• January 31, 2015

How Much Has the Recession Hurt Charitable Giving?

Wednesday, June 10, 2009, at 12 noon, U.S. Eastern time

As the economic downturn has sent shock waves throughout the fund-raising world, the big question for nonprofit groups is whether their level of donations is better or worse than that of other nonprofit organizations.

On June 10, with the release of the latest edition of Giving USA, nonprofit groups will have a measuring stick to determine how they are doing.

Giving USA, published annually since 1956 by Giving USA Foundation and written and researched at Indiana University's Center on Philanthropy, offers one of the most authoritative benchmarks of American philanthropy.

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The Guests

Melissa S. Brown, associate director of research and managing editor, Giving USA at the Center on Philanthropy. Previously, Ms. Brown was the center's manager of fundraising and manager of its annual fund.

Milton Key is vice president for development of the Children's Healthcare of Atlanta Foundation. Previously he worked as director of planned giving, executive director of major gifts, and executive director of development for Austin College, in Sherman, Tex. He also was a development officer for Buckner Children's Home and Dallas Baptist University, both in Dallas.

Del Martin, chairwoman of Giving USA Foundation, is a founding partner of Alexander Haas, an Atlanta fund-raising consulting company. Ms. Martin also serves as a board member of the David & Linda Shaheen Foundation, in Crystal Bay, Nev.

Nancy Raybin is chairwoman of the Giving Institute and a managing partner at Raybin Associates, a New York consulting company, where she focuses on strategic and financial planning, governance, management, and fund raising. Previously she worked for McKinsey & Company.

A transcript of the chat follows.

Peter Panepento (Moderator):
    Hello everyone.

Today, the Giving USA Foundation released its annual report on U.S. giving. The report is one of the nonprofit world's benchmarks. And, as you might imagine, the results, which measured giving in 2008, reflect the nation's current economic woes.

Peter Panepento (Moderator):
    Donations to nearly every type of charity faltered in 2008, as contributions declined by 5.7 percent last year after adjustment for inflation, according to the report.

It was the steepest decline in the history of the survey, which has been conducted since 1956.

Americans contributed a total of $307.7-billion to charity last year, Giving USA reports down from $314.1-billion in 2007. The only other decline nearly as large occurred in 1974, when donations dropped by 5.4 percent.

It could take a long time until giving recovers. Researchers who compile Giving USA said that today's recession most resembles the one in 1974, and it took three years after that downturn ended for philanthropy to return to the same levels of donations as before the economy soured.

Peter Panepento (Moderator):
    So what does this all mean? During the next hour, you'll have an opportunity to get some frank answers to that question. With the help of the Giving USA Foundation, we've assembled a team of experts that include the study's authors as well as some top fund raisers. They'll be available to take your questions about the survey, its methodology, the state of U.S. giving, and about where things are heading for the rest of 2009 and beyond.

Peter Panepento (Moderator):
    Our panel of guests includes Melissa S. Brown, managing editor of Giving USA; Milton Key, vice president for development of the Children's Healthcare of Atlanta Foundation; Del Martin, chairwoman of Giving USA Foundation and a founding partner of Alexander Haas, an Atlanta fund-raising consulting company; and Nancy Raybin, chairwoman of the Giving Institute and a managing partner at Raybin Associates, a New York consulting company.

Peter Panepento (Moderator):
    For those who are new to this forum, please note that this is a text-based discussion. There is no audio. You can watch the discussion unfold on this page, which refreshes every minute with the latest questions and answers. To ask a question, simply click on the "ask a question" link on this page and type in your query. I'll direct your question to a member of our panel.

Peter Panepento (Moderator):
    To help frame your questions, I invite you to read our coverage of the report. You can find our story here: http://philanthropy.com/news/updates/8510/

Peter Panepento (Moderator):
    Ok, enough housekeeping. Let's get started.

Question from Melissa, large public university:
    Is there an indication that giving levels have declined more significantly for small nonprofits as opposed to universities or other types of nonprofits?

Melissa S. Brown:
    Giving USA doesn't collect data based on the size of the charity. I have heard others--specifically Ann Kaplan from the Council for Aid to Education--say that the decline is less severe when the organization has a strong annual giving program with a wide base of support. Most affected among the groups she researches are organizations that typically receive a large share of total giving from a small number of donors.

Question from Janet Levin, medium sized non-profit:
    I work for a non-profit that is having to lay off employees, while also cutting programs, salaries, and employee benefits. A few of our employees would like us to send out an emergency appeal letter to our donors, informing them about these changes. Is this a good idea?

