Opinion: The collapse of grassroots giving

Dan Prater

On the surface, charitable giving looks great. Recent reports show Americans donated a record $592 billion in 2024. However, a deeper dive reveals a concerning trend. The total number of people giving, especially small and mid-level donors, is rapidly shrinking. And this isn’t a temporary dip; it’s a decades-long trend.

Grassroots donors have been disappearing, and those dollars are being replaced by mega donors (defined as a person or family that contributes $10 million or more). Contributions from billionaires like MacKenzie Scott, Bill Gates and Michael Bloomberg are replacing those from everyday donors (such as teachers, mechanics, nurses and retirees), creating a top-heavy funding landscape.

The structural cost
High-profile philanthropists have donated billions. Many of these donations are “unrestricted,” allowing organizations to use the money wherever they feel it is most needed.

In the current environment of federal cuts, these gifts have been a lifeline. Yet, heavy reliance on a small group of ultra-high-net-worth donors poses a threat to the nonprofit sector:

• Concentrated in urban hubs, mega donors may lack knowledge of faraway communities’ history and culture.

• Gifts may focus on a donor’s personal agenda rather than on a community’s needs.

• Prominent donors involved in high-profile or controversial situations can create reputational risk by association.

Local problems, local people
The most effective change occurs when citizens who understand their communities engage in solutions. Their lived experiences and shared commitment to an area give them contextual intelligence, a deep understanding of important nuances and local dynamics.

Local citizens realize that their investment of time and money has the potential to directly affect family, friends and neighbors.

What’s causing this decline?
The steep decline in small and mid-level donors cannot be blamed entirely on mega donors. There are several other factors to consider.

First, the rising cost of everyday goods has cut into individuals’ disposable income and reduced their capacity to make charitable donations.

Second, the passage of the Tax Cuts and Jobs Act of 2017 triggered a significant drop in households claiming itemized deductions for charitable gifts.

A third factor is the shift in community demographics. Younger donors (millennials and Gen Z) prefer peer-to-peer and crowdfunding, which can bypass traditional donation channels and is difficult to track.

The fourth factor is skepticism. National studies have shown that the public’s trust in nonprofit organizations has been declining for several years. The distrust stems from a belief that organizations lack operational excellence and that many of them are unable to quantify their effectiveness (proving that their programs and services result in an improved outcome or situation).

A final factor is organizational behavior. Reducing investment into stewardship and focusing on major gifts has resulted in low donor retention.

Bringing them back
Reengaging donors will require intention and strategy at the leadership level.

1. Build trust. Donors can be compared to investors; they want to see a high return. In other words, they are willing to support organizations that are data-driven and have a high impact on an issue or problem. Nonprofits can restore confidence by using research-based approaches and sharing engaging posts that highlight success stories.

2. Offer options. Allow donors of all levels, even the $10 and $20 gifts, to see an option for giving on your site and at events. And once they give, acknowledge them within 48 hours – even small gifts. Explain how their donations support staff and the clients or cause you serve. 

Remember, small-dollar donors who feel valued can become long-term supporters.

3. Personalize. To help them feel like more than a name on a list, keep them connected with personalized messages and ask them for feedback on their experience. Let them know their voice matters.

Rebuilding trust with everyday donors is a strategic investment, not a sentimental one. It leads to stronger organizations, diversified support and shared ownership of community outcomes – critical ingredients for long term success.

Dan Prater is a senior managing consultant at Forvis Mazars. He can be reached at dan.prater@us.forvismazars.com.