A Letter from the President and CEO
As we ring in the New Year in these challenging economic times, I wanted to send a note of encouragement and sincere gratitude for the vital work you do as a professional fundraiser.
Often the voice and the face of a nonprofit to key community supporters, you make possible the great work of your organization. I hope you were able to meet your 2008 fundraising goals and that you weathered the difficult giving climate. The work we do is more important than ever.
It means so much to me personally to be part of such a great group of people. This year will certainly not be easy, but then when is inspiring support ever easy? Philanthropy and our work to encourage charitable giving is truly a labor of love. We want to be successful because we care about the people our organizations serve. We work to make the world a better place.
I also want to thank you for your membership to AFP. We hope you will lean on your association all the more in 2009 to provide the knowledge and opportunities necessary to face a troubled economy. Whether you have realized it or not, you are a leader in your community. As a skilled and ethical fundraiser, you assure that the gears of your organization keep turning. Membership in AFP shows everyone that you are dedicated to advancing yourself, your organization and ethical fundraising.
We now have the opportunity to show just how critical the nonprofit sector is to our communities and our world. But as we do so, let’s be sure not to forget about the important role of ethics and trust. People give because they trust they can make a difference. Let’s continue to be keepers of that trust with every interaction we have with donors.
I commend you for your hard work and ask you to let us know how we can help you succeed. Let’s make 2009 a year to remember!
Paulette V. Maehara, CFRE, CAE
President and CEO
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Fundraisers See Chilly Giving Climate Now and in Future
The fundraising climate is the toughest it’s been since 1998, according to the Indiana University Center on Philanthropy’s most recent Philanthropic Giving Index.
Two thirds of fundraisers reported the economy was having a negative impact on fundraising, while more than a quarter reported it has had a very negative impact.
The Giving Index takes semiannual measure of professional fundraisers’ attitudes about the present giving environment and their outlook for the next six months. All three indicators in the study (fundraisers’ current, future and overall climate assessment) have dropped dramatically.
It is probably no surprise that the present situation for many is markedly unfavorable. Unfortunately, few see things getting any better in the first six months of 2009. The average level of confidence in the giving climate, called the Expectations Index, is 88.9 over the course of all study years, which is fairly optimistic. This index has now fallen to 66.1. Fundraisers report a strong drop off in confidence since as recently as summer 2008. They now rate the present situation about 22 percent lower.
A Closer Look
In terms of specific fundraising methods, significantly fewer fundraisers are reporting success with major gifts, a trend seen throughout 2008. Just over 71 percent of fundraisers reported success in this area, the lowest figure since 2003. However, planned giving has increased over the past six months, from 67.6 percent of fundraisers reporting success to 72.9 now reporting success.
In addition, fewer development officers reported success with direct mail and foundation grants than they did six months ago. However, neither have reached their all time low, the study finds.
Corporate giving, as one might expect, continues its downward trend, while surprisingly, more fundraisers are reporting success with special events and telephone solicitations than just six months ago.
When broken down by sector, health organizations and consultants had the highest overall assessment numbers. Public benefit, environment/animals, international and human service organizations reported the worst fundraising climate in the poll.
Fundraisers were asked in summer 2008 to predict the level of success they would have with various fundraising techniques. In all areas save for telephone and special event, actual results were lower than what fundraisers anticipated. Email and major gifts, in particular, performed far below what fundraisers predicted.
Fundraisers for education have seen mixed results over the past year. More than 40 percent of development officers working in educational organizations reported a decrease in the scheduled payment of pledges this past year, which, the study notes, is significantly lower than other types of organizations. But, education organizations were significantly more likely to report an increase in success this past year using the IRA charitable rollover provision.
“This is a hard year for fundraisers at many organizations across the nonprofit spectrum. These results reflect that the U.S. economy is in recession,” said Patrick Rooney, interim executive director of the Center on Philanthropy, in a press release. “Our research for Giving USA Foundation shows that total giving generally declines by about 2.7 percent annually during longer recessions. While we don’t yet know what will happen to total giving in 2008, the PGI is a strong indicator of the difficult challenges fundraisers are clearly concerned with as 2008 comes to a close.”
The full Philanthropic Giving Index (PGI) report, including results by organization size, location of donor support and subsector (e.g., arts, environment, etc.), is available for purchase at the center’s website, www.philanthropy.iupui.edu.
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Learning from the Madoff Scandal—Dealing with Unfulfilled Charitable Pledges
As has widely been reported, the Bernard Madoff scandal has extended well-beyond the corporate sector and has hit the charitable sector quite hard. It is estimated that philanthropic organizations have lost $2.5 billion dollars so far as a result of Madoff’s activities.
Foundations, in particular, have suffered in the wake of this scandal, and many no longer have the financial means to support causes and organizations that rely on their charitable dollars. The domino effect throughout the charitable sector has been swift and powerful with reports of charities already closing their doors.
This unfortunate situation (as well as the dismal economic climate) gives rise to a broader, yet simpler question—what happens when a charitable pledge to a philanthropic organization goes unfulfilled?
