Nonprofits’ Overall Confidence in Giving Climate Up Slightly

Charities face a sobering environment for charitable giving this holiday season despite their perceptions that the giving climate improved slightly since last summer, according to the latest Philanthropic Giving Index (PGI) released yesterday by the Center on Philanthropy at Indiana University.

The PGI, similar to a Consumer Confidence Index for charitable giving, includes three indexes on a scale from 0 to 100 points, based on a semiannual national survey of nonprofit fundraising professionals. Higher scores indicate more positive or optimistic attitudes about the climate for giving.

In the latest survey, all three indexes (overall PGI, Present Situation Index, and Expectations Index) rose slightly from six months ago. The overall PGI was 71.1, an increase of 8.7 percent since summer 2009 and up 9.8 percent from this time last year. The Present Situation Index was 62.5, up 7.7 percent from six months ago and down 1.7 percent from one year ago. The Expectations Index, at 79.8, increased 9.6 percent from six months ago and 20.7 percent from a year ago. Still, the indexes remained near historic lows in the study’s 12-year history.

“Right now, fundraising is extraordinarily difficult for charities,” said Timothy L. Seiler, director of public service and The Fund Raising School at the Center on Philanthropy. “Donors and fundraisers remain wary about the economy. Yet these findings suggest that fundraisers either have indications from donors that things may be beginning to get better, or they are optimistic that the situation will improve and they are confident in their nonprofit’s ability to earn donors’ contributions.”

Fundraisers from human services charities and consultants who provide outside fundraising counsel to nonprofits were substantially less optimistic about the current giving climate than fundraisers for other types of nonprofits. Fundraisers from educational and religious organizations were the most optimistic about the present giving climate.

The PGI also asks about the success of various fundraising techniques. A majority of fundraisers continue to report that major gifts and direct mail are the most successful techniques. Since the beginning of the recession, the share of fundraisers reporting success with corporate gifts fell from 54.3 percent in December 2007 to 29.2 percent in December 2009. This is a decrease of 46.2 percent. The share of fundraisers reporting success with foundation grants and special events has also fallen 42 percent and 22.2 percent respectively since December 2007.

“We see a mix of serious concern and a hint of optimism in the fundraisers’ views,” said Una O. Osili, director of research at the Center. “While almost 77 percent of respondents continue to believe the economy currently is having a negative or very negative impact on giving, those attitudes have lessened from one year ago, when more than 90 percent said the economy’s impact was negative or very negative.”

Fundraisers also were asked about new activities or initiatives implemented in 2009 that increased their organization’s revenue. The majority reported that focus on stewardship and communication with donors (84 percent), as well as setting organizational priorities and making tough budget decisions (83.7 percent) led to increased revenue. In addition, 51.1 percent wrote grant proposals for foundation and corporate grants, 38.9 percent accepted in-kind donations, and 31.2 percent partnered with community organizations.

Nonprofits also reported putting the highest priority on retaining their current donors (92.5 percent), followed by cultivating prospective donors (69.7 percent), and reengaging lapsed donors (56.3 percent).

“One-third of fundraisers reported no change in the number of donors who gave this year compared to last year, while about 27 percent reported an increase in repeat donors,” said Patrick M. Rooney, executive director of the Center on Philanthropy. “However, nearly 40 percent of fundraisers reported fewer repeat donors during the past year. Both this finding and the positive results of nonprofits’ new initiatives emphasize the importance of nonprofits responding in ways that donors say are most important to them. These include better stewardship and more frequent communication about the needs they are meeting, as well as making choices that result in greater organizational efficiency and impact. These best practices are especially important in difficult times.”