Nancy Raybin:
    Janet: You need to be responsible, transparent, and honest with your donors, but you don't want them to think that your organization is going out of business. Talk about the challenges and what your organization is doing to provide services and programs. Talk about results. Ask your best donors to continue to support your good work in these difficult times. Show that you are doing your part by making difficult decisions to trim program and staff.

Question from Val Starr, Morris Hospital Foundation:
    Hello, I was wondering how 2007 giving did compared to 2008 giving for healthcare related organizations. Thank you

Melissa S. Brown:
    Giving to the health subsector is estimated to have declined in 2008 by 6.5 percent (a decline of 10 percent adjusted for inflation).

Question from Kathy, small nonprofit:
    Do your findings make a strong case for redirection of assets and staff time from foundation appeals to planned giving mechanisms?

Del Martin:
    Kathy: I believe that they not only make a strong appeal for that, but also for directing staff time and attention to cultivating and soliciting INDIVIDUALS.

Question from Shannon Cooper, National American Red Cross:
    I'm working remotely and am trying to put the 2008 numbers in perspective without access to our 2007 copy of the Giving USA report. I went back to review the Chronicle's article on the 2007 report and found that the June 26, 2008 article on the 2007 report indicated that total giving in 2007 was $306.4-billion - not the $314.1-billion referenced in the 2008 report. Can you help me to understand the discrepancy? Is one of these an inflation-adjusted number? I cannot find this indicated in the articles.

Melissa S. Brown:
    Every year, the new edition of Giving USA revises estimates for the preceding two years based on the most current data received. For this edition, we revised the 2007 estimate to include data from the Foundation Center and from the IRS for bequests. Both of those lifted the 2007 estimate over the original figure released last year. The revised total for 2007 with these changes is $314.07-billion.

Question from Kathy, council member at Protestant sect church:
    How has giving to mainline Protestant sect churches fared, typically? Are there any salient features about the congregations/churches who have had their giving levels remain stable or grow that you can share? Thank you!

Melissa S. Brown:
    Giving to congregations of any type follows membership and attendance. The religious traditions with the highest attendance levels, especially Evangelical Protestantism and nondenominational churches, have reported higher rates of growth in giving in the past several years. Data for 2008 is estimated. The National Council of Churches of Christ will release results from its survey for 2008 donations in early 2009.

Question from Peter Panepento:
    Hi Milton:

Given the current state of the economy, what are some steps your organization is taking to communicate with donors? Are you adapting your cultivation strategies for the economy?

Milton Key:
    At Children's Healthcare of Atlanta, we are continuing an effort begun last year to try to make an in-person contact with those who've indicated to us that they've made a planned gift for Children's at some point. We are continuing to stay close to those donors in portfolios, including those making pledge payments and those who have already told us they aren't going to make a gift this year. The gift officers attach personal notes to the quarterly donor magazines and we're offering group tours at one of our hospitals each month.

Question from Yvonne Mohrbacher, small nonprofit:
    I am the grant writer for a small nonprofit that mentors and lends to micro-enterprises in 1/4 of the state. Our office is busily helping new businesses get started, but foundations do not seem to be interested in funding our office. One program director told me last week that we should merge with the state agency that lends to small businesses, because our work "obviously overlaps with theirs." Yet our clients tell us we are the only agency that calls them back, helps them get through the paperwork, and gets their proposals in front of our board for timely approvals. What else can we try? We have no individual donors, only some state money and one grant from a utility.

Nancy Raybin:
    You should open up conversations with the state agency. Perhaps you could be providing a valuable and efficient service that they cannot provide. And, they could provide some of the administrative support that you need. This may not be an ideal solution, but it will give you time to develop a stronger track record and then you can ask donors for additional support

Question from Darrell, community Fundraiser:
    Are we seeing a rise or decline in giving to certain types of groups during both the current economic environment and in general over the last three to five years? If so what are the trends?

Melissa S. Brown:
    In general, gifts to foundations have increased at a faster rate in the past five years than have gifts to many other types of recipients. This might continue as several major estates with foundation gifts will be transferring assets, if they haven't already. These include Leona Helmsley, Helen Walton, and others. Giving to international affairs has also grown more than giving to other subsectors in recent years. Whether this continues remains to be seen.

Question from Laura, mid-sized museum:
    Please comment on donors' seeming reluctance to meet and talk face-to-face with staff or volunteers from the organization, as they decrease or stop their giving in 2009. We'd like to maintain the relationships we have, gift or no gift this year.

Milton Key:
    What a neat question! We're getting that at Children's Healthcare of Atlanta, too. Obviously, people know ultimately why we're calling, so they're even more evasive these days due to the economic uncertainties. As alternatives to in-person contact, we're offering group tours each month in one of our hospitals. So far, response is good. (Some are less threatened in a group, of course.) Another of our touches is that most of the gift officers attach handwritten notes or letters to the quarterly donor magazine, rather than have them sent by our mail house.

