Nonprofit Harvest

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.

This Week’s Harvest

• A Nonprofit News Round-Up from Not-For Profit Accounting,  including:
  • Bringing the Stimulus Plan Home: Obama’s Effect on Nonprofit Jobs
  • 7 Things To Consider For Your D&O Policy
• British Charity Mergers Examined
• FASB Releases Standard for Nonprofit M&A

Stimulus Update

The American Recovery and Reinvestment Act (ARRA, commonly called the Stimulus), includes significant funding for nonprofit organizations.  However, assessing whether or not you should apply, and how to do so, can be a daunting task.  Especially given the timetable for submissions and reporting.

Before you apply for any federal funding, I encourage you to read these words of caution and consider whether or not your organization has the infrastructure and administrative capacity for a federal grant.

Jim Schowalter, Minnesota’s state budget director, also offers a few important caveats about the available funds, according to MCF’s Philanthropy Potluck blog:

The amount of stimulus money flowing to Minnesota is equal to 8.2 percent of our state budget; however, our state is facing a 15 percent budget deficit.  This stimulus funding provides a one- or two-year bump to hopefully get us through the recession, but it is not enough to resolve our budget deficit.

While the dollars involved are many, they are not significant enough to create new areas of funding or expand programming, and may not even be enough to stave off cuts to balance our state’s budget.  Much of the money will be distributed using existing infrastructure and pipelines and will go to backfill gaps created by budget shortfalls.

General Resources

• Bulletin on How Nonprofits Can Apply for Stimulus Package Funding from Giving USA and the Center on Philanthropy at Indiana University
• What Do Nonprofits Need to Know About the American Recovery and Reinvestment Act? 
• National Council of Nonprofits Special Reports on Economic Stimulus & Recovery

Minnesota Resources

• Best ARRA Funding Resources – Minnesota from the Foundation Center
• Overview of the Recovery Act from the Minnesota Management & Budget Agency
  
• 2009 Recovery Act Resources for Nonprofits from MCN

New 990 Resources

The IRS has an excellent Resource Library to help nonprofits maintain their tax exempt status, file reports, and meet other requirements.  They recently produced a new mini course to help nonprofits file the 990.

As a reminder, MCN has video training that helps organizations understand the changes to the 990 and Not-For-Profit Accounting can help answer your questions.

This Week’s Harvest

• Surveys: Few NP Mergers And Ready Credit
• Nonprofit Groups in 19 States Report Late Government Payments
• The Funder is Not the Program
• More Than a Third of Family Foundations Are Either Uncertain About Lifespan or Expect to Spend Down