FOMO Charity

4 min read

Nonprofits can create FOMO in charity wants to put FOMO (Fear of Missing Out) in charity!

Does that sound too audacious? Maybe even a bit brash for charitable activities? If so, we apologize. Our aim isn’t to offend, but to highlight a critical issue: the nonprofit sector is missing the mark.

A Trust Problem

Albeit often over referenced, it is a well established statistic that many people distrust nonprofits. Why? Is there something nonprofits can do to promote trust with more people? Are we doing those things?

Why do nonprofits collect over 80% of their donations in the last quarter of the year? Why do we need the Q4 blitz of donor requests to ensure our missions continue? And why is the Fidelity Investments Charitable Gift Fund, a donor-advised fund (DAF) sponsor, the largest charity in the United States?

The questions above reveal deep-seated problems at the core of our nonprofit sector. When close to 50% of people feel skeptical about nonprofits and those willing to engage in charitable activity do so for the tax benefit or due to cajoling from non stop mailings, there’s something wrong. The people’s skepticism toward nonprofits alone is enough to support corrective action.

The Case of Donor Advised Funds (DAF)

Using donor-advised funds to support this discussion should not be misconstrued to mean we have a problem with their existence. However, they illustrate the issue with the nonprofit sector so brilliantly. Let’s look at Fidelity's charitable fund, in 2022 the organization reported:

  • Gross Revenue of $19,858,000,000 (that's billions)
  • Total Grants of $11,634,000,000 (again billions)
  • Total Assets of $48,314,000,000 (billions)

A charity with nearly $50 billion in assets, raising almost $20 billion annually but granting out only $11 billion, brings up questions. Why are these funds sitting in investment accounts instead of being used to battle starvation, cure illness, or teach future generations? How much is too much in a fund designated as “charitable” when people are facing innumerable issues around the world? If funds are not granted when donated, when will they be granted?

Fidelity isn’t alone. Schwab Charitable Fund and Vanguard Charitable also report massive assets, totaling $90 billion across the three organizations. Yet, these funds grow more in value each year than are distributed in grants. They’re becoming richer while urgent needs go unmet.

The problem isn’t the existence of DAFs, but a symptom of the problem is the underutilization of the funds held in these accounts. A donor advised fund can be an exceptional conduit for charitable giving, but when it becomes a storehouse of “donated” funds never granted to charitable work, it’s nothing more than an unfulfilled pledge. A charitable gift requires a recipient, and while a DAF gives you the tax benefit of a gift, there is no recipient, so ministry is not activated.

Donors have already set aside money for charity but aren't inspired to grant it. This reflects a failure in how nonprofits engage and motivate current and potential supporters.

A New Giving Model

How do we change the nonprofit sector’s state of affairs? How do we inject FOMO into the donor experience and transform people from skeptical observers into active participants in giving, excitedly championing the organizations they believe in?

These are questions we need to answer. The answers will not come from pointing fingers and blaming the donors’ fickle attitudes or shady operators within the nonprofit industry. The answers will come when we shine the light internally within our organizations and evaluate how we can positively influence our network of partners and donor communities.

A revitalized view of charity is needed. We need to refresh our approach to charitable giving. Nonprofits need to provide greater awareness and a higher level of donor service. While donors need to be more judicious in their charitable giving and demand more from the nonprofits they support. We should all understand that charity does not belong to us. It is God’s, and through it God invites us to join His work being done on the earth.

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