Question from aaron, advocacy and health related:
    Do you track organizations that do advocacy work? If not what would be your closest designation?

Melissa S. Brown:
    Giving USA tracks 501(c)(3) charities. These are allowed to do advocacy work within limits. Organizations that focus on specific types of advocacy topics will be located in that topic area - health, education, etc. Organizations that advocate for civil rights or for special populations are in the public-society benefit subsector.

Comment from Hamilton College :
    If anyone is interested in the challenge Hamilton College and Colgate University conducted this past April and mentioned in today's article - or challenges in general - I would be willing to respond to them.

Director of Annual Giving Jon Hysell jahysell@hamilton.edu

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.

Question from Aaron, Medium HC and Advocacy :
    My organization does both advocacy and operates community based health centers. To better understand how my organization might fit into your categories I would like to know how it is that you create (what are the defining characteristics / what are some of the organizations that you track) your health center or hospital designation(s)?

Melissa S. Brown:
    Giving USA follows the National Taxonomy of Exempt Entities in its classification system. Health care centers will be in health. Organizations that advocate for greater access to care, as long as they are registered as a charity under section 501(c)(3) (and not as a 501(c)(4) organization) will be in health.

Question from Meg, philanthropic consultant:
    I was surprised to see the dramatic decline in giving to human service agencies--it is greater than the decline in giving to arts organizations. Doesn't this data contradict what experts have been saying about giving during recessions? That arts organizations are often the most deeply impacted because of donors' focus on giving to organizations that fulfill basic human needs?

Del Martin:
    Meg: I, too, was surprised to see this, as it does contradict our analysis of giving during recessions. The drop for 2008 is particularly pronounced. And because human services are experiencing a greater demand, it makes the "gap" even bigger.

Question from Kevin Martin, Kevin P. Martin & Associates:
    What is the pereceived level of overrall optimism at the moment? Giving seems to be down for the wealthiest in the face of uncertainty. Is the sense that we still see lots of uncertainty?

Nancy Raybin:
    It's interesting that the stock market "surge" in the last two months has provided a whole new level of optimism. And, the financial folks are saying that the credit markets are coming back as companies are issuing new financing requests. In New York, I find there is optimism, but I am looking for it...as are donors. Many investors are on the sidelines and many donors are waiting...So, that tells me that there can be movement.

Question from Pat Perell, philanthropy coach:
    What does your research show with regard to e-giving. Is it increasing in the current market?

Del Martin:
    Pat: Giving USA doesn't track HOW the money is given, unfortunately. However, from all the research I've been reading, I can tell you that while e-giving is increasing at a fairly fast clip, it is still a very small part of the "ways to give" pie.

Question from Ronnie Weston, Bull Moose Group-Non Profit Consulting:
    Given these statistics, what innovative fundraising techniques are being used successfully?

Milton Key:
    At Children's Healthcare of Atlanta, we're focusing on fundamentals in what is a realtively young major gift culture. As a result, we're focusing on high touch elements...reaching out to planned gift donors, many of whom have never seen a Children's gift officer; attaching handwritten notes to the quarterly magazines; offering group tours each month at one of our hospitals...innovative for us, but, certainly not new ideas.

Question from Amanda from SmallCanBeBig.org:
    Does the study report all the donations made online via sites like SmallCanBeBig.org or sites you visit through Twitter? When asked how much you gave last year, do you really remember every $5 donation you gave online or even directly to a homeless person?

Melissa S. Brown:

We use estimating methods to generate the "sources" pie chart. These rely in large part on tax return data and for people who do not file itemized deductions, we use survey responses in a very detailed study conducted as part of the Panel Study of Income Dynamics. People are asked several questions about giving, and it appears that they do recall significant portions. This will include mobile giving (through your phone), online giving, and more.

Note, however, that giving $5 or any other amount directly to an individual in need is not considered a "charitable gift" under tax law. Giving USA records only gifts that the tax code permits.

Peter Panepento (Moderator):
    As we approach the halfway point of today's conversation, I want to repeat our invitation to submit questions and comments. If you'd like to ask a question or offer your own thoughts on this topic, click on the "ask a question" link and type away. Thanks.

Question from Claudia, medium sized nonprofit:
    Is cutting the public relations budget wise during this time?

Nancy Raybin:
    It is important to be in touch with your donors with honest information about what you are doing during these times. Being responsible and trimming a large PR budget may make sense as long as that doesn't hamper getting your story to donors. And, don't spend unnecessary scarce resources on glitz. Bottom line, put the budget money into development staff to be sure that they have time to call, email, and meet with current donors.

