The State of Giving

Tuesday, June 24, at 12 noon, U.S. Eastern time

Melissa S. Brown is the managing editor of Giving USA, an annual study that looks at trends in American philanthropy.

Richard Belous is vice president of research for United Way of America in Alexandria, Va., and serves on the advisory council for the Giving USA Foundation.

Robert Evans is managing director of The EHL Consulting Group, a fund-raising consulting firm in Willow Grove, Pa., and is a member of the Giving USA Foundation board of directors.

A transcript of the chat follows.

Peter Panepento (Moderator):
    Welcome to today's live discussion about the state of U.S. giving. The release this week of the annual Giving USA report on American philanthropy makes today's talk especially timely. The report shows giving grew modestly in 2007 -- and many signs point to a slowdown through 2008 and beyond. What does this mean for your organization? What should you be doing to maximize your results in the current climate? We have three excellent guests on hand today to answer these and other important questions.

Peter Panepento (Moderator):
    For more information, I invite you to read The Chronicle's extensive coverage of the Giving USA report. You can find it here: http://philanthropy.com/free/articles/v20/i18/18002501.htm You'll also find links to case studies, data, and much more.

Peter Panepento (Moderator):
    Ok, let's get started. To ask a question of one of our guests, please click on the "ask a question" link on this page and fire away.

Question from Rachel Lyle, small nonprofit:
    In your opinion, how will future economic trends affect the field of active giving (that is; giving that is more engaged than simply writing a check)? Rachel Lyle

Richard Belous:
    The most important variable is the "Ability To Give." If the economy hits a strong recession then giving will go down. Giving to philanthropy is a "lag" variable. The economy falls and then in roughly 6 to 8 months giving also falls. The reverse is also our experience. When the economy recoverys it takes time before philanthropy will see expanded giving. But so far the United Way has NOT experienced major declines in giving. We seem to be holding with last year's levels of giving.

Question from Cami Thompson, American Heart Association:
    Have you found that any economic indicators, such as the Consumer Confidence Index, track directly with fluxuations in philanthropic giving?

Melissa Brown:
    We have tested several variables, including the Consumer Confidence Index, in the past. The economic indicators that are best at helping us estimate charitable giving by individuals are inflation-adjusted changes in personal income, changes in the year-end Standard & Poor's 500 index, and changes in the highest income tax rate. Recent changes (two years ago) changes in itemized contributions also helps.

For corporations, the strongest associations are with changes in corporate profits, changes in Gross Domestic Product, and changes in the highest marginal corporate tax rate.

Question from Laura Pravs, Greenpeace USA:
    In past economic recession periods, what are the trends observed in monthly giving? Are people less likely to sign on to become monthly members of an NGO when the economy is struggling? Are there any specific warning signs that NGO's should look for with regards to monthly giving and the economy?

Bob Evans:
    Americans are generally very generous people . . . although giving has not expanded beyond about 2.1 % of GNP. It is not a good thing to look at monthly giving . . . rather you need to look at quarterly, semi-annual and annual results. In times of a bad economy, lower income poelke tend to be much more cautious about ANY expense, including charitable giving. Therefore, we encourage every non-profit to be looking for more and bigger support from wealthier households, especially those with inbcomes of $100,000 and more, representing more than half of all giving today. Also go high tech: off giving on line as an option so you get your monies faster and easier.

Question from Bob Zimmerman, Zimmerman Lehman (consulting firm):
    Fundraising is a "confidence game" in the finest sense of the word. Nonprofits must be confident that they can bring campaigns to successful conclusions. Even though there is a great deal of money available now for philanthropic contributions, the steady drumbeat of bad economic news terrifies nonprofit staff and board members. What suggestions do you have for convincing folks that this is indeed a good time to be asking for donations?

Bob Evans:
    Cynical people (everywhere) can find excuses about NOT giving or NOT campaigning. Even in the late 1990's, people wanted to hold back on campaigns! The important strategy that all non-profits need to adopt: constant stewardship of current donors and mining the fields for new donors. If you look at the giving results from 2007, we can see that arts and culture (as a group) recorded a substantial percentage increase after serious decreases in giving previously. We can only assume that in the last 2-3 years, arts and cultural agencies renewed their efforts after a few years (post 9/11) holding back on major campaigns. Other sectors need to take a lesson from this group of non-profits! Even though the economy is not as strong today as it was previously, people still give to projects that have vision and that make a difference. Generally, most Americans are not giving to real capacity today.

