Getting Back to giving

How to revive charitable donations, with Charitybuzz CEO Ben Erwin

- Damien Martin

While the stock markets hit record highs and the U.S. economy outpaces its peers, charitable giving is an area of finance that has not recovered from Covid. Adjusted for inflation, giving went down in 2022 and 2023. Over the long term, fundraising has been stuck at 2% of GDP for 50 years. Charitybuzz CEO Ben Erwin attributes that to a lack of innovation.

"With technology, all the different ways we've removed friction, you would think as a percentage of GDP it would be going up," he told BOSS.

But charities continue targeting the same audience year after year and in the same manner, essentially just asking for money. To really succeed, they need to broaden their horizons.

"Charities need to operate more like for-profit businesses, and they need to speak to their constituency more like investors than donors," Erwin said. "This whole idea of, 'I'm going to take the spare change out of my pocket or just give you some money' that doesn't really inspire people to increase their contributions."

New Avenues

By treating donors more like investors, charities can show them how the money is being spent and different benchmarks the donations are enabling the organization to hit. That will go a long way toward generating excitement and repeat donations.

While overall donations have been down, the contributions by megadonors have gone up, meaning that it's small and midsize donations that have taken a hit. While large donations are obviously welcome, they can often come with strings attached, creating friction between donors and charities who might have different ideas on how best to allocate resources.