Comment from Jon Hysell, Hamilton College :
    A very helpful study on electronic giving was just published and can be downloaded at http://www.e-benchmarksstudy.com/.

Question from Tad Druart, Convio:
    How does the $229-billion from individuals break down by gift size? Specifically major, mid-level giving and small donor giving? How much of that giving comes from direct mail, telemarketing, online, and other?

Melissa S. Brown:
    Tad, great question. No simple answer. Other research, not from Giving USA, shows that the vast majority of gifts are small -- but the largest share of dollars comes from a relatively small number of gifts. Check the American Express Charitable Gift Study at the Center on Philanthropy for one look at this (http://www.philanthropy.iupui.edu).

As to online giving, such as that facilitated by Convio and others, our best estimate is that it is not more than 5 percent of individual giving. This comes from asking organizations what percentage of their total they receive from online gifts. There is no estimate for direct mail or telemarketing at this time.

Question from Karen Saverino, consulting firm:
    The Ad Council is running a "Root Causes" campaign and the Obama Administration is focused on changing policies that have led to many of the inequities in this country (such as capping salaries for execs at publicly held companies). Any sense of whether those who are giving in this climate are interested in addressing root causes as opposed to addressing the symptoms?

Milton Key:
    It's a thoughtful question. At Children's Healthcare of Atlanta, we cover more than $100-million annually in charity care, so that's the "root cause" most known to me. My experience is that most donors understand and are best prepared to give toward alleviating symptoms, rather than root causes. Generally, I think we have to continue looking to the large foundations like Ford, Pew, Gates, etc., and big-picture individual philanthropists to focus on the root causes in our communities and beyond. They're the ones with the capacity and the propensity to address "root causes," while most of our donors are best equipped to help us meet pressing needs.

Question from Karen Saverino, Metropolitan Group:
    Comparing this to 1974, you inferred it might take three years for giving levels to return to where they were. Are there areas of giving you expect to go up in the next year (such as social services, housing, etc.)?

Melissa S. Brown:
    Karen, The world is a different place now than in 1974, so I wouldn't use changes from 35 years ago as a guide for what might happen to the allocation of giving this year or next. In 1974, for example, Giving USA didn't track giving to foundations, giving to international affairs, or giving to environment. The most important thing is that nonprofit organizations need to be persuasive in making their cases for support.

Question from Jeannette Archer-Simons, Archer-Simons Consulting:
    Your "Raising Money in Hard Times" report refers to relationships several times, from individuals to grant funders. Can you share some examples that you found and why this is so important? I personally believe this is a neglected area and would encourage nonprofits to build skills in this area.

Del Martin:
    Jeannette: I totally agree with you that this is a neglected area! RELATIONSHIPS -- this is what development is all about. Of course the best examples exist with individuals. I would just ask any organization to think of its best donors, and how many times they have given as well as what precipitated that gift. It is usually a relationship--- an individual wants to feel close to the nonprofit and its cause. (This is why board members tend to give more than other individuals.)

I sit on a small foundation board, and I can tell you that the organizations that get the largest gifts from this foundation are those that have built a relationship over time. Example: a women's cancer foundation hires a new development director. He happens to be someone I have known for years at another organization. I introduce him to the foundation, knowing of the donors' interest in breast cancer. This results in an initial gift. Now, after fice years of building this relationship, the cancer foundation has enjoyed significant funding from these donors.

Question from Jennifer Waggoner, Non-profit Consultant:
    I work for an organization with robust direct mail campaigns which they want to expand, but am concerned they aren't worried more about donor fatigue. They want to send even more mailings to the same people, whereas I think they need to personalize and do coordinated campaigns involving phone, and e-mail, and only increase mailings by 1-2 per year. Thoughts?

Nancy Raybin:
    Direct Mail is about numbers and if you don't keep increasing the mailings, you aren't reaching more people. Fund raising in these times is more about dollars. I strongly encourage my clients to do something more with the Direct Mail donors they have so they can keep them. Personal phone calls are best because no one expects them. Also send emails and consider visiting some of them. I assume that the organization has a limited development/membership staff. I would focus their energies on the donors they have and see what they can do to move their organization higher on the priority list. See the article in today's Washington Post

Peter Panepento (Moderator):
    We recently played host to a live discussion on the topic of direct mail. I think you'll find some pertinent advice in the transcript of that discussion. Here's the link: http://philanthropy.com/live/2009/04/direct_mail_workshop/index.shtml

Question from Randi Hogan, Metropolitan Group:
    What, if any, outlier gifts are included in these numbers?

