U.S. Giving: Perspective is Everything

by Nancy Raybin

Perspective is everything, including in the world of charitable donations and philanthropy. Coupled with facts, we can say two things about the year 2009 as it relates to Americans and their money: It was the worst year economically since the Great Depression in this country; and, the inflation-adjusted drop in giving of 3.2 percent for 2009 is not as severe as the decline found in 1974, when inflation-adjusted giving fell by 5.5 percent. The year 1974 was also a very difficult recession year.

What can we surmise from these facts to put matters into perspective? In looking at data we have been compiling and analyzing since 1956, we can say, with certainty, that people are giving more now to non-profit organizations than they did in 1974 per household; charitable giving has been integrated into our identities as Americans. I think we can take a certain measure of pride in our response to societal needs and fundamental values in this country.

To put it concisely, giving is a way people act on these values. In today’s world, non-profits need to connect with donors and potential donors at that values level, and not from guilt, exchange, or other methods of fundraising.

At Giving Institute: Leading Consultants to Non-Profits, our member firms serve thousands of diverse non-profits across the country. What they have learned from these groups mirrors what the data tell us – even as many long-time donors felt the need to pull back from giving, others increased their effort to support the nation’s 1.4 million charitable organizations through financial and in-kind donations. Where one strata might have had to drop its level of donating, other strata picked up the slack, and perhaps without even realizing it.

Giving USA 2010 estimates that 2009 charitable giving was 2.1 percent of GDP – the thirteenth consecutive year that charitable giving has been higher than 2.0 percent. While it would be encouraging if giving had increased further as a percentage of GDP, when you consider the economic turmoil experienced last year, I think there can be a sense of accomplishment and gratitude that American individuals, corporations and foundations still reached deeply into their pool of seemingly shrinking resources to meet the needs of charitable organizations.

A simple math equation shows how giving could be impacted by a small decisions: If 55 million households across the United States each elected to increase their giving by $100 a year, that would raise all charitable giving by 1 percent. Based on reports from Giving Institute member firms, some of this extra giving occurred in 2009. Anecdotally, board members of our organization reported that charities around the country focused the most effort in 2009 on raising annual fund support, and asked their current donors to give a little extra if they could. Many organizations reported that they met, or nearly met, their goals for this type of giving.

Donors give because they trust the recipient organizations and believe in the important contributions to the fabric of society that those organizations seek to achieve. One way to interpret the estimate of giving for 2009 is that despite the economic crisis and other concerns, a large number of donors in the United States continued to see nonprofit organizations as vital partners to improve the quality of life for themselves and others.

Nevertheless, the reality is that despite Herculean efforts at every level, giving did drop as measured in today’s dollars – by 3.6 percent. While some organizations have well-staffed, volunteer-led fundraising programs that successfully raise millions of dollars, the vast majority of charitable organizations, including religious congregations, raise funds locally from a comparatively small number of donors.

In 2009, many charities set aside plans to raise funds for endowments, buildings, staff development, program innovation, impact evaluation, or planning activities – they had to go into “survival mode” to keep the doors open, and their budgets reflected that reality. We heard this decision to stop – or slow down – asking for capital and endowment gifts consistently in 2009.

For any one organization, the results for 2009 fundraising will reflects its myriad fundraising initiatives. Increasingly, these include online efforts and social media. Technology-driven methods of giving and communicating are supplementing, but not replacing, the fundamental premise of charitable giving: people give to people they trust to work toward a shared vision.

Nonprofit organizations that did not ask for funds probably saw a drop in charitable giving, which might mean their results appear to be different from the national picture. These informal reports are important, but don’t tell the story of total giving across the country. Our estimates paint a picture with data that we are proud to provide to the American public, year after year.

Nancy Raybin is Chair, The Giving Institute and a Managing Partner at Raybin Associates, Inc.

For more on Giving USA 2010, read U.S. Giving in 2009 Exceeds $300 billion, Reflecting Strong Support for Non-Profits.