AFP eWire Printable Version: June 24, 2009
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U.S. Giving Declines in 2008 Reflecting Economic Woes
Charitable giving in the United States declined for the first time since 1987, reports the Giving USA Foundation, though total giving again broke the $300 billion mark.
In 2008, estimated overall charitable giving in the U.S. was $307.65 billion, which is a 5.7 percent drop from 2007, according to Giving USA in a report released recently. In 2007, giving totaled an estimated $314.07 billion. This marks the biggest decline in the history of this report, first published in 1956.
The Giving USA totals back up the findings AFP’s State of Fundraising Survey, which asks charities to compare their fundraising totals in 2008 to their figures in 2007. AFP found that overall, just 46 percent of organizations raised more funds in 2008, a new low in the eight-year history of the survey. Of the organizations that did raise more money, the amount of money raised also dropped substantially.
According to Giving USA, individual giving, which made up 75 percent of total giving, dropped 6.3 percent and totaled $229.28 billion in 2008. Charitable bequests totaled $22.66 billion, representing a 6.3 percent drop, and corporate giving declined 8 percent to $14.5 billion. Only foundation grantmaking, totaling an estimated $41.21 billion, came close to reaching 2007 totals with a decline of 0.8 percent.
Two-thirds of public charities receiving donations saw decreases in 2008. Only Religion and Public-Society Benefit received more money in 2008 than the previous year after adjusting for inflation.
Most Subsectors See Declines
- Gifts to human services organizations decreased an estimated 15.9 percent from 2008 to 2007.
- Education saw a drop of 9 percent.
- The health subsector and the arts, culture and humanities subsector both received about 10 percent less in charitable donations.
- The environment/animals subsector received an estimated9 percent less than in 2007.
- Donations to international affairs organizations decreased 3.1 percent.
- Religion was one of only two subsectors to receive more money in 2008 than 2007 (when adjusted for inflation) and received an estimated 1.6 percent more for a total of $106.89 billion.
- Public-society benefit organizations made up 8 percent of total giving and saw an increase in donations of 1.5 percent.
NOTE: All percentages above have been adjusted for inflation.
“These giving totals affirm the unique challenges fundraisers and charities have been facing over the past year,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “It is an extremely difficult giving environment right now, but on the other hand, we have to be amazed at the continuing extraordinary levels of support from donors. Success isn’t easy, but with a continued emphasis on innovation and donor cultivation and stewardship, organizations can weather this storm.”
Challenges for Human Services Subsector
Giving USA this year also included a report specifically focusing on human services organizations. They note the following trends (results are based on 228 completed surveys).
- Compared with 2007, 54 percent of human services charities saw an increase in need for their services in 2008; 30 percent saw little change in need; and 16 percent saw a decline.
- For 2009, 60 percent of the surveyed human services organizations were cutting expenses, including cutting services or staff, due to funding shortages;
- The type of human service agency most likely to be underfunded was youth development/serving children and youth. Of this type of group in the study, 74 percent said they are underfunded or severely underfunded, meaning that current available funding was insufficient to meet current demand.
- Among organizations working to meet people’s basic needs (food, shelter, clothing, etc.), more than half (53 percent) said they are underfunded or severely underfunded for 2009.
Giving USA 2009 is a publication of Giving USA Foundation, and is researched and written by the Center on Philanthropy at Indiana University. The complete report is expected to be released in July. More information can be found at http://www.givingusa.org/.
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Analyst Predicts Slow Recovery for Sector, Advises Engagement and Planning
The economy is not likely to rebound quickly and will require strong donor engagement. However, now is also an opportunity to improve the way nonprofits do business, says Susan Raymond, Ph.D.
Following the report by Giving USA that revealed a drop in total giving in the U.S., Raymond, who is executive vice president at of Changing Our World Inc., gives insights into the state of economy and how nonprofits can meet the challenge.
Raymond notes that there have been a number of years that the United States has seen year-over-year declines in inflation-adjusted giving, but that there have been only two periods with sequential annual declines—the mid-1970s during the oil embargo and the period following the terrorist attacks of Sept. 11. She says it is possible that we are in the midst of another multi-year reversal of U.S. giving totals.
A Slow Recovery
There are three reasons why the charitable sector is going to take time to recover from the recession, Raymond says. First, huge increases in the federal budget deficit will be a burden on economic growth in coming years. Second, she notes that high levels of unemployment are taking their toll on giving. Her firm’s research shows that unemployment is a strong indicator of individual giving—more so than GDP or the stock market—and cites a report by the Department of Commerce that estimates unemployment will not return to previous low levels until 2013. Third, rebuilding wealth takes time, Raymond explains. She points to a report by AARP that shows that nearly half (46 percent) of its members have lost at least 30 percent of their retirement accounts in the economic downturn.
What You Can Do
Despite the bad news of a slow climb out of the recession for nonprofits, Raymond says that recovery actually triggers higher levels of giving than before or during a downturn. She advises creating a plan now that manages the effects the slow climb to recovery that nonprofits are likely to face. The plan should revolve around donor engagement—not dollar values of gifts.
“Today, and looking at where we are going, the absolutely most important job of every nonprofit is engagement,” Raymond says. “If we focus on HOW MUCH people are giving, we miss the point. We need to be sure THAT people are giving.”
“Recovery will come, and with it giving,” she continues. “But, without determined, purposeful, meaningful engagement of people, that giving will flow elsewhere. Engagement is the North Star of strategy where economic recovery promises to be prolonged. Measure engagement before you worry about measuring dollars.”
Handling the current economic environment also demands that nonprofits closely examine the way they do business, Raymond says. “Now is the time to go back to the management drawing boards, to examine every last system for efficiency. Moreover, now is the time to pick up the phone, call the executive directors of your colleague nonprofits and sit together to determine how services might be shared, how programs might be combined, how collaboration might both reduce costs and improve quality. Now is the time to take a sledgehammer to organizational silos. It has always been the right thing to do. Now it is the necessary thing to do.”
In the end, nonprofits can arise stronger than when the current challenges began, Raymond says. The key is deep engagement and purposeful collaboration.
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Total Corporate Giving Falls in 2008
Corporate giving fell in 2008 despite many corporations increasing their giving to help fill the gap.
Adjusted for inflation, 2008 aggregate giving retreated from $10.47 billion in 2007 to $10.03 billion across a matched set of 102 companies providing data from 2006 through 2008. These data are the results of a study by the Committee Encouraging Corporate Philanthropy (CECP).
Median giving per company remained high at $30.78 million, drifting down 7.8 percent from a peak in 2007 of $33.19 million. These figures include corporate cash grants, foundation cash grants, and noncash contributions.
Filling the Need
Against this challenging economic backdrop, 53 percent of surveyed companies increased their giving from 2007 to 2008 (off only slightly from the 56 percent that increased giving from 2006 to 2007), reports CECP. Within this group, 27 percent of companies raised their year-over-year giving by 10 percent or more.
Among the 53 percent of companies that gave more in 2008, non-cash giving increased the most—surging by nearly 35 percent. Among companies whose giving declined, their giving dropped most in cash grants from the corporate side.
Overall, the drop in total giving shows corporations are feeling the pinch, as 68 percent of companies that responded to survey reported a decline in corporate profits from 2007 to 2008.
The above findings are based upon data from the Committee Encouraging Corporate Philanthropy’s Corporate Giving Standard, an online philanthropy measurement and benchmarking tool for participating companies. CECP will post its annual data analysis report, Giving in Numbers, 2009 Edition, for free download in fall 2009. For more information go to http://www.corporatephilanthropy.org/.
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"The Philanthropist" Debuts Tonight
A new television series brings glamour, action and adventure to the world of philanthropy, but it may not be a realistic depiction of how charities work and the challenges they face.
The Philanthropist, airing on NBC on Wednesday evenings, depicts the story of a “billionaire playboy-turned-vigilante philanthropist” (according to NBC) who finds meaning in his life by traveling around the world and helping others.
A review in USA Today calls the new series a “well-acted, well-intentioned, incredibly preposterous show that would struggle even if it were in step with the times, rather than marching to its own prosperous drummer.” It also notes that the show “has no more to do with actual philanthropy than Superman does with journalism.”
The Council on Foundations received an advance copy of the first episode of the eight-part drama and was concerned about the wrong impression of philanthropy that it sends to the public. The Council has developed a series of talking points about the show. The talking points are designed to:
- Acknowledge the series as entertainment rather than as representative of authentic charitable giving; and
- Call attention to a couple of real, local stories about philanthropic activities and their results.
AFP agrees with the concerns of the Council and is pleased to make the talking points, posted on the Council on Foundations website, available to members. For these talking points please visit http://www.cof.org/ or view the electronic version of this eWire story.
“AFP feels that exposing the power of philanthropy to millions of people is a very positive thing,” says Paulette V. Maehara, CFRE, president and CEO of AFP. “We appreciate NBC producing a show about doing good and we hope that as the series progresses that it will show philanthropy in a more realistic light or will shed more light on the real world of philanthropy rather than being solely for the purpose of entertainment.”
AFP will be monitoring the show to see if specific issues related to fundraising arise.
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Contribute to Advancing Philanthropy
For the 2010 Advancing Philanthropy we are looking for people who have interesting ideas and good contacts for article interviews. This would not involve any great time commitment on your part—just excellent suggestions! Please contact Jackie Boice at email@example.com if you are interested.
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Nominations Being Accepted Now for AFP Board of Directors
AFP is seeking nominations of qualified candidates to serve on its 2010 Board of Directors as a district director or as an at-large director. Forms are due on or before July 31, 2009. To nominate someone for AFP’s Board of Directors, go to the AFP homepage, www.afpnet.org, and click on the item in the to-do list regarding board nominations. Or see the electronic version of this story in eWire.
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Nominations Open for Foundation for Philanthropy Board
The AFP Foundation for Philanthropy is now accepting nominations for chair-elect (due July 10) and for officers and directors (due July 24). For more information and for a nomination form please visit the AFP Foundation for Philanthropy website at www.afpnet.org/afp_foundation_for_philanthropy.
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Don't Miss Two Upcoming Great Webconferences to Improve Your Fundraising!
(To register go to www.afpnet.org and click on Education and Career Development—AFP Web/Audioconferences)
Making the Most of Email Marketing—Presented by Allison Van Diest of Blackbaud
June 25 | 3-4:30 pm ET
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Maximize Fundraising Through Your Website – Presented by Allan Pressel
July 8 | 1–2:30 pm ET
Learn how to plan and build a website which not only has a lot for the user to see, but a lot for the user to do as well. Consider the impact of a site that offers online donations, event tickets, membership dues, e-store purchases, affiliate marketing, even in-kind donations, planned gifts, investment donations and much more. Register today for Forty Ways to Maximize Fundraising Through Your Website presented Wednesday, July 8 at 1 p.m. Eastern.