The Giving USA annual report on philanthropy is a valuable service to our profession, but the data collected and reported is missing a critically important data point, one that should be central to our profession’s global strategies.
Nowhere to be found is the national trend in the number of donors making gifts. According to Giving USA donations in 2013 increased 4.4 percent (in current dollars) from the revised estimate of $320.97 billion for 2012. Adjusted for inflation, total giving rose 3.0 percent over the 2012 estimate. We don’t know if this rise in giving was from more donors or fewer donors.
If we measured average gifts and particularly median gifts, overall, it would likely tell a story that we probably do not want to hear. With real earning power for the middle class declining over the past 20 years, and income polarization putting more wealth in the hands of a smaller and smaller percentage of the population, it stands to reason we are likely seeing growth in overall giving from fewer and fewer people.
Target Analytics does begin to weigh in on this issue through the evaluation of transactions from 80 organizations, including over 38 million donors and more than 79 million gifts totaling over $2.5 billion in revenue. They found “donor numbers dropped at the same rate as overall index revenue in 2011, declining a median 2.1% from 2010 to 2011. Just over one third, or 34%, of the organizations in the index had year-over-year donor increases 2011.
This continues a trend that predates the recession. Donor populations have been shrinking for the past six years, primarily because of declines in new donor acquisition. The index has not experienced positive year-to-year overall donor growth or new donor growth since the U.S. Gulf Coast hurricanes in the third quarter of 2005.
In 2011, revenue per donor amounts rose, as they have ever since the end of the 2007-2009 recession. This growth was widespread throughout the index; 66% of the organizations in the index had positive revenue per donor growth over the year. However, declining overall revenue shows that, this year, revenue per donor increases are not making up for continuing donor declines.
Although corporate giving decreased in 2013, the year saw considerable growth in very large gifts of $80 million and up from individuals, couples and estates. “We witnessed a number of these very large gifts from households and estates, which may be signaling growing confidence among wealthy donors in making larger commitments,” said Gene Tempel, Ed.D., CFRE, founding dean of the Indiana University Lilly Family School of Philanthropy.
Although corporate giving decreased in 2013, the year saw considerable growth in very large gifts of $80 million and up from individuals, couples and estates. “We witnessed a number of these very large gifts from households and estates, which may be signaling growing confidence among wealthy donors in making larger commitments,” said Gene Tempel, Ed.D., CFRE, founding dean of the Indiana University Lilly Family School of Philanthropy.
We are all aware that this is the era of mega, multi-billion dollar campaigns. These campaigns, while typically attracting tens of thousands of donors and gifts, contribute to obscuring the reality that increases in total giving are coming from higher average giving from fewer donors.
Consider some statistics in the July 27,2014 NY Times article by Stephanie Coontz, “The New Instability” where she points out that “In 1969, by the time men reached age 25, three-quarters were earning wages that could support a family of four above the poverty line. By 2004, it took until age 30 for the same percentage of men to reach this income level. And while in 1969 only 10 percent of men ages 30 to 35 were still low earners, by 2004 almost a quarter of men in that age range remained low earners.” To support this reality, a study financed by the Russell Sage Foundation found the inflation-adjusted net worth for a typical household was $87,992 in 2003 and $56,335 in 2013, a decline of 36%.
Does this sound like the conditions for an expanding donor universe?
Does this sound like the conditions for an expanding donor universe?
If my briefly described thesis is correct, what are the implications for advancement and advancement professionals? Here are a few thoughts:
1. A strategy to generate the bulk of your gift revenue from a broad base of donors will be increasingly expensive to do.
2. Strategies to identify, engage and solicit wealthier donors should be a high priority.
3. Strategies to identify engage and solicit planned and estate gift donors should be a high priority.
4. Attracting and retaining wealthier donors must involve skilled advancement staff, the relationship networks of your volunteers and staff, and a consistent and tailored stewardship program.
5. Case statements must embody both emotional connection to your mission and cause and effect resulting from contributions.
Do you have other thoughts to contribute to this list? Please comment…
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Topline Considerations from Giving USA 2014 about Donors:
1. The single largest contributor to the increase in total charitable giving in 2013, over 2012, was an increase of $9.69 billion in giving by individuals (in current dollars).
2. Giving increased for three of the four sources of giving. Only giving by corporations declined slightly in 2013, the result of the slow rate of growth in pre-tax corporate profits in 2013, at 3.4 percent.
3. Total giving was given a lift by several very large gifts made by individuals, couples and estates in 2013.
4. In 2013, giving by foundations increased an estimated 5.7 percent (4.2 percent adjusted for inflation) and giving by bequest increased an estimated 8.7 percent (7.2 percent adjusted for inflation), according to Giving USA. Giving by foundations has increased for the last three years (adjusted for inflation), generally reflecting increases in assets and the increased confidence of grant makers concerning their financial recovery. (Data for giving by foundations are provided by the Foundation Center.)
A Closer Look at the Data from Giving USA 2014:
1. Giving by individuals increased 4.2 percent (2.7 percent adjusted for inflation) from the revised estimate of $230.91 billion in 2012.
2. Giving by corporations decreased 1.9 percent (-3.2 percent adjusted for inflation) from the revised estimate of $18.22 billion in 2012.
3. Giving by foundations increased 5.7 percent (4.2 percent adjusted for inflation) from the revised estimate of $46.34 billion in 2012.
4. Giving by bequest increased 8.7 percent (7.2 percent adjusted for inflation) from the revised estimate of $25.50 billion in 2012.
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