Fundraising Update

Welcome to Fundraising Update. This week, an essay explores how direct mail may be weakening donors’ engagement in causes. Plus, we dig into some of the ways the House-passed tax bill could affect nonprofit fundraising.

I’m Rasheeda Childress, senior editor for fundraising at the Chronicle of Philanthropy. If you have ideas, comments, or questions about this newsletter, please write me.

Thanks to our sponsor GoFundMePro for supporting Fundraising Update.

Direct mail has become a staple of successful fundraising programs, but in a guest essay for our Commons section, fundraiser Jason Lewis contends that direct mail created a mindset that treats supporters like consumers and turns collective action into targeted marketing.

Direct mail recast the donor as a consumer, Lewis writes. “The nonprofit became the seller, the cause a product. The offer was simple: Pose a problem; package a solution; sell it for $20, $50, or $100. No meetings, no deliberation, no shared labor. Just pay and move on.”

Over time, he says, that became the expectation. Not because donors demanded it, but because that’s the only version of engagement they were offered.

Lewis argues that direct mail is an example of the quiet decline that scholars like Robert Putnam and Theda Skocpol have documented. “Americans didn’t stop caring — they stopped gathering. Fundraising became retail. Engagement became content delivery. Donors were trained to listen, agree, and pay. Nothing more,” he writes. “They were talked at, not brought in. And what emerged wasn’t just a slicker fundraising machine; it was a civic imagination on autopilot: compliant, convenient, and increasingly dependent on distant experts to do the work.”

Getty Images/iStockphoto

Lewis says it worked — at least for a while, funding lawsuits, protests, and campaigns. “But it hollowed out the base of movement-building. Donors stopped seeing themselves as part of the struggle,” he writes. “They became clients of advocacy machines, underwriting work they no longer imagined themselves doing. Their passion didn’t vanish; it just got channeled into a monthly charge.”

In a system like that, Lewis argues, the real questions never even get asked. “Fundraisers are told — directly and indirectly—that their everyday donors aren’t enough, that their tools aren’t sophisticated enough, that their work doesn’t count unless it sounds strategic,” he writes “So they’re pushed to upgrade: fancier tech, bigger gifts, slicker messaging. What started as a fundraising tactic slowly turns into a worldview — one based on not having enough, not being enough, and quietly giving up control.”

For Jason’s thoughts on how to turn the tide and build a sense of membership among donors, read the entire essay.

$39 billion
— Revenue the new tax bill is expected to raise from foundations and nonprofits over the next 10 years

Advocates for the charitable sector say they’re working hard to remove harmful provisions from President Trump’s “big beautiful bill,” which passed in the House last week. The proposed taxes unveiled in the tax bill earlier this month surprised much of the nonprofit world.

Three of the biggest provisions affecting the sector — sharply higher taxes on big foundations and university endowments and a new floor requiring corporate giving to exceed 1 percent of profits before businesses can deduct charitable gifts — are estimated by the Joint Committee on Taxation to raise a combined $39 billion over 10 years. These provisions could impact fundraising by shifting some foundation giving to donor-advised funds, and potentially reducing corporate giving, reports my colleague Ben Gose.

Under the bill, the biggest foundations would see their tax burden shoot up by more than seven times the current rate. For example, the Robert Wood Johnson Foundation, which paid $14 million in taxes in 2023, would pay nearly $103 million on the same amount of net investment income under the new rate.

John Seitz, CEO of FoundationMark, suspects that some foundations will roll over their assets into DAFs — and that wealthy individuals will increasingly contribute to DAFs rather than private foundations. DAFs don’t have to disclose grants or make any required annual distributions.

“The really damaging thing isn’t only the money — it’s the transparency,” Seitz says. “You’re pushing money into dark pockets — and that money doesn’t have to come out at any prescribed time.”

A provision in the bill requires companies to give at least 1 percent of their taxable income to charity before they can begin taking any deduction for charitable giving. It’s expected to raise $16.6 billion over 10 years.

The 1 percent threshold is higher than the typical giving rates for companies. Chief Executives for Corporate Purpose (CECP) found that the median company gave slightly under 1 percent of pre-tax profits to charity in 2023.

“These proposed restrictions risk weakening the very fabric of corporate giving in America,” says Kari Niedfeldt-Thomas, CECP’s chief operating officer.

For more on how the tax bill might impact nonprofits and how they plan to fight back, read Ben’s full story.

• Courage Continues to Trend. Last week’s newsletter mentioned that courage was a hot topic at the Classy Collaborative conference, and also that philanthropist Abigail Disney was encouraging donors to show more courage.

  Now, United Way Worldwide and a group of foundations have launched a new award for “civic bravery,” which includes grants of up to $50,000, reports Thalia Beatty, who covers philanthropy at our partner the Associated Press.

  The Courage Project, a partnership between United Way and funders like the Freedom Together Foundation, will grant $5 million in awards over at least a year to recognize nonprofits and individuals who stand up for their communities. The individual recipients won’t receive a monetary award but can direct funds to a nonprofit of their choice. For more on the project, read Thalia’s complete article.

Paul Dybedal and Mary Louise Dybedal left more than $20.8 million to Kansas City University. The bequest will advance osteopathic medical education, research, behavioral healthcare, and scholarships. The donation will be used to expand the Dybedal Center for Research on the Kansas City campus and establish state-of-the-art laboratory facilities on the Joplin campus, create the Paul W. Dybedal, DO, Endowed Chair of Psychiatry, and increase the Mary L. Dybedal Scholarship Fund.

Paul Dybedal earned a degree from the university in 1954, later practiced inpatient and forensic psychiatry at Napa State Hospital, in California, and served on Kansas City University’s Board of Trustees for more than 36 years. Mary Louise Dybedal worked as a computer programmer at IBM.

For other notable gifts this week, read my colleague Maria Di Mento’s Gifts Roundup column. To learn about other big donations, see our database of gifts of $1 million or more, which is updated regularly and has data going back to 2000.

9 Tips for Thank-Yous That Make Donors Feel Valued. While love languages have long been a fixture in pop psychology for improving romantic relationships, new science is emerging that learning to speak donors’ love languages forges lasting connections between nonprofits and their supporters.

Why the Quiet Collapse of a Crowdfunding Platform Should Alarm Philanthropy (Opinion).Nonprofit crowdfunding platforms get money to the people and places big for-profit platforms ignore, but they need funding themselves to survive.

How Megadonor Philanthropy Is Changing. With Bill Gates and Warren Buffet winding down their giving and new proposed taxes on major foundations, megadonor philanthropy is in for a change — one that could potentially be led by women like MacKenzie Scott and Melinda French Gates, reports Fortune.

“We’re likely to see more women come out of the shadows,” Amir Pasic, dean of the Lilly Family School of Philanthropy at Indiana University, told Fortune.

Pasic and other philanthropy-watchers in the article said that Scott was a “trendsetter” for her use of trust-based philanthropy and that French Gates’s philanthropic LLC was showing people that foundations aren’t the only way to make an impact. The article notes there were “more than 200 new billionaires minted in 2024 alone,” and “more players are entering the field and women are stepping into wealth.”

“You’ll see women becoming much more prominent mega donors,” Kathleen McCarthy, director for the center on philanthropy at CUNY, said. “They’re very comfortable handling money. They’re very comfortable doing research, and they’re looking for ways to change the system.” (Fortune)