Question from Susan, small nonprofit:
    Sorry: I have questions: Is the economy likely to depress giving to all nonprofits? Are some service areas more likely to suffer than others? and might some areas receive more funding or at least support? For example, after 9/11 arts organizations were hit very hard -- but organizations that ran lean and served the hungry and homeless got through.

We've already heard that things are looking up for Habitat for Humanity due to lower land costs. Might housing agencies see more donations if people can imagine themselves being homeless, or is everyone just likely to hold on tight? Might donations of land and property that can't be sold to make a profit be given to charities for the tax write off?

Melissa Brown:
    Will the economy equally affect all nonprofits: No. While tough economic times force choices on everyone, some nonprofits are adapting (as you note) and others have a more difficult time.

Are some service areas more likely to suffer than others: Yes. Watch for a report to be released later this summer from the Giving USA Foundation, in which we will present the results of further research about this.

I can't speculate about what types of donations people will make -- land or property for example. That is a complex issue that relates to the individual donor's circumstances and the needs of the agency making the request.

People have taught me that in fundraising, appeals should reach the prospective donor on two levels: the identification level (what you say about people imagining themselves in those circumstances) and at the level of impact, or how the agency will make a difference.

Not every donor will respond to every appeal, of course. Issues of Giving USA since 2004 have summarized recent research findings about fundraising and successful strategies. In addition to identification and impact, some more recent work has shown that donors set their gift amount at least in part in response to what others around them are giving, so sharing information about gifts is one approach.

Question from Stephen McKenney Steck, CEO, small public media NPO in Orlando, FL:
    Several questions, please...

#1 -- Can you confirm that, generally, the south is the last to go into a recession and the last to recover? Is there a regional "lag?"

#2 -- Does the economy impact decisions by grant makers to curtail multi-year grants?

#3 -- Do you feel that electronic media is accurately portraying the plight of NPO's during this time of struggle? If not, how should media improve its coverage? Thanks!

Richard Belous:
    Let me put my economist hat on: No, it is not always the case that the South is the last to go into a recession or the last to recover. It depends on the reasons behind the recession and recovery. It depends on which specific industries are hurt the most. Sometimes it has been the rust belt in the middle of the country. Sometimes it has been the so-called left and right coasts. Yes the state of the economy has an impact on grant makers-- but more in the form of making new grants than in altering existing multi-year grants Electronic media is a wide range of sources-- from The New York Times and The Chronicle of Philanthropy online to your aunt who has become a blogger. I think when you aggregate the wide range of electronic sources, we are better off for having the wide range of electronic reports. I do sense a greater interest by the media in the importance of NPO/civil society/etc.

Question from Cami Thompson, American Heart Association:
    How has Corporate Sponsorship been affected by the economy?

Melissa Brown:
    Giving USA doesn't track corporate sponsorship, as that is not considered charitable contributions. IEG, a company based in Chicago, does track sponsorships but doesn't separate charitable organizations from all other types of sponsored organizations. Giving USA 2003 began publishing the last three years of reported sponsorship from IEG, but we have never analyzed it against the larger economic trends. Giving USA 2008 has a graph in it that shows corporate sponsorship and corporate giving over time. Look for it in the corporate giving chapter when the book is released next month.

Question from Warren Thompson, Wreck House Inc. (recreational center):
    What avenues can we go to obtain charitable contributions/Donations with a poor economy? We are a new organization and business/Corporations are hesitant to give because of the fact that we do not have a history of donors. What avenues can we take to obtain potential donors?

Bob Evans:
    Who is on the agency's Board? Are they giving to provide annual or special support? Have they been recruited because of their own wealth and contacts? (We hope so!) When you review the statsitics from GUSA 2007, please see that more than 82% of all support last year came from individuals living and dead, also reflecting tough times for obtaining corporate support. This trend will continue so we encourage you to position your agency and the camapign effrots to be attractive to high net worth individuals (especially) who want ot make an immediate impact and truly make a difference. Stewardship of current and potential donors is critical . . . keeping them knowledgeable and involved would be essential strategies. Do you have any research capabilities (especially using computer) to identify local "prospects" who can get to know your agency and the work it provides? Where are your current dollars coming from? I encourage you to remain in VERY close contact with current donors and to find out who they know and would be willing to introduce to the Center. How about seeing of one of your current donors could offer a challenge to "new" donors supporting the center?

