Setting the stage
The effects of the coronavirus pandemic have been nothing short of disastrous, as the disease swept into all pockets of the world. The United States was greatly impacted, as hundreds of thousands lost lives, lock-downs were mandated by city officials and governors, and a deep economic recession hit the nation hard. And while it may seem that everyone struggled as a result, a holistic look into the way certain groups were impacted by the pandemic reveals inequities that have plagued the American economic system for centuries: the wealthy compound their wealth while low income folks are put in even more precarious positions.
White-collar workers with remote friendly jobs, including those in tech and finance amongst others, did not suffer as severely from the ramifications of the work-from-home economy. In April 2021, the employment rate for high wage workers ($60K+ per year) has rebounded back to what it was in February 2020, or pre-pandemic times. Meanwhile, blue-collar folks working labor-intensive jobs have experienced salary cutoffs or unemployment with the employment rate for low wage workers (>$60K per year) decreasing by almost 20%.
K-shaped recovery: what is it and what does it mean?
As vaccinations start to roll-out and more and more restaurants, businesses, and offices begin to open, the nation has slowly begun to reverse the economic downturn, and a period of recovery is emerging. However, to delineate this recovery to a single line on a graph would be an improper representation of the economy: that is where the letter K steps in. The K-shaped recovery refers to the divergent distributions of wealth, as the gap between the upper class and lower class widens further and further apart. The impacts of the coronavirus undoubtedly magnified wealth inequality in the United States, as the word “recovery” becomes applicable to majorly white-collar individuals with remote-friendly jobs and a large safety net of wealth to fall back upon. “Recovery” certainly does not define the trajectory of many Americans, as they struggle to find employment or a stable income in the post-pandemic world.
Implications for nonprofits
What does all of this mean for nonprofits? Because of the rising income streams for some, there is an opportunity for nonprofits to target more high capacity donors who may be galvanized to contribute to causes that have taken center stage throughout 2020, including racial and housing justice, human rights, and food security. Many upper to middle income folks will be moving into higher income brackets, and will have the ability to donate more of their earnings back to the community. Everyone below a certain threshold is going to have a lower capacity for giving. While the capacity to donate will likely still exist, especially for active volunteers, target donation amounts (and asks) may need to recalibrate in accordance with changes in the economy.
To maximize donations, it will be helpful to strategically compartmentalize groups of people, based on both their willingness and ability to donate. Nonprofits should not be asking for the middle amount of money from potential donors, but instead ask for significant amounts from those with a lot to give (ex: 100+ per month), and smaller amounts from those who may not be able to contribute as much but still want to make an impact (ex: $5 to $30 a month).
How nonprofits should move forward for maximum donations
Having a well-informed strategy to re-engage or expand high capacity donorship can be highly impactful as nonprofits look to increase donations and funding in 2021. While marketing strategies such as email campaigns or newsletters are helpful in increasing awareness about your cause, relying on impersonable methods is oftentimes not enough to convert your audience into donors. Curated promotional materials, strong branding, and well-communicated core values that can speak to the pathos of high capacity donors will be key. Asking for higher monthly or annual donations should be considered, given that economic trends reveal they have the means to give more.
For lower capacity donors, the approach shifts to asking for extra small amounts of money or “micro-donations”. Volunteers are twice as likely to donate to the organizations they give time to over non-volunteers. Small donation asks ought to be made immediately following volunteer activities; when passion for the overall mission of the org is heightened.
Civic Champs’ Micro-donations tool was designed specifically for these types of small dollar donation asks. The feature focuses on making the right ask at the right time that much easier for nonprofits who are looking to leverage the giving power of their volunteer force. Small-dollar requests empower volunteers to further their positive impact within the organization they care about while allowing nonprofits to implement automated fundraising strategies with every single volunteer event.
The K-shaped recovery of the economy following the coronavirus pandemic is a symptom of long standing inequities in the U.S. But the best thing nonprofits can do in this moment is maintain agility and recalibrate their fundraising strategies based on shifting donorship capacities. Have thoughts on nonprofit fundraising in the Covid-19 recovery period? Give Civic Champs a shout on social or email our editorial director at firstname.lastname@example.org