding

• Selection: select the right platform for your organization, review their fees and donor information sharing policy.
• Timing: time your campaign to align with a national or state-wide day of giving.
• Harness the power of social media: invite donors to share the campaign on their channels.

Point-of-Sale

• Charity Partner: look for a retail partner whose services or location align with your mission and client base.
• Leverage shared exposure: both the retailer and the nonprofit can benefit from the point-of-sale campaign. Place links to the retailer and nonprofit on the high traffic areas on your website to promote both organizations.
• Educate retailer about your mission: this allows retail employees to answer questions people may have regarding your organization.

More individuals are giving to charities through donor-advised funds, crowdfunding and point-of-sale campaigns. This democratizes philanthropy by inviting people of a variety of economic backgrounds to participate in social change. Nonprofits can take simple measures to leverage the surge of democratized philanthropy.

Paola Gale is a 2023 graduate of the Masters of Nonprofit Leadership and Management program at Arizona State University and a member of the Nu Lambda Mu Nonprofit Honor Society. She is passionate about creating educational opportunities for youth through philanthropy and has worked in the nonprofit sector in Arizona for the past 14 years. She is a Certified Fund Raising Executive (CFRE) who held development roles in K-12 education before joining the ASU Foundation. She now leads the fund development efforts for Barrett, The Honors College at Arizona State University.

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