Melissa S. Brown:
    All Giving USA estimates are grounded on data from tax returns. For 2008, we identified no gifts by individuals or through bequests that were large enough to be added to the estimates that take into account the historical relationships between changes in giving and macro-economic changes like the stock market, personal income, and so on. To be large enough to be included, a gift would need to be an amount that would change the rate of change by one half of one percent.

Question from Meta Williams, Los Angeles Urban League:
    What trends do you see in giving general operating support to nonprofits.

Nancy Raybin:
    More organizations are packaging GOS or budget relief items for their donors. Donors want to give to something specific, but that can include packaged items that are already in the budget. Donors want to know that you really need their money and that their gifts, no matter the size, will really help.

Question from Mimi Pink, M. Pink, Inc.:
    With gifts to foundations growing due to a transfer of assets, do you see gifts from these same foundations to nonprofits also growing? I recognize, of course, that a gift from a foundation founded by an individual who is still living is, in essence, a gift from an individual. Relationships matter everywhere, is my point. Would you agree?

Del Martin:
    Mimi: yes, we see gifts from foundations increasing (in fact, it was the only source area that increased in 2008). And yes, I agree with you that RELATIONSHIPS MATTER everywhere! Your point about a foundation founded by a living individual (that this is in essence a gift from an individual) is absolutely on target!

(Love your name, by the way!)

Question from Dawn, small health services organization:
    We have been attempting to bring donors into our facility or offer to meet them at a location convenient for them in order to share information on what we are doing, program updates, etc. This is not being received well. The majority of people are saying they do not have time to meet with us. We make it clear that this is not a solicitation meeting but an information session to also get their feedback. But it is still not being received well. Do you have any suggestions on other ways we can stay in touch with donors? We do a newsletter three times a year and then another newsletter twice a year just for donors. Any suggestions you have would be great. Thank you.

Milton Key:
    Thanks, Dawn. I feel your pain. No matter what we offer -- tour, luncheon, etc. -- we find it very challenging to attract people. I suggest identifying your top donors, customizing a stewardship plan for each one of them and continuing to try a variety of things with the masses. To the degree you can call all your top donors or e-mail them with a personal note of thanks and a specific comment or two about the difference their gifts make, you've done your best.

Question from Mimi Pink, M. Pink, Inc.:
    Since the 2007 figures were adjusted upwards by the degree you referenced, what can you say about how the 2008 numbers will be adjusted? At the 2007 figures, could overall giving end up being steady or even slightly ahead?

Melissa S. Brown:
    Mimi, Giving USA estimates since 2001 have been, on average, within 3 percent of the final total once tax data are available. This excludes 2005, when we did not try to estimate giving under the provisions of the Katrina Emergency Tax Relief Act.

Question from Lisa Benson:
    I am a consultant to several organizations. What I am seeing is that compelling issues ARE being funded. If the case for support is articulated well, and the campaign is integrated, the organizations are being funded. Those that are not being funded are those who had poor campaign plans in the first place. Are we not seeing a "weeding out" of the weakest organizations as a result of this recession?

Nancy Raybin:
    Yes, I agree with you. Over the last few years, many other nonprofit organizations have adopted the fund raising practices of the more sophisticated and celebrated universities, hospitals, and UJA-Federations. They have made the investment and now they are able to use their cases, integrated campaigns, and management practices to their benefit. Also, organizations with strong and engaged boards are also doing well

Question from Tim Woodard, medium non profit:
    How can I get a copy of the report?

Melissa S. Brown:
    The complete report is available for purchase at www.givingusa.org.

Question from jacob berkman fundermentalist.com:
    I'm wondering if you have any data on when in 2008 most gifts were given. How badly did giving slow in the third and forth quarters of 2008? That could give us real insight into how bad 2009 might be.

Melissa S. Brown:
    Jacob, Giving USA doesn't track the quarter in which gifts were received. Two groups have released reports about that -- Target Analytics for direct response fund raising and Convio for their clients. Both report a decline in the fourth quarter of 2008. Target Analytics will be issuing its first quarter 2009 results soon. Most research shows that people give all year around, but some types of charities receive more of their money toward the end of the year.

Question from Carol Cheney, TACS, med MSO nonprofit:
    Are there any data that describe giving patterns in rural or suburban communities in the year studied? Up, down? Donations closer to home?

Melissa S. Brown:
    Carol, the Center on Philanthropy has looked at rural giving in earlier years (not 2008). That report will be released soon. The main finding is that rural giving is not very different from giving in urban areas. Giving USA does not do research at the community level.

Comment from Lisa Benson, Consultant:
    Thank you for responding. Interesting that you say those that follow UJA models are successful. I am a former UJA executive. Thank you for this session; it has been very informative.

Question from John, medical college:
    What are your thoughts on the trend and usage of social networks for fund raising or engaging donors.