Question from Nicola Beddow, Case Foundation:
    Yesterday, the Wall Street Journal mentioned that total donations have increased 88% from a decade ago. What do you see as the top three factors for this significant increase? Thanks, Nicola

Melissa Brown:
    The most important factors affecting charitable giving are household wealth and household income. Households that have income or wealth are almost always donor households. How MUCH a donor household contributes is a response to several factors, including marginal tax rates (high tax rates mean greater value for charitable deductions hence more is contributed) and most importantly, the case or reasons for charitable support advanced by charities. Growth in giving that began most noticeably in the 1990s was largely stimulated by growth in wealth (stock market) and possibly inspired in part by leadership among nonprofits and high-profit donors who challenged others to step up and make contributions.

Question from Peter Panepento -- Moderator:
    Richard, are you seeing any geographic patterns so far this year among your United Way chapters around the country? Are there parts of the country that are faring better or worse?

Richard Belous:
    Final United Way results will be released in September. But in general we are seeing local results following the trends in local economies (i.e., local economies tha are hard hit with major increases in unemployemnt will see reduced rates of giving)

In terms of the housing crisis, the majority of the most recent UW campaign was completed prior to the worst news from the housing crisis.

Next year could prove to be a harder time for ALL PHILANTHROPY than the last year covered by these GIVING USA data and estimates

Question from John C McGee, Woodstock, GA:
    With increasing demand for services, a less than robust economy, an increasing regulatory environment, do you see donors (individual, foundation or corporations) increasingly restricting gifts to program specific expenses or activities?

Melissa Brown:
    Donors (individual, foundation, and corporate) began restricting gifts more than a decade ago. What I see now is increasing arguments advanced BY FUNDERS, not just nonprofits, for the need for funding that gives charitable organizations the working capital needed to respond to emerging needs. This was promoted in part last year in reports from Grantmakers for Effective Organizations, the National Committee for Responsive Philanthropy, and other work.

In all cases, the charitable recipient can steward an unrestricted or semi-restricted gift by showing the impact or change brought about. Gift agreements can be written so that a gift is paid out over time as certain milestones are reached, for example, so that the agency has some future commitment AND the donor has some assurance about how the funds are used. (With a thank you to Edith Falk, who taught me about this.)

Peter Panepento (Moderator):
    This is Richard Belous' follow up comment to the last question: In recent years, the United Way has seen a relative increase in the number of dollars that are unrestricted. We call this Resources Under Management. It now represents well over 75 percent of the donations made to the United Way.

Question from Laura, mid-sized museum:
    Should we use these tough economic issues and their impact on our charity in our fundraising mail appeals and pitches? Or is this off-putting?

Bob Evans:
    I think it is off-putting generally but you do need to be honoest and forthcoming when approaching your donors about the impact of the economy on your agency's results and needs. The needs, I assume, are not less now than previously and in anticipating harder financial times we could project that some previous donors may not step forward, thereby putting some pressur on others to be generous. I prefer to use the much more POSITIVE approach in asking for support and reflecting on tough economic times is rather negative.

Peter Panepento (Moderator):
    Richard Belous has also offered a follow up to the most recent question and answer: United Way Research has convinced us that the appeal which has the most meaning is one directed to "Advancing the Common Good." A victory for one of us is a victory for all of us. When need increases it has an impact on ALL of us. A recession hits ALL of us-- some directly and some indirectly. When it is put in this framework of Advancing the Common Good, more donors are willing to listen and respond in positive ways.

Peter Panepento (Moderator):
    We have reached the midway point in today's discussion. We do have time for more questions during the next half hour, so please feel welcome to submit your queries. To do so, simply click on the "ask a question" link and type in your question. Thanks.

Question from germaine, DoD at a private small college:
    can anyone suggest positive talking points as a respond to the economic concerns that donors bring up as reasons for not being able to donate at this time. thanks

Bob Evans:
    There are a number of sugegstions to use (in no order of priority): people give all of the time, regardless of the economy; even though the economy impacts some people negatively, others (who have financial resources) are prepared to give/share generously; if a donor is not able to give the same as last year(or more than last year), can he/she give something now and then we can return to them when their own financial position changes for the better?, and (finally) can people not in a position to give now identify others who could give now?

Note that all non-profits have serious financial pressures in bad econominc times so the needs do not stop or become lesser.

Question from Ben Glenn II, The Community Foundation for the National Capital Region:
    In our most recently completed fiscal year, we welcomed a record $105 million in new charitable funds. How do you think community foundations, as opposed to service-oriented nonprofits, will fare in the current economic climate?

Melissa Brown:
    That is great news about your successful year.

