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By the time most of us are in high school we’ve been asked to wrestle with a classic entry-level philosophical conundrum, “If a tree falls in a forest and no one is around to hear it, does it make a sound?” So forgive me if I give you flashbacks to the tenth grade with this entry-level fundraising mindbender: If we're in the good times but no one believes it, are these really the good times?
Today marks the release of Giving USA 2015: The Annual Report on Philanthropy for the Year 2014. Giving USA is published annually by the Giving Institute, a national association of fundraising consultancies. Plenty is a member, and as such we get a chance to preview the research, which is conducted by the Indiana University Lilly Family School of Philanthropy.
I have to admit, Giving USA is starting to feel slightly anachronistic in a time when online giving and overall access to data have allowed other organizations to publish both rapid recaps and forecasts of giving. Blackbaud, for example, now publishes its own Blackbaud Index, which is updated monthly and which I’ve found to be fairly accurate as an overall representation of philanthropic activity. Other organizations are following suit, and nowadays December and January are fairly rich with philanthropic surveys that are becoming increasingly useful.
That’s all by way of saying that some of what is included in Giving USA 2015 seems to be news we all reported on six months ago: 2014 was, thankfully, another year of growth in giving. Economic factors, from an overall increase in GDP, strong performance of the domestic stock market, and declining unemployment, have freed up pocketbooks at both the individual and corporate level. Overall giving in inflation-adjusted dollars from both corporations and individuals has increased. This is the same conclusion other indices reached months ago, and it’s good news as it’s another clear indication that the after-effects of the Great Recession are long gone.
Or are they? Where Giving USA really shines is in the depth of detail it provides, which is above and beyond the more timely indices. And it is in the details that I’ve found data points that at the very least pique my curiosity, and at a deeper level make me wonder if we as a sector really understand that this is our boom time.
Much will be made in the publication of the report about growth in giving as a percentage of GDP. Most of you reading this probably already know that giving is heavily related to overall GDP – in fact, it has been stuck around 2% of GDP for 40 years or so. As the economy grows, giving increases – and sadly, as the economy shrinks, giving does too. In 2014, giving as a percentage of GDP moved to about 2.1%. I wouldn’t make too much of that – the percentage has fluctuated from 1.9% to 2.1% continually over time. In my mind the increase to 2.1% doesn’t signal a long-term change as much as it is just another sign of good times.
I don’t mean to sound like I’m not interested in the 2% issue – in fact, we’ve written about it a lot. I’m just not sure it is the top story anymore. In the deeper pages of the report I find a lot that interests me more, and a few things that concern me. Among the highlights:
Yet again this year, one-third of total giving went to religious institutions. While I think there are a number of reasons for this, one big reason is that most religious organizations ask their constituents to give – and they ask in person, every week. Asking works.
Further into the details you will find an interesting chart showing corporate giving as a percentage of pre-tax profits. Unfortunately, by this measure, corporate giving was at its lowest level in 40 years. That’s two generations. But wait, didn’t corporate giving in inflation-adjusted dollars go up? Yes, but corporate profits were up so much more that corporate giving as an overall percentage of profits actually went down. Corporate generosity isn’t keeping pace with corporate profits.
A similar gray cloud is the outline of volunteer rates over the last decade. The volunteer rate for adult citizens is at its lowest rate in ten years. About one in four U.S. adults volunteer for charitable organizations. At one level, I think that’s fantastic – at another, I can’t help but wonder what we need to do to get the other 75% engaged.
My biggest reaction in reading through the report, though, is will our nonprofit clients believe that giving is growing again? The Great Recession ended years ago, and yet we continue to find that many organizations are still operating on recession footing. Most nonprofits made at least some staff cuts in 2009 and 2010, as well as cuts to investments in training, marketing, programs, and technology. Some groups made severe cuts.
Now, five years later, we still find staff members that are incredibly overworked, teams that are too small for the tasks at hand, convoluted organizational charts that need a compass to decipher, fundraising programs that are mainly growing organically rather than strategically, and an overall reluctance to try new channels. There is no question the focus on expenses has created some efficiency gains. But I worry about the sector’s ability to grow long-term without also putting money into long-term investments. Like the corporations that grow profits without giving back, we need to do more than simply grow the bottom line.
The next several years are an incredible opportunity for the sector to prepare for the next recession by putting in place the channels, technology, brand presence, and competence to grow through the economic cycle. More than that, it presents an opportunity for the sector to establish its vision for the next several decades. Are we working to get four stars from Charity Navigator, or are we working to create long-term change in the world? I know which one I’d choose.
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