Some of the country's most iconic nonprofits have struggled to raise money in the past few years while a new breed of philanthropic organization is thriving thanks in large part to its appeal to millennial donors. While the American Red Cross ran an operating deficit after its worst fundraising year in over a decade in fiscal 2015, ended last June, Charity: Water reported its best year ever in 2014, raising more than $27.9 million for clean water. And its donations have increased each year since its founding in 2006.
Previous generations of donors made it easy for big nonprofit organizations to rely on mass marketing, workplace collection and brand loyalty to meet their fundraising goals. But those donors have now been surpassed in numbers by a generation of digital natives who identify with causes instead of institutions and are rewriting the rules of fundraising.
"We give millennials a low barrier to getting involved, and we make things as easy as possible with features like our online fundraising platform," said Cubby Graham, social media strategist at Charity: Water. "We want to keep people passionate and engaged and really show them the impact they can have with a birthday or a bike ride."
"It's about the evolution of giving," said National Council of Nonprofits communications director Rick Cohen. "In the past, there were a few big brand names for people looking to give. Now, if a natural disaster happens, rather than donate to one size fits all, it's a lot easier for people to find more specific nonprofits to align with their more specific interests."
It's not easy to estimate total spending across a field as fragmented as fundraising. But according to 2013 data from philanthropic software developer Blackbaud, baby boomers account for 43 percent of all charitable giving compared to millennials' 11 percent. (Millennials donated on average $481 annually, while boomers gave $1,212.)
A new way of giving
Millennials, as a group, see giving in much broader terms than their predecessors. They like to volunteer, enlist others to join them and use social media for crowdfunding. They want to be more involved than their more passive boomer counterparts, according to Dennis McCarthy, director of sales and targeted analytics at Blackbaud.
"Millennials' giving is different from their parents," McCarthy said. "Time is a similar currency as is a check for $25. They're very experimental. They want to go out and volunteer, and they have the time. My 23-year-old son wouldn't know what to do with an envelope."
Given Gen Y's ease with technology and expectations of access to information, it's also a generation that demands to know results.
"They want to see how their impact matters," said Javan Van Gronigen, creative director and co-founder of fundraising software company Donate.ly. "These donors are hyperfixated on where their money is going, and they like doing a lot of transparency."
In recent research, Blackbaud found that donating via mobile device is the top way millennials contribute. That was followed by giving at work, retail purchases that also involve a charitable donation, organizations' websites, and getting others involved in causes. Boomers, however, respond to tried-and-true fundraising tactics—contributing through the workplace is their preferred method followed by using organizations' sites, responding to direct mail solicitation, using donations as an honor or tribute, and having monthly payments debited from their bank accounts.
While charitable giving has traditionally been seen as a later-in-life endeavor for wealthy philanthropists, millennials can find role models in contemporaries like Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, who urge others to give back.
"The Chan Zuckerberg Initiative is interesting because it's a couple of millennials who are sending a signal that people with money should be donating money," said Stacy Palmer, editor at The Chronicle of Philanthropy. "With boomers, what you thought of as a philanthropist was [publisher] Walter Annenberg. Now, you have people in your peer group contributing to causes. It may not just be writing a check."
Despite the stereotype of millennials as selfie-obsessed and narcissistic, they are one of the most socially conscious groups in recent history, observers argue.
"Millennnials are a purposeful generation," said Gina Kohler, co-founder of social commerce site BeautyKind. "They want to be involved with something bigger than themselves. It helps them connect on a social level, and that's how you create a long-term relationship with a customer."
How one major charity is pivoting
Creating those relationships is something big nonprofits have to do now that millennials have overtaken boomers in America in terms of population.
For the United Way, one of the biggest challenges is to engage millennials through new fundraising channels. "Millennials have a different mindset when it comes to causes; they have different attitudes from people who give through the workplace," explained AnneMarie Borrego, the United Way's director of media and PR.
So execs are using the organization's traditional community strengths to woo millennials in new ways.
In 2015, after Maryland's governor asked for the organization's help during the Baltimore protests, United Way raised $570,000 via crowdfunding. The Restore Baltimore campaign was a first for a nonprofit accustomed to traditional marketing, and donors responded in droves.
"In these news-cycle events, virality is the way people want to donate," said Edwin Goutier, director of innovation at United Way.
Goutier added that the charity also introduced mobile giving with a test platform last year that had very successful results. "Before, our giving platforms were desktop only," he said. "Now we're starting to make the giving experience more of what [millennials] expect. Moving forward, we want to get our partners to encourage mobile contributions."
Like other big, institutional nonprofits, the Red Cross, which ran a deficit of $159 million in fiscal 2015, must also retool traditional tactics born of a mass-marketing era.
During the 2014 holiday season, for instance, it played off Bitly, the online service that condenses long web addresses, to create Hope.ly, another URL shortener. When a user clicked on the Red Cross Hope.ly link, a friendly banner ad appeared on top of the page and encouraged online donations. Not only was it effective in grabbing attention, it cost relativity little and generated a good return on investment, sources recalled. (The Red Cross declined to comment for this story.)
Nonprofits like Charity: Water have an advantage in that they are designed as digital fundraising efforts, appealing to millennials' need for simplicity, information, experience and transparency. But as important as technology is, fundraisers underscore the need to reach people on an emotional level, something that remains unchanged from previous generations.
Read more about how creativity and tech are fueling today's nonprofits in Adweek's Cause Marketing Report.