Milton Key:
    John, at Children's, we're just starting to get our arms around it. We think it has potential for us because we have a large network of community groups in metro Atlanta that produce various fund raising events to support a wide variety of needs here. I think it's another opportunity to acquire new donors, but, not to replace anything we're doing.

Question from Maya, family foundation :
    Could you summarize what you are seeing in terms of the family foundation world, and by size? For instance, do you see differences in the giving decreases depending on the size of foundations ($0-$1 million, $1-$5 million, etc.), family or otherwise?

Melissa S. Brown:
    Maya, please see the Foundation Center's work on family foundations. They have the most comprehensive data about this. For a current perspective, the Foundation Center's Web site contains "in their own words" foundation responses to the current economy. See www.foundationcenter.org.

Question from Ronnie Weston, Bull Moose Group, Non Profit Consultant:
    What are the chances that a new 501 (c) (3) can get off the ground in this environment? What are their best sources for funding?

Del Martin:
    Ronnie: what a great question! I think that it depends most of all on the strength and interest of the founding board. In this environment, it will likely be very difficult to get a brand new nonprofit up and thriving, without significant support from the founders. Donors are tending to give to the organizations they already have a relationship with. Institutional funders are urging existing nonprofits to explore collaborations. A fledgling organization will not have a track record that will attract donors, unfortunately.

Question from Shannon Cooper, National American Red Cross:
    I sent a similar version of this posting, but I think I inadvertently deleted it before it posted. In yesterday's Chronicle article regarding the Giving USA report, Paula Wasley reported on a successful campaign launched by Hamilton College, which engaged its alumni in a competition against their rival Colgate University. For me, their success echoes the current success of the movie industry, which is offering a fun escape for people from their problems. I'm wondering if you, as a group, are seeing a trend in the success of such new, creative and ‚Äì most importantly ‚Äì fun fund raising campaigns during this recession?

Nancy Raybin:
    Donors like good stories and fun. We know that donors don't like to hear doom and gloom and they certainly don't like to support deficits. Telling the Red Cross story in terms of the difference your involvement makes is the story they want to hear. However, people connect you with disasters and they know that ARC has had deficits. So...you need to be honest and talk about results.

Question from Cindy Sadler, Accordia Global Health Foundation:
    Based on past actions, is this report likely to cause donors to in any way reevaluate their giving for the rest of 2009? For instance, might many who thought that others were taking up the slack for human services organizations see the drop and shift their philanthropy more towards those organizations?

Del Martin:
    Cindy: Giving USA has never looked at how or if its reporting has affected donations, so we don't know about the past. I can only offer an educated guess as to whether or not this will influence donors. I think that it is possible that our findings might cause some thoughtful donors to re-examine their priorities. (At least I hope so!)

Question from Angela Eikenberry, Univ of Nebraska at Omaha:
    I'm wondering why giving for basic needs dropped as much as it did considering that previous research has indicated that people tend to give more in this area during recessions. Is it that this recession is so much worse than others? Do you have any way to compare current data to depression-era giving? What do you think is happening here?

Melissa S. Brown:
    Hi, Angie. An analysis I just heard today showed that people whose net worth is below $100,000 saw their assets drop by 82 percent in 2008. Compare this with high-wealth households, where assets dropped by 20-25 percent. While high-wealth households do give to support people's basic needs, a very high percentage of human services organizations are small, grassroots organizations that rely on donors located in their own communities. The people who are among those frequently asked to give to meet basic needs are also the people who saw losses income and assets.

Question from Peter Drury, DZO Strategists:
    I keep seeing orgs thinking "We're weathering 2009 OK, therefore I think we'll do OK..." when my instinct is that 2010-2012 will show even greater "lag" impact, especially from foundation giving. Will you please comment on what you're projecting...?

Milton Key:
    Peter, at this point, I'm projecting a flat year for 2010.

Question from Hall Powell, Fundraising Consultant:
    Some nonprofits are experiencing a struggle with keeping volunteers, e.g. board members, involved in the fundraising process due to the "current economy." While this can be an excuse for not participating in fundraising, it appears that it is driving fundraising back to a staff driven process, thus relieving the volunteeers from involvement. Any suggestions?

Nancy Raybin:
    There is a difference between roles/responsibilities of Board members (which there are many) and roles/responsibilities of fundraising volunteers. Unfortunately, this recesssion is the time for you to help organizations sort out their best Board members and look for more like them. If Board members cut back now, then they may not be the people you want to keep long term. Del may have some other thoughts.

Question from Jennifer, mid-sized youth leadership development organization:
    Can you "talk" a little about Foundation giving? The report shows that it was up in 2008, but what are your predictions for the coming year? It seems that we keep hearing that if you don't have an established relationship, you are not going to get funding from Foundations next year.

