Some Observations: Year-end Giving, Statistics and Changing Donor Habits
by Robert I. Evans and Avrum D. Lapin
The Chronicle of Philanthropy recently explored how the 400 largest U.S. non-profits fared in 2009 with regard to reported charitable giving. To many, the collective decline in giving of 11+% reported was shocking, especially recognizing that Giving USA previously announced total U.S. giving was only down last year by about 3.5%.
Today, there are approximately 1.4 million legitimate U.S. non-profits, in addition to about 300,000 houses of worship. Looking at the 400 largest charities and their results is an eye-opener, for sure, and we contend that the statistics do reflect important trends but not a decline in charitable intent.
Rather, we highlight a significant change in giving priorities by the millions of donors whose generosity has characterized the United States. The Chronicle’s study serves to validate what we have been seeing for several years . . . highlighted especially in 2009.
As the U.S. and global economies took a turn for the worse in 2008 and 2009, many donors consciously “took a deep breath” and re-evaluated how they allocated their precious charitable dollars, intending to make the greatest impact possible. As a result, we witnessed major changes in giving patterns in which donors directed dollars away from large national and “community chest” type campaigns and major non-profit organizations. Alternatively, donors focused more on smaller and more mission-specific boutique and sometimes grassroots efforts that they saw as having immediate and direct effects on people and communities in jeopardy. That explains in part why, as noted above, certain large non-profits, such as the traditional “umbrella organizations,” including the Jewish Federation system and United Way, experienced across-the-board declines.
While there are so many organizations that present compelling cases and demonstrated specific immediate needs with solutions to how they could be met, donors have responded with different priorities and, consistent with the evolving “new normal” that we have discussed in earlier posts, are asking new sets of questions. This approach has resulted in paradigm shifts, especially among major donors, and can explain a movement, at least for the time being, away from larger well-known non-profits to those with particular interests.
Certain non-profits that engage in large-scale fundraising efforts needed to change their approaches during this time period and many were not prepared to adjust so quickly to different donor pressures. Re-framing compelling needs was not done well or quickly enough and this, we feel, reflected why some donors sent their dollars elsewhere.
One other reason that reported giving to the 400 largest non-profits reflected a decline in 2009 related to a paucity of major capital campaigns, especially ones being conducted by colleges and universities and major medical centers. Higher education experienced very significant declines in giving in 2009, especially because of fewer capital campaigns being conducted. The Chronicle’s report showed this!
Look specifically at results for annual appeals from the education sector and we surmise that results were more consistent and generally reflecting increases.
During the downturn in the economy, capital campaigns significantly decreased in number as donors felt more basic service needs should take precedent and non-profits could not support the costs of building or renovating facilities.
Another factor that contributed in some ways to the decrease in giving over the past year is the decline in the U.S. death rate. As a result even Giving USA reported a major decrease in testamentary gifts last year. Even with that being reported, 8-10% of all giving generally comes to non-profits in the form of bequests. We believe that this trend definitely makes an impact on many non-profits of all sizes but especially large organizations with sophisticated planned giving opportunities. This does not suggest, however, that non-profits should stop seeking bequests and other forms of testamentary commitments!
When you factor in changes in giving priorities, a tougher economy, and the decrease in testamentary giving, we find ourselves looking at that “new normal” for the non-profit arena. So with just two months left in 2010, half-way through the most critical quarter of the year, what should non-profits do to attract critical dollars?
Being timid is not an option. As we come in to the final weeks of the calendar year – the time when most Americans write checks to fulfill pledges made earlier in the year or even just respond to year-end appeals – appealing to and reaching out to donors will be key. Now is time to collect unpaid pledges and solidify gift renewals. Donors need to be reminded and often coaxed to make sure their payments are in before the artificial “deadline” of December 31st. It is important that donors see and feel the efforts that you are taking to translate dollars to impact.
Talk about plans for 2011. Give donors the answers they seek about your organization’s next steps to demonstrate that their gifts have been used responsibly and will have long-term impact … and that the leaders have thought ahead and are planning ahead. Showing proactivity will be an important way to keep donors connected and, most importantly, ensure that you have taken the necessary preparations to fulfill your mission and build upon the goals of 2010 for an even more productive 2011.
Focus on the positive. While it is important to convey the need, make sure your appeal for support does not read as a cry for help. Be honest about what areas require additional funds specifically as you reach the end of the year, and how you plan to further address these needs in 2011. Offer thanks for their previous support and in advance of their help in the future. The end of the year is a time to show appreciation for your donors and everything they have done and hopefully will continue to do in future.
Today the non-profit community is at a demonstrably stronger and better place than it was a year ago, and it is important to communicate that progress while also being truthful about the challenges your non-profit are facing.
Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, of suburban Philadelphia, and are frequent contributors to eJewishPhilanthropy.com. EHL Consulting works with dozens of nonprofits on fundraising, strategic planning, and non-profit business practices. Become a fan of The EHL Consulting Group on Facebook.