by: Rev. Dr. Anna Hall
Most congregations we work with at Convergence are experiencing a common dilemma – a gap between their congregational giving and their desired budgets. These gaps are often well over $100,000 annually. Even congregations that are healthy by all other measures can find themselves in endless conversations about how to fill this gap. We know that in a recent study, 83% of funding for places of worship is from congregants, with the remaining 17% coming from other sources, most commonly rental income, in-kind donations, and endowments.
Depending on external income or endowment withdrawals can make congregations anxious. Constant conversations around scarcity can cause decreased congregational vitality, which dampens giving. It’s a vicious cycle. What are modern congregations to do?
Trends in Charitable Giving
Giving is expected to grow in 2024 and 2025.
Charitable giving increases when incomes grow and economic indicators such as the S&P 500 are on the upswing. However, individual/household giving, while still the largest segment of giving and increasing in total amounts, is projected to decline in proportion to corporate/foundation giving. In fact, individual giving has had the slowest rate of growth when looking at 10-year, 25-year, and 40-year trends. Estate giving is projected to grow as well but is greatly variable from year to year.
Since giving is so closely indexed to economic markers, different types of households give differently. Those with higher incomes give more than those with lower incomes. This means that if your congregation is made up of folks with middle incomes or lower, they may not be able to give as much to your ministries, no matter how much they support them in spirit. Those with household incomes above $70,000 were most likely to say they would give if approached for a donation. Those with household incomes below this line were most likely to say they stopped or decreased their giving in recent years due to financial constraints.
We also know that participation and membership in congregations has been declining for years. This shrinks the traditional donor base for congregations: those who join or attend regularly. Another great concern among many congregations is the aging of their members and participants. The average age in our client congregations is increasing over time. Fortunately, this is less of a concern for giving as older adults are most likely to have maintained or increased their contributions in recent years.
Leaving aside shrinking and aging congregations for a moment, you may also find that people who had donated in the past have stopped or decreased their donations in recent years. The most frequent reason people with incomes above $70,000 say they stopped donating is a lack of trust in the soliciting charity. 70% say that it is extremely important to trust an organization before charitable giving. We know that trust in religious organizations has declined over time, when compared with other types of charities. Only 25% say they trust religious organizations for their charitable giving.
Motivations for Giving
The number one reason people trust organizations enough to give is the organization’s accomplishments. Top reasons people choose not to donate are feeling like their money is spent on management, not knowing what the money will be used to accomplish, and a lack of understanding of recent accomplishments. (High-income households were most likely to decide based on financial indicators and outside evaluations, but this is less common among middle-income households.)
Overall, among those who stopped giving, 75% did not believe that charitable donations had a stronger impact on society than shopping at socially responsible businesses. Yet, 58% of those who increased their giving believed that contributing to charity has a larger impact.
The most common motivation for faith-based donors in 2023 was to help those in need. To accomplish this outcome, your folks may be donating to non-congregational charitable organizations. 53% of faith-based givers are giving to nonprofit organizations, foundations, schools, universities, and/or charities. The most common recipients are those providing youth and family services, education, and domestic poverty and disaster relief.
Connection is often the most powerful motivator after impact. People who maintained or increased contributions are more likely to say that they feel connected to a community. Younger givers, in particular, are more likely to say they donate because they want to be part of something bigger. Most active donors across age groups report having highly positive experiences engaging with an organization in activities outside of financial giving, such as participating in activities or receiving services.
71% of faith-based givers volunteer with one or more organizations. However, only 52% report volunteering with their congregation in 2023.
Steps to Greater Financial Sustainability
- The first step in cultivating giving is raising awareness of your congregation and its impact on the community. Younger givers were most likely to say they would give more if they had more information about charities working in their own community. Do people inside and outside your congregation clearly understand your congregational goals and impact? One way to find out is through community interviews. If awareness is lacking, it’s time to get the word out through all available outlets. The goal is to be known so well that anyone in your neighborhood or town can say with confidence: XYZ church is the church that ______________ for our community.
- The second step is asking people to give. You may feel like you are constantly asking the folks inside your congregation. It’s worth examining how you ask them, though. Are you asking for operations or for impact? Operations support impact, but it is up to you to make it clear how that works. People inside and outside your organization may respond better to one-time or spontaneous asks when you can convey a clear focus on how their gift will impact the world outside your doors. Ask for both recurring gifts and one-time special donations. A top factor in people deciding how much to give to their congregation was trying to set aside a percentage or amount of income, while the top factor in deciding how much to give to non-congregational organizations was through spontaneous giving.
- The third step is making giving easy. In 2023, 77% of those who donate to congregations used at least one digital tool. 60% of congregational contributions were received through digital giving during this same period. Donating through an organization’s website was the top way most donors were giving to any charitable organization. Is it clear how to donate to your congregation? Is it easy?
Before the next season of lament over gaps between giving and budget, make time to consider:
- Is your congregation well-known in your community for the impact you are making?
- Are you constantly celebrating your impact with your current and prospective donors?
- Are you strategically asking for giving toward that impact
- Do you make it easy for people to give?
If you need help in any of the above areas, reach out to us at Convergence about how we can help you discover new and innovative financial sustainability ideas.