Melissa S. Brown:

Please check with the Foundation Center's report about giving in 2008. In that, they report that 66% of foundations say they intended (as of January of this year) to give less in 2009. Steven Lawrence, the senior researcher for the Foundation Center's studies, said recently that foundations encourage organizations to reach out to them, but that overall, many foundations are limiting their grantmaking to organizations they already fund.

Question from Abbie von Schlegell, philanthropic consultant:
    You have told us that overall giving is down significantly; what about the number of individual donors? is that down as well?

Melissa S. Brown:
    Hi, Abbie,

Giving USA doesn't track the number of donors. We will have data from the IRS in a few years about the number of tax returns that itemize charitable deductions for gifts. We will also have data in a few years from household studies of giving in 2008. At the Center on Philanthropy, we used data from households for giving in 2000, 2002, and 2004. We found similar numbers of households giving in all three years, and 56% of the households gave in all three years. Another 29% moved in and out of giving over that time, and 15% did not give at all.

Del Martin:
    Don't neglect to continue to ask people to support your cause!

Question from Dean Alan, health-related foundation:
    We have seen an increase in the number of donors, but a decrease in multi-year major gift pledges. Is this a statistical trend with regard to reluctance of major donors to commit beyond one year?

Nancy Raybin:
    Donors are more comfortable making one-year commitments. It's not a good idea to push for multiple years right now because they just arent interested. This situation, however, gives you a reason to go back to them and to continue to build the relationship. Sure that makes it difficult for planning, but it is better for the donor and perhaps better for building a longer term relationship.

Question from Lisa Benson, Consultant :
    I agree that the Case for Philanthropic Support document is critical. My clients with compelling cases are receiving charitable gifts. Even my C4 orgs are receiving gifts. How can we foster the notion of case development and good governance to those organizations who are now in the "red" and have not spent time on case development and best governance practices

Del Martin:
    Lisa: I think consultants have been trying to foster that notion for many, many years! (I know that I have, as you obviously are.) I believe we have to "show them"-- i.e. give them examples of organizations who do a good job on their case, and governance, and how that has resulted in increased support. THey have to see it to believe it, don't you think?

This would be a wonderful discussion to carry forth to The Giving Institute: Leading Consultants to Philanthropy. I suggest you join them at their Summer Symposium -- together, you all may come up with something!

Comment from Jon Hysell, Hamilton College :
    It is worth noting that the Hamilton-Colgate Donor Challenge did generate some (small) pushback about trivializing a serious situation. This provided us with an opportunity to speak directly to the concerned alumnus/a and highlight the reasons we "lightened up" for 30 days and recommunicate our case for giving.

Question from Barb Reid, Childhood Leukemia Foundation:
    Our organization relies upon in-house telemarketing for much of it's revenue. Do you have any suggestions for where to best locate targeted donor lists?

Nancy Raybin:
    It seems risky to rely on a single strategy for the buld of your revenue. What do you do with the donor once a he/she makes a contribution? Not sure I can help you locate targeted donor lists.

Question from Beth Breeze, University of Kent, UK:
    The Giving USA press release (page 3, para 4) says individual giving is down by 2.7% but the Chronicle coverage is saying 6.3%. Is the discrepancy due to the former being based on estimates, or am I mis-reading something? Thanks for any clarification.

Melissa S. Brown:
    The Chronicle reported the change in inflation-adjusted dollars, Beth. The press kit focused on current dollars since that is how most organizations review their own budgets.

Question from Hall Powell, Fundraising Consultant:
    As to a way to get donors and prospective donors to attend cultivation events, I find that having a volunteer with strong peer relationships making personal invitations is a more effective way to get people to respond rather than having an insitution's staff person issuing the invitation.

Del Martin:
    Hello, Hall!

I couldn't agree with you more. In fact, in times like these, using peers to extend invitations (and to solicit) may be the ONLY way to get people to come!

Comment from Tad Druart, Convio:
    Some people asked about Q4 versus Q1 trends as an indicator for what 2009 might be like. Here is one data point from 400 organizations doing online fundraising for more than three years - Q1 online giving is 8% higher than the Q1 2008, and 5 points higher than the fourth quarter of 2008. This is a welcome surprise for many organizations who feared that either donor fatigue following year end giving, or economic hardships impacting an ever increasing number of donors, would have a negative online revenue in Q1.

Question from Joel Newman, Big Brothers Big Sisters:
    What are your thoughts, given this economy, on organizations with little or no individual-giving campaigns and a development team solely focused on grant and foundation funding? Is it possible to stay afloat and what suggestions would you make on reengaging and reaching out to new donors?

