• April 23, 2014

2010 Fund-Raising Figures Are Grim for Many Charities, Study Finds

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More than one-third of nonprofits saw donations fall in the first nine months of the year, and one in five expects to make cuts in spending next year because of the poor fund-raising climate, even though many groups report escalating demand for services, a new survey of more than 2,500 charities finds. Seven percent of the organizations said they are in danger of closing down next year because of financial problems.

The study, conducted by the Indiana University Center on Philanthropy and five other organizations, reported some signs that charities are beginning to climb out of the staggering decline in donations they faced during the recession: Thirty-six percent said donations rose in the first three quarters of 2010, compared with 2009, when only 23 percent of nonprofit groups reported an increase. And while 51 percent of groups said donations dropped in the first nine months of 2009, the share of groups with declines dropped to 37 percent this year.

Still, the financial challenges are daunting for many groups. Looking ahead to the final quarter of the year, 43 percent of organizations expected no increase at all over 2009 holiday giving, while 22 percentpercent forecast a decline.

Twenty per cent of charities said they will be forced to cut their budgets next year because they faced a shortfall of donations or other revenue.

What’s more, demand for services from January through September continued to rise compared with the same period in 2009. Nearly 70 percent of charities reported an increase this year. The rise was particularly acute for human-service organizations: Among 965 such charities in the survey, 78 percent said demand from needy individuals and families has grown compared with 2009.

Trimming Services

For charities facing budget cuts in 2011, 66 percent said they would trim programs, services, or operating hours; 59 percent said they would cut or freeze staff pay or benefits; and 49 percent said they would resort to hiring freezes or layoffs.

Among groups reporting a decline in giving this year:

  • A decline in the number of individuals who made gifts or who reduced the size of their gifts was the most frequently cited challenge for charities, affecting from 63 percent to 75 percent of charities, depending on the size of their budgets.
  • A drop in grants from private foundations was the second biggest challenge, in the form of either smaller grants or a grant maker’s decision to give nothing at all.
  • Twenty-six percent reported a decline in corporate grants, compared with 20 percent a year ago.
  • Nearly a third of the organizations in the survey reported that the amount they raised in government grants and contacts dropped this year, compared with the same nine months in 2009.

The Nonprofit Research Collaborative survey, as it is called, is a joint effort by Indiana University Center on Philanthropy; GuideStar USA, the database of nonprofit organizations; the Association of Fundraising Professionals; the Foundation Center; the Urban Institute’s National Center for Charitable Statistics; and Blackbaud, the software company. The organizations plan to repeat the study three times each year, in early winter, spring, and fall.

Comments

1. mlinnovations - November 29, 2010 at 03:05 pm

Philanthropy moves up and down with GDP. It's that simple. When GDP goes up, philanthropy goes up at a similar rate. So, the fundraising results for the first nine months of 2010 are not at all surprising. Organizations that have a solid case for support, actively promote that case, and ask for contributions will do much better in these challenging times than those that don't. While on the surface it is sad when some organizations close their doors, it might be that some organizations should close their doors. These are the times that will test the management of nonprofit organizations. Some will pass while others will fail the test. (www.mlinnovations.com/books)

2. pattiecharles - November 29, 2010 at 03:28 pm

today's headlines Chronicle of Philanthropy

3. ainman - November 29, 2010 at 05:46 pm

So let me get this straight: the number of non-profits reporting an increase in donations grew by 57% (from 23% to 36%), while the number reporting a decrease in donations dropped 27% (from 51% to 37%).

But the Chronicle goes doom-and-gloom with the headline and the lede? Wow. Okay. I guess.

News flash (are you paying attention, Chronicle editors and reporters?): even when times were flush, there were many non-profits not seeing year-over-year increases. The real story is NOT seven percent of non-profits that may go out of business. Seven percent (or more) of non-profits in this country SHOULD go out of business.

Do not equate my rant with insensitivity to the fundraising and financial pressures faced by not-profits. The increase in demand for services is a huge issue. But the reporting here reeks of panic that seven percent of non-profits might go under, while underplaying the apparent evidence that far more non-profits have seen the bottom and begun clawing their way back.

