Bad News … Good News … Bad News

by George Ruotolo of member firm Ruotolo Associates

As we reflect on the most recent Giving USA report, it can candidly be characterized as bad news…good news…bad news. This year’s report brings a level of caution and concern that our analysis of giving fell short as a result of The Great Recession. We now realize that Giving USA’s methodology which predicts giving, and has served us well for over 50 years, needed to be adjusted. In light of the historic economic collapse we now recognize that giving in 2008- 2009 was not as robust as we then reported. In the year 2009 we now estimate that philanthropic giving was approximately $280 billion.

Giving USA has implemented a new methodology that is relevant to the post Great Recession era. As reported the revitalized methodology continues to equate predicted giving based on IRS final data, but now also includes total household consumption, tax rates, and the stock market. Furthermore, it provides a two-year-ahead forecast on how changes in macroeconomic variables affect charitable giving. The adjustments in the methodology now include financial factors which impact today’s philanthropic giving, and as we have seen historically there is a correlation between the rise and fall of the stock market and the prediction of giving.

The good news is that American’s continue to be generous. We now believe that giving for 2010 increased by 3.8% to $290.89 billion which is a testament to the generosity of our citizens and the ongoing support of foundations and corporations. Let me be clear that the fact that giving increased by 3.8% is a great accomplishment and that stands as what I believe is very good news.

The next chapter of the 2010 philanthropic story may in fact have challenges that we have not experienced since The Great Depression. Charitable giving declined 13% in 2008 and 2009 and while we now seem to be on an upswing with an increase of 3.8% in 2010, we still have 11% to recover. We now find ourselves at the exact same level of philanthropy as a decade ago at $290.76 billion in 2001. Giving USA predicts that at this rate (approximately a 2% increase per year) it will take 5-6 more years to return to pre-great recession levels.

What does this all mean? Bad news, we now recognize giving did decline. Good news, people were very generous in 2010. Bad news, we have a lot of work to do. I believe it is important that the non-profit community, fundraising professionals, and philanthropic consultants accept this as a challenge and attempt to accelerate the pace of philanthropy so that the prediction of 5-6 years to reach pre-great recession levels is realized sooner. The message of a new commitment to philanthropy needs to be shared with the donor base of non-profits and as appropriate with those who historically set the pace for philanthropic giving in this country. The tenants of charitable giving will remain in my view relatively constant, although this new information needs to be communicated with a sense of purpose and urgency. It is critical that our major donors also view this as an important new challenge and something they can and hopefully will impact in a significant way.  

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