Donations TO foundations are most studied by The Foundation Center and the Columbus Foundation survey of community foundations. My understanding of work from those two organizations is that donations to community foundations slow down or possibly even decline during times with the stock market and other assets are down. I cannot predict the total economic performance for 2008, but I would recommend keeping an eye on indicators such as the stock market and personal income (Bureau of Economic Analysis, www.bea.gov, has monthly notices).

Question from Linda, Wheelock College:
    What advice can you offer for those who are moving into capital campaigns?

Bob Evans:
    Move ahead cautiously but pro-actively!

Be sure to think big about your institution's capital needs but be sure to show the impact of your new facility on the College. In addition, build in a financial component that incorporates building maintenance endowment as a budget item (we use 20% of the cost of construction as a guideline for this). And then look at the types of programs that would be housed in the new building as endowment opportunities as there are some donors who strongly resist capital/bricks and mortor projects today and prefer to focus on programs and services that an organization offers. Is your proposed new facility envionmentally friendly? Is it LEED-certified? (if not, it should be!)

Is your board behind the proposed campaign 100%? Do you have good stewardship of previous donors who will want to see the new campaign through as a success?

And of course, bring in a qualified campaign consultant to assist in propelling the effort forward quickly and at a top level. The consultant will conduct a required assessment of the insitution's capacity to conduct a major campaign and examine other issues, too, that will be predictors of a successful capital project.

Has an architect been hired to develop renderings and other descriptors of the new building? Is the architect someone prepared to work closely with the development people?

What plans do you have about recognizing donor support for the building? (Don't wait until your institution has broken ground for the project to address this as it is a good thing to build in donor recognition to the design of the building.)

Question from Ana, small nonprofit:
    What suggestions to you have for a small nonprofit whose board are representatives for the coalition of churches that founded the agency. They usually are good church people but not necessarily have the sills for non-profit board. They also may not be willing to give out of their pockets, saying they give to the church. It makes for difficult fundraising when the board doesn't give or think they need to fundraise.

Richard Belous:
    Boards are very important! Let me not name names, but even some of the largest charities are going through some very hard times because their boards and board structure are for 1958 and not 2008.

So some suggestions:

First, when considering the size of your board, larger is not always better, In many cases you will get more from less. Second, do you have the key representatives from the various sectors that you need to accomplish your task? Third, does the board walk the walk or just talk the talk? Are they willing to make the critical "ASK" of the right people (asking for resources, time and talent??) If not, you don't have the right people.

When United Way advanced to our "community impact focus" from just fund raising, it required new skills from board members. The United Way of America Board is smaller than it was before. And it is more divers and inclusive then it was before. We also have a Board that believes in the new mission and vision-- and is not in the business of micro management. Hope this helps

Question from Anna Marie, Caridad Center, Boynton Beach, FL:
    We have been told that a "number" of charities are canceling fall galas and other fund raising events due to the feeling that sponsorships will suffer and ticket sales will plummet. Is this your finding?

Melissa Brown:
    Giving USA 2008 is about fundraising in 2007. My colleagues in the field, Bob Evans and Rick Belous, are closer to the action in 2008 and probably better able to respond than I am about what charities are doing this year.

We did survey charities in early 2008 about their plans for this year, and many said that they anticipated difficulties because of the economy. They also thought that their own fundraising efforts would help them get through. One of the types of fundraising most often selected by the 300+ respondents in this study was submitting more proposals.

Thinking back to 2002, when the economy was also very tough, funders said they would fulfill prior commitments and maintain existing partnerships but that they were not able to accept new proposals or open new relationships. If that is prevailing now in the corporate funder world, it makes sense not to seek sponsorships for relatively low-return events and galas. It might also suggest that submitting proposals to foundations is not a super-likely way to help raise funds.

Question from Peter Panepento -- Moderator:
    Bob, I'll pass on Anna Marie's question to you: Have you heard of any charities that are canceling fall galas and other fund raising events due to the feeling that sponsorships will suffer and ticket sales will plummet.

Bob Evans:
    I have indeed heard that some agencies are becoming "chicken" and are not continuing a tradition of special events that has been ongoing. Our advice: do not cancel events but rather consider ways to make the event(s) more appealing for attendees.

One of our clients recently held their annual dinner and auction (a 15 year tradition) and received a challenge grant from a donor prior to the evening; the results represented one of the best events the agency has seen ever!

Special event fund raising is not a favorite of mine as they are too strongly linked to the committee, the leadership, or some special honoree so we encourage you to consider other options for expanding your fund raising efforts . . . beyond special events.

Question from M. Fung, AALDEF:
    Many boards of directors seem to be focusing on how to emulate the success of the Obama Presidential campaign in raