Looking Forward by Looking Back
Charitable Giving: Glass Half Empty or Hall Full?
This week, Giving USA released their report on 2008 giving. As nonprofits can attest, it was a rough year. According to the study, total giving decreased by 5.7%, with donations down across the board.
- Individual giving: -6.3 percent
- Foundation grantmaking: -0.8 percent
- Corporate giving: -8 percent
- Charitable bequests: -6.4 percent
- Two-thirds of public charities experienced a decline in donations.
However, even in the worst economic climate since the Great Depression, charitable giving exceeded $300 billion.
Over at Tactical Philanthropy, Sean does some excellent analysis in his post How Much Did Americans Really Give in 2008?
So what’s the take away? I would say that the best way to think about charitable giving in 2008 is that it contracted sharply, but that the contraction was less than many people feared and the total amount given was within the range of the level of giving seen over the past few years. Giving as a percentage of GDP was 2.2%, within the normal range and very close to the 2.3% of GDP that was given in 2007…
Charitable giving behaved more or less as it normally does when the economy sours. This is, by most measures, the worst recession in a very long time and so we’re seeing charitable giving get hit. But it is only declining in line with the way it normally behaves.
As a reminder, if this recession is similar to other economic downturns, it will take the philanthropic/nonprofit sector longer to recover than the rest of the economy. The Giving USA authors commented in a discussion hosted by the Chronicle of Philanthropy that this recession resembles the one in1974 , when took three years for giving to rebound. However, they cautioned against assuming that this would be an accurate guide, noting the changes in the world and the nonprofit sector.
Related Coverage
- Charitable Donations Fell by Nearly 6% in 2008, the Sharpest Drop in 53 Years
- Charitable Giving Fell by 2 Percent in 2008, ‘Giving USA’ Says
Other Giving Reports
- Foundation Center 2009 Foundation Giving Forecast
- 2009 Giving Forecast by Minnesota Grantmakers
- MCF 2009 Outlook Report
What’s a nonprofit to do? Start contingency planning
During the Giving USA chat, someone brought up the question of budgeting amidst so much uncertainty:
Question from Hazel, animal charity: How can one do any financial planning or construct a budget for the coming year when it may even be worse than last year and no one knows whom we can depend on?
Nancy Raybin: Agree on different scenarios, e.g. economy gets worse by 10 percent, economy levels; economy gets better by 10 percent. Make some hypotheses about the impact of different scenarios on your animal charity’s activities and what donors are likely to do. Then prepare different budgets for each scenario. Clearly, you know best how animal lovers respond in these times. You must also have a number of donors on whom you can depend. Focus on those.
Sometimes it feels like I’m beating the scenario planning drum all time, but it really is the best advice we can give to help nonprofits plan and adapt in these uncertain times. Download and use our tools to get started.