In the Attachments section of the electronic version of this story is a brief document created by AFP's legal counsel, Perlman & Perlman LLP, summarizing the legal issues surrounding unfulfilled charitable pledges. Among other things, the document describes a charitable pledge’s enforceability, a charity’s potential recourses and factors that should be weighed when an organization is deciding whether or not to enforce a pledge.
AFP thanks Perlman & Perlman LLP for developing this brief.
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Donors’ Return on Gift Annuities Should Decrease, Group Recommends
The American Council on Gift Annuities has lowered the recommended level of return to donors for charitable gift annuities.
The amount that assets in gift annuities are expected to net annually has been lowered from 4.75 percent to 4.25 percent. A new rate schedule is being developed to reflect this change and will be released no later than Jan. 15 when the actuarial work is complete, according to the ACGA.
The change comes in response to a poor economy as well as the lowering of the federal interest rate. A leader at ACGA said this measure will help charities account for lower earnings on annuities in the present economic climate. The new rate recommendation will be effective on Feb. 1, 2009.
Frank Minton, a Seattle planned-giving expert who sits on the council’s board, told The Chronicle of Philanthropy that, for most people who establish gift annuities, the change in their payments will be moderate. For example, the Chronicle reports, under actuarial calculations, a 75-year-old donor who currently receives $6,700 annually on a $100,000 gift annuity would, with the change, receive $400 to $700 less each year for a new $100,000 annuity.
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IRA Mandatory Minimum Distribution Rule Waived for 2009
On Dec. 23, 2008, President Bush signed into law the Worker, Retiree and Employer Recovery Act of 2008 (H.R. 7327). This legislation included a waiver of the mandatory minimum IRA distribution rule (just for the 2009 calendar year) for individuals who are 70½ and older.
Under current law, people who are 70½ and older are required to distribute a certain amount of funds from their IRA to avoid a stiff tax penalty. But through this recently enacted law, individuals who are 70 1/2 and older can keep all of their funds in their IRA without receiving a tax penalty.
The temporary waiver of the mandatory minimum distribution rule could detrimentally affect donations under the IRA Rollover provision that allows individuals who are 70½ and older to contribute up to $100,000 from their IRAs as direct gift to a charity tax-free. As was reported in an earlier eWire story, a two-year extension (covering years 2008 and 2009) of the IRA Rollover provision was passed as part of the bailout package.
Part of the rationale for enacting the IRA Rollover provision was that individuals could direct their mandatory minimum distributions to charities to diminish the tax implications of those distributions (mandatory minimum distributions from IRAs are treated as taxable income unless they are contributed to charity). However, because individuals 70½ and older will not be required to distribute funds from their IRA's in 2009, charities could see a reduction in IRA gifts.
To help AFP members and their organizations better understand and promote the IRA Rollover provision in light of this development, attached in the electronic version of this story is a fact sheet about the provision. Questions about the IRA Rollover provision can be directed to Jason Lee, director, AFP government relations, at firstname.lastname@example.org.
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Looking for a Change of Scene? Go to Sydney for the Fundraising Institute Australia Conference
FIA's 2009 International Fundraising Conference will be held at the Sydney Convention and Exhibition Centre from Feb. 27 to March 2, 2009. It is the largest gathering of fundraisers in the Southern Hemisphere. Download the registration form and learn more on the FIA website, www.fia.org.au.
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Register Today to Spice Up Your Fundraising in New Orleans!
The AFP International Conference on Fundraising this spring will feature a Distinguished Speaker Series covering issues related to proactively leading in tough economic times, effective fund development strategies and funding a sustainable relief and rebuilding effort after a natural disaster. And those are just a few of the 120 presentations at the conference covering every conceivable aspect of fundraising! Register and learn more at http://conference.afpnet.org.
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Take the CFRE Review Course at Conference
Have you considered earning your Certified Fund Raising Executive (CFRE) credential? Sign up for the conference and get the tools you need in New Orleans at the International Conference on Fundraising. While there, you can take the CFRE Review Course to prepare you for the CFRE Exam. Go to the AFP website, www.afpnet.org, and click on Education and Career Development.
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Now Open! Registration for the 2009 Web/Audioconference Series
AFP has a tremendous new lineup of Web/Audioconference programs in 2009. Plus, we are offering a special member price of $99 per program when you order 10 or more programs at once! There are more than 20 programs offered. Don’t miss this great opportunity to hear from experts in the field. Go to the AFP website, www.afpnet.org, and click on Education and Career Development for more information.
We are starting 2009 with these two great AFP Web/Audioconferences!
Jan. 15, 2009, Recession-Proof Your Annual Campaign presented by Stanley Weinstein, ACFRE, EMBA
Jan. 27, 2009, Raising Big Money Through Golf Events in a Down Economy with Phil Immordino
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Building Donor Loyalty at the AFP International Fundraising Conference
Charitable Giving Coalition Letter to the President