Milton Key:
    Joel, the good news is that funding from foundations is generally expected to be strong. While it is theoretically possible to stay afloat on grants, I'm not a believer in "all eggs in one basket" -- especially, given that individuals are still "where it's at" when it comes to maximizing gift potential, even in a bad economy. No doubt, your organization has legions of volunteers who's lives have been impacted by mentoring a young person. They should be the first ones to understand the unique opportunity they have to make charitable gifts to BBBS.

Question from Peter Panepento:
    Melissa: Did you have to change the way you collected information this year to accommodate the economic situation? How did the economy affect the way you approached gathering the data?

Melissa S. Brown:

Last year (for giving in 2007, released in 2008), Giving USA changed its procedures for developing the estimates for the subsectors. We used these new procedures this year with no changes. We no longer survey charities, as we last did in 2007 (about giving in 2006) because it was becoming clear that answering surveys was low on the list of priorities for organizations facing a number of demands for attention. For most subsectors, we now use estimating methods similar to the ones used for estimating individual and corporate giving since 2002. We develop the giving to foundations estimate with the Foundation Center and the giving to religion estimate using a three-year rolling average.

Peter Panepento (Moderator):
    We'll be wrapping up shortly. But first we have a few more questions to address. Thanks for sticking around.

Question from Tad Druart, Convio:
    Great session. With the focus on individual relationships and cultivation, it seems more important than ever to know your donors and their preference for communication - group tours, calls, direct mail, e-mail, etc., so that you have the most efficient and effective process for raising money. There are no silver bullets. What do you think nonprofits should be doing more of, less of, given the results?

Milton Key:
    Tad, you're right...no silver bullet. It takes a mix of strategies to achieve our results and cover our constituencies well. As has been noted by Del and others today, the big gifts come from relationships, so the "right" investment of resources toward generating and stewarding big gifts is critical. At Children's we're very conscious of our cost to raise a dollar. The least costly money we raise are major gifts.

Comment from Randi Hogan, Metropolitan Group:
    What I am seeing among the groups I work with are that those with a compelling case for support and deeply engaged boards are bucking the overall trends. Even though giving may be down across our sector, it's important to note that there are groups raising more money than ever before, stepping up board giving, securing first-time large grants from foundations, and so on. There is indeed a place for optimism!

Question from Barbara Reid, Childhood Leukemia Foundation:
    What can organizations do now to correctly position themselves for when the recession ends?

Milton Key:
    Barbara, for me, it's all about keeping the story of your organization out there and making sure that you are consistently, appropriately communicating to your base of support. When things get better, donors are going to remember the organizations that stayed in touch with messages of impact and appreciation.

Question from Laura Smith, small nonprofit:
    How was giving to religious organizations up 5.5 percent? Other studies I have read like those from the Barna Group show a decline or flat levels in giving. Any thoughts?

Melissa S. Brown:
    All surveys and studies have margins of error. Surveys that reach "the general population" with telephones (such as the Barna Group) are not usually able to reach the wealthiest households. Of those, something like 75 percent or more do give to a congregation. We've heard of many congregations that have been "saved" by a single large gift. We also know that the more people attend, the more they give to a congregation, and attendance has increased.

Peter Panepento (Moderator):
    A couple of our guests have some final thoughts before we wrap up.

Del Martin:
    I encourage everyone to purchase a copy of Giving USA 2009 to share with your board members, your donors, and your staff. Not only does your purchase enable us to continue with this important research, but this is a great way to educate your organization's leadership!

Milton Key:
    Tell your story, be tactfully pushy, and pay close attention to your base in these tough times. There really is a pony in the pile, so, keep digging!

Peter Panepento (Moderator):
    We are now out of time. I wanted to take this opportunity to thank our guests -- Del Martin, Melissa S. Brown, Milton Key, and Nancy Raybin -- for taking the time to join us today. They provided some excellent insights into the study and into how organizations can practice effective fund raising during these difficult times.

Peter Panepento (Moderator):
    Before we sign off, I'd like to offer a couple of quick pieces of information. The Chronicle of Philanthropy will publish a full analysis of the report, and the status of fund raising at charities nationwide, in the issue that will be sent to subscribers on June 11 and posted online June 15.

Peter Panepento (Moderator):
    Also, you can find out more information about upcoming live discussions at http://philanthropy.com/live. We hold weekly discussions every Tuesday at noon Eastern time on matters of interest to the nonprofit world. We also are playing host to a special discussion tomorrow, June 11, regarding foundations and the recession. You can find that discussion here: http://philanthropy.com/live/2009/06/finance_funds/

Peter Panepento (Moderator):
    Thanks everyone.

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