4. hollyhall - November 30, 2010 at 12:59 pm

Ainman: You make some good points, and we deliberated about how to cast this story. However, to us, things still look pretty bad out there.

Consider the headline of the press release issued by Indiana University Center on Philanthropy in reporting the study: "Charities Seeing Slight Recovery in Giving, but Not Enough to Keep Up With Demand or Budget Cuts."

Also included in the release was this quote from Patrick Rooney, the center's executive director: "We are beginning to see some positive signs, but despite that giving still has a long way to go to return to the levels it was three or four years ago."

Our story does acknowledge "some signs that charities are beginning to climb out of the staggering decline in donations they faced during the recession." But there are still a lot of challenges out there for many organizations.

Thanks for writing,
Holly Hall
Features Editor

5. arstrauss - November 30, 2010 at 01:58 pm

So let me get this straight. We have a growing conservative political climate that wants our "socialistic leaning" government out of or cutting back on helping to fund social services, education and the arts.

We have non-profits that are, depending upon the spin you want to put on the news, either experiencing a decline in grants and donations or starting to experience a recovery but one that still has a long way to go before it "claws" its way back to former levels.

Meanwhile, there is a growing need for services particularly in an economy that is still anemic.

Whatever the status of fund-raising, the recipients of non-profit services will suffer if funding is insufficient to pay for those services.

6. anatgerstein - December 01, 2010 at 09:02 am

Non-profits need to start telling their story more effectively to reach individual donors. For too long, too many non-profits have relied on government funding. That pot has, and will continue to shrink. I come across too many organizations that think doing good work is good enough. It's not. More people need to know the good work these organizations are doing. Non-profits have to invest time and effort into communicating their message effectively through their website, social media, and the press.

7. sccharities - December 06, 2010 at 08:10 am

Charities need to sharpen their skills and get more competitive for capital resources by developing new strategies (i.e., CHIRA, not tax free rollover) to go where the donor funds are not as subject to the ebbs and flow of GDP and their own personal consumption needs. The ability to redirect retirement accounts to charity without tax to the donor can generate substantial cash today. Most charities simply have their hand out and fail to seek more sophisticated strategies because its easy to ask for cash whether from donor, private foundation or government. With consumption funds going down, this outdated approach inevitably leads to poor results.

Micro-financing strategies work for foreign charities. In the US, we have an opportunity to tap into pre-tax funds for our domestic social fabric without reducing the tax base. For those charities willing to go to where the funds are at (i.e., retirement accounts), they will find a $300 billion annual market awaiting.

In addition, these types of strategies enable a new type of donor / charity relationship that rewards donor and charity today in a fiscally sound manner while promoting the contagion of immediate philanthropic return. Other donors, seeing the force of their retirement account economic power directed to doing immediate good, will encourage long term participation and health of the charitable organization.

Smart, forward thinking charities will do just fine.

8. sccharities - December 06, 2010 at 08:20 am

Charities need to sharpen their skills and get more competitive for capital resources by developing new strategies (i.e., CHIRA, not tax free rollover) to go where the donor funds are not as subject to the ebbs and flow of GDP and their own personal consumption needs. The ability to redirect retirement accounts to charity without tax to the donor can generate substantial cash today. Most charities simply have their hand out and fail to seek more sophisticated strategies because its easy to ask for cash whether from donor, private foundation or government. With consumption funds going down, this outdated approach inevitably leads to poor results.

Micro-financing strategies work for foreign charities. In the US, we have an opportunity to tap into pre-tax funds for our domestic social fabric without reducing the tax base. For those charities willing to go to where the funds are at (i.e., retirement accounts), they will find a $300 billion annual market awaiting.

In addition, these types of strategies enable a new type of donor / charity relationship that rewards donor and charity today in a fiscally sound manner while promoting the contagion of immediate philanthropic return. Other donors, seeing the force of their retirement account economic power directed to doing immediate good, will encourage long term participation and health of the charitable organization.

Smart, forward thinking charities will do just fine.

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