Happy Days are Here Again … for Now

Charitable giving in the USA reached a record high for the second year in a row, according to the newly released Giving USA 2016: The Annual Report on Philanthropy for the Year 2015, a publication of Giving USA Foundation, researched and written by the Indiana University Lilly Family School of Philanthropy.

While the news is good, storm clouds are gathering on the horizon. You need to hear both the good and the troubling news. I’ve tried to distill the most relevant, overarching information for you and provide you with some tips to help you be more successful moving forward. While I would normally advise against sharing lots of statistics, I nevertheless think you’ll appreciate these numbers.

Source Pie Chart_June 13 2016Researchers estimate that giving totaled $373.25 billion in 2015.

That new peak in contributions represents a record level whether measured in current or inflation-adjusted dollars. In 2015, total giving grew 4.1 percent in current dollars (4.0 percent when adjusted for inflation) over 2014.

The revised inflation-adjusted estimate for total giving in 2014 was $359.04 billion, with current-dollar growth of 7.8 percent, and an inflation-adjusted increase of 6.1 percent.

Charitable contributions from all four sources — individuals, charitable bequests, corporations, foundations — went up in 2015, with those from individuals once again leading the way in terms of total dollar amount, at $264.58 billion. This follows the historical pattern seen over more than six decades.

Giving to eight of the nine nonprofit categories studied grew with only giving to foundations declining (down 3.8 percent in current dollars, down 4.0 percent adjusted for inflation).

Giving to the category of International Affairs — $15.75 billion — grew the most (up 17.5 percent in current dollars, up 17.4 percent adjusted for inflation).

Giving to the category Arts/Culture/Humanities — $17.07 billion — grew the second most (up 7.0 percent in current dollars, up 6.8 percent adjusted for inflation).

While the numbers are terrific, the story is really about more than that. Giving USA Foundation Chair W. Keith Curtis, president of the nonprofit consulting firm The Curtis Group, says:

If you look at total giving by two-year time spans, the combined growth for 2014 and 2015 hit double digits, reaching 10.1 percent when calculated using inflation-adjusted dollars. But, these findings embody more than numbers — they also are a symbol of the American spirit. It’s heartening that people really do want to make a difference, and they’re supporting the causes that matter to them. Americans are embracing philanthropy at a higher level than ever before.”

While the 2015 giving news is certainly positive, there are four points that indicate that the good news might be short lived:

Slowing Growth Rate. The rate of growth in giving slowed in 2015. In 2014, we saw inflation-adjusted growth of 6.1 percent while the growth rate in 2015 was just 4.0 percent. We may be seeing the start of a new trend.

Correlation to GDP. Once again, charitable giving correlates to Gross Domestic Product. In both 2014 and 2015, giving stood at 2.1 percent of GDP. Since 2000, giving has been between 1.9 and 2.2 percent of GDP. In other words, when the overall economy grows, philanthropy grows; when the overall economic growth rate slows, so does philanthropic growth. With anemic GDP growth in 2016, we can expect anemic philanthropic growth unless the economy heats up in the second half of the year.

Decline in Volunteerism. In 2004, 28.8 percent of Americans volunteered. In the following decade, the percentage of Americans who volunteered dropped 12.2 percent, down to 25.3 percent of the population. While the percentage of Americans who volunteer remains good, the downward trend is worrisome. There is a correlation between volunteerism and giving. For example, people who volunteer but do not make current donations are more than twice as likely to make a charitable bequest gift as people who neither donate nor volunteer.

Tougher Competition for Donors. Between 2014 and 2015, the US saw a 6.0 percent increase in the number of 501(c)3 nonprofit organizations. That means that the 4.0 percent inflation-adjusted growth rate in philanthropy did not even keep pace with the growth rate of charitable organizations. In other words, fundraisers are facing greater competition for a pool of philanthropic resources that is not keeping pace with demand.

As we celebrate record giving in 2015, let’s keep an eye to the storm clouds gathering on the horizon. A bright future for philanthropy is not assured. We need to be prepared and, where we can, we need to be proactive.

Here are just three things you can do to help ensure your organization has the philanthropic resources necessary to fulfill its mission:

  1. Have a monthly giving program.
  2. Work on improving your organization’s donor retention rate.
  3. Start or grow your planned giving program. In 2015, 9 percent of charitable giving came through bequests. What percentage of contributions to your organization came from bequests? If it was less than 9 percent, you have some work to do in this area.

