By Poonam Prasad of member firm Prasad Consulting & Research
Just as the latest Giving USA figures showed a slight uptick and the beginning of a recovery in US charitable giving, the latest economic news is beginning to spread gloom once again.
But this time, we are equipped with better coping skills. Even when the news is bad, we know that people do not stop giving – they just may give a bit less. According to Giving USA, during the worst years of the Great Recession, giving only fell by 7%, adjusted for inflation, in 2008, and by 6.2%, adjusted for inflation, in 2009. We also know that even in bad times, there are those whose businesses thrive and we can use our research skills to uncover those industries or constituencies.
When there are less funds to go around, we may also need to invest our acquisition and research dollars more strategically. A Money for Good study shared with Giving Institute members by GuideStar (available at http://www.hopeconsulting.us/pdf/Money%20for%20Good_Final.pdf) shows that the largest percentage of charitable donors (38%) fall into the category of “Repayers.” These are people who support organizations that have had an impact on them or a loved one. They give, for instance, to their alma maters or medical institutions that have assisted them or someone they are close to. This speaks to mining your donor database for current donors whom you should cultivate for upgrade rather than acquiring lists of High Net Worth Individuals with whom you have no linkage or connection.
Statistically, however, the study also indicates that the largest numbers of individual donations as well as the highest median and mean donations by far, go to organizations with which the donor has “Personal Ties.” These donors gave to organizations where they were familiar with the leadership (staff or volunteer), supporting the old fundraising adage: people do not give to causes, people give to people. Or to take it a bit further, people give to people whose causes they know about, understand and believe in. The best and most successful fundraisers already know that. In the end, it’s all about the relationship. Who do we know? Who can we get to know? What are the six (or less) degrees of separation that can get us to the people we want to know?
The same study also finds that most donors consistently give to the same organizations and only 14% of contributions are “switchable” from year to year. What does that mean for us? It means that our organizations must continue to communicate and cultivate, acknowledge and thank, and steward and report to our donors what we accomplished with their dollars as diligently as possible so that we are not among the minority of organizations that they drop from their lists.
As we know most recently from the experiences of September 11, the tsunami, Hurricane Katrina and the Haiti earthquake, when human tragedies occur or disaster strikes, there is an immediate outpouring of financial support from generous Americans. According to Giving USA, when the Great Recession first hit, many human services organizations, such as food banks, soup kitchens and social service agencies saw a considerable rise in donations because people could see and feel the suffering around them. By 2010, giving returned to the usual annual percentages, with education and arts (which receive a higher percentage of their gifts from High Net Worth Individuals), showing a resurgence. International affairs also showed a large increase in 2010, in part attributable to donations following the earthquake in Haiti. If things slide further this fall, it is likely that donors will once again skew their year-end giving towards organizations that help those in need.
Although the recent economic news is unpleasant, it might not foreshadow a period of decreased receipts. During the last few years, some of America’s wealthiest have made large donations to their own foundations or donor-advised funds. For many nonprofits, this will mean that there are more funds already allocated for giving, we just have to be sure to solicit the right people or organizations.
So, regardless of the economic situation, this year, as I have done for the last seven years, I will begin my Fundraising Research and Information Management course emphasizing the importance of giving by individuals. The same three precepts will take center stage:
- Individuals remain the single most important source of charitable donations.* (According to Giving USA, in 2010, when bequests and family foundations were included in the total, individuals gave approximately 88% of all charitable donations.)
- The wealthiest of them overwhelmingly make most of the gifts. (According to the Center on Philanthropy at Indiana University the wealthiest 3% of American households are responsible for approximately two-thirds of all charitable giving annually.)
- Individuals give only to organizations whose missions interest them or to those with whom they have a relationship.
Far from sitting on our hands in fear, let’s get out there with passion and energy – we have letters to write, websites to update with our latest accomplishments, events to host, volunteers to engage and donors to meet face-to-face. These are the building blocks which will strengthen the connection with our donors, ensuring that they remain loyal and supportive through good times and bad.
* Ever since its first publication in 1956 Giving USA has reported that individual donors contribute the largest share of the total in the United States.