Playing the numbers

Posted by Laura Otten, Ph.D., Director on June 21st, 2012 in Thoughts & Commentary

0 comment

The Center on Philanthropy just released its Giving USA 2012 report.  To announce the findings, they take their dog and pony show on the road and included Philadelphia for the first time. .

In case you have missed the high level summary of the results, here it is.  (I’ll leave you to decide whether the news is good, bad or indifferent.)

  • Giving by individuals, 81% of all gifts given in 2011, rose almost 4% in 2011, but only .8% in inflation adjusted dollars.
  • Adding up individual giving, from those both alive and dead, and the 60% of foundation giving that comes from family foundations, Giving USA concludes that 88% of private giving comes from individuals.  Perhaps more graphically put, if that is possible:  nine out of every ten dollars received by charities comes from individuals.
  • Foundation giving held steady from 2010 at 14% of all gifts given in 2011.
  • Corporate giving also held steady 2010 to 2011, coming in at 5% of gifts given.
  • Religious organizations continued to receive the largest share of private dollars at 32%, but this was a 2% drop compared to 2010.
  • Big news:  the international affairs subsector had a 7.6% increase in giving from 2010 to 2011, contributing to the 15.2% increase in giving to this subsector from 2009-2011.

There is a lot more to be gleaned from this report, but the more interesting things to be learned came from comments by Patrick Rooney, the Executive Director of the Center on Philanthropy.  But here are some of the more salient ones, paraphrased, of course, that truly deserve every nonprofit’s (that wishes to survive) attention—and why.

Comment:  When government spending in a subsector increases, private giving in that subsector decreases.

Why we need to know this:  All too frequently, when we hear of government cuts—or funding cuts and shifts from any source—we are all too quick to wipe our brows, pat ourselves on the back and say, “Phew! Dodged that bullet!” and go back to what we were doing.  Instead, we need to constantly be monitoring and paying attention to the conversations of our various government entities, regardless of how convoluted and “three steps forward one step back” they may be.  By listening, we may actually become proactive and smart, shift strategies well in advance and allow ourselves to continue to dodge bullets.

Comment:  The most difficult giving pattern to predict is planned giving.  The three richest people who die in a year determine the size of this slice of the private giving pie.

Why does this matter? It doesn’t!  What matters is that planned giving is a strategy in most every nonprofit’s development toolkit, whether that means you have dedicated development staff who know the ins and outs of arranging these gifts or you rely on financial management companies, estate attorneys or whomever.  What matters is that board members are aware of their responsibility to cultivate donors, are equipped to do so and are out there doing it!  The reality is that over the years, planned giving has been comprising an increasingly large portion of that individual giving pie slice, but it doesn’t really matter to your nonprofit whether it grows by almost 9% (adjusted for inflation) as it did in 2011, or 7% or 12%.  You still just have to do it!

Comment:  There is a strong and positive correlation between parents who gave/give to charities and their adult children doing the same.  And this holds whether the giving was to religious or secular organizations.

Why should you pay attention to this?  Here and elsewhere, there is evidence that philanthropy is learned behavior, acquired at an early age.  As with any learned behavior, one is never too old to learn the desired behavior, though it comes with a learning curve.  Thus, far better to recruit board members who learned the importance of philanthropy at mom’s, dad’s, grandma’s, and grandpa’s knees for my anecdotal and observational data tells me that these are the board members who don’t fight or shirk their fundraising responsibility.  Once equipped, they sally forth and do their job!

Comment:  Every year, approximately 2/3 of Americans make at least one charitable donation, with average household giving at  $2000.  More than half of these donors—56%–give every year.  Looking at the Bank of America/Center on Philanthropy annual studies of the top 3% income earners, 98% of them give to charities every year.

What to do with this?  Regardless of economic times, never stop your fundraising efforts, never stop cultivating current and potential donors, never stop telling your story, never stop asking people for money, when you have the right pitch and the right time, never answer for someone else.  In other words, don’t use economic conditions as the basis for determining whether to engage in fundraising or not.  In other words, don’t use economic conditions as an excuse not to fundraise.  Economic conditions may influence your approach, your pitch, your target goal, etc., just as economic conditions may influence people’s decisions to give, to where and how much.  But the majority of donors are going to give, year after year after year; so, you better be out there with your fundraising strategy intact, year after year after year.

Comment:  If you take the average growth rate of giving, it will take over a decade before individual giving is back to its 2007 level.

Why this is important:  Even if you believe the statements that economic recovery has begun in this country, the nonprofit sector’s recovery, which always lags behind the rest of the economy, is way off on the horizon.  This means continued full-court presses by both board and staff; on-going creativity in the how, what, where, and why of fundraising; constant attention to having as diversified a revenue strategy as possible; unvarying attention to both existing donors and bringing in and on new donors; and the list could go on.  This is a long-distance race; no sprinters allowed.

Fundraising, regardless of the economic times, has always been and will always be a job for those who can go the distance.  So, folks, put your endurance gear on, and keep on trekking.  The mountain remains particularly high for the years to come.

The opinions expressed in Nonprofit University Blog are those of writer and do not necessarily reflect the opinion of La Salle University or any other institution or individual.