To purchase your copy of the full report, visit the Giving USA store by clicking here.

That’s what Michael Rosen says… What do you say?

Advertisements

11 Responses to “Happy Days are Here Again … for Now”

  1. This is really interesting and exciting to see. I noticed you mentioned there was growth in every area except giving to foundations which saw a decline. I would be very interested to see what portion of the decline and rise may have actually been a shift. It obviously couldn’t account for the entire decline in giving to foundations, but I’d be interested to know what portion. Do you think it’s possible we are seeing a shift from giving to foundations to giving directly to charities?

    • Jessica, thank you for your good question. I wish I could give you a good answer. Unfortunately, I have not seen any data that would explain why giving to foundations dropped from 2014 to 2015. However, I can offer some speculation.

      First, gifts to foundations are usually quite large. So, a relatively small change in the number of people choosing to give or not give will move the needle significantly.

      Second, as you’ve suggested, some donors may have chosen to give directly to a charity rather than to a foundation. There’s really no way to know. But, again, changes of behavior among relatively few individuals can impact the growth or decline in giving for this category.

      Third, the weak stock market performance during the period studied may mean that some individuals had fewer major assets with which to give to a foundation.

      Time will tell if this is the beginning of a trend or merely a periodic fluctuation.

      I should also point out that giving to Donor Advised Funds is on the rise. So, there’s probably not a big movement back to giving directly to charities instead of giving to DAFs and foundations. As professional fundraisers, we need to understand why some donors would rather give to a DAF or foundation rather than directly to an operating charity. Then, we might be able to enhance the donor experience in order to attract some folks back to operating charities.

  2. I couldn’t wait to see what you wrote, Michael! I knew you wouldn’t just join the “good news” bandwagon. I wrote a post wondering where exactly the $373 million is going because most of the million+ nonprofits get a tiny fraction of that amount. Thanks as always for your insightful comments and thoughtful suggestions!

    • Susan, thank you for your kind message. I enjoyed reading your post, and I encourage folks to take a moment to check it out by clicking here. As you’ve observed, the big money goes to the big organizations. Unfortunately, the vast majority of charities are relatively small, with budgets less than $5 million. These smaller organizations often struggle for a number of reasons. However, these organizations have a major advantage over large organizations: They can be innovative and nimble. During and immediately following the Great Recession, social service charities struggled. However, the Philadelphia Children’s Alliance actually attracted significantly greater philanthropic support by diversifying its funding stream, focusing on mission fulfillment, and planning for success. So, while an overall increase in philanthropy does not equally impact both large and small charities, smaller organizations actually have more control of their destinies than many are willing to accept. To read more about PCA, readers can click here.

  3. I say thanks, Michael, for sharing this information with everyone! It takes a lot of work by the Lilly School and all of us in the field to bring this data together in a meaningful fashion!

    • Bill, thank you for your thank-you message. I’ll admit to being a nerd. I actually like reading Giving USA, and I’ve done so for decades. I greatly appreciate The Giving Institute and the IU Lilly Family School of Philanthropy for compiling and publishing Giving USA. The information is always interesting and insightful. In addition, it provides great data that can be used for benchmarking by individual nonprofit organizations. I’ve provided some highlights from the new report; however, the full report contains much, much more information worth exploring.

  4. Michael, great synopsis. I love data, as it under girds our efforts and provides a great gut check. But…like always, it comes down to fundamentals, doesn’t it?
    Show your donors the great outcomes their gift provides, steward them appropriately to manage retention and find engaging was for volunteers to feel their time is well-spent. If we do all that, we might even beat the average stats.

    Thanks for your insight.

    • Greg, thank you for pointing out that the percentages in the pie chart (above) add up to 101 percent rather than 100 percent. Frankly, I had not noticed that. So, after receiving your comment, I contacted the spokesperson for Giving USA. I was told that the unrounded percentages by category are:

      Corporations — 4.9%
      Foundations — 15.7%
      Bequest Giving — 8.5%
      Individuals — 70.9%

      When adding the unrounded percentages together, we find that they do indeed add up to 100 percent. However, when rounding each number (as was done for the preparation of the pie chart), we find that each of them rounds up resulting in a total of 101 percent.

      So, what we see in the official Giving USA pie chart is the result of rounding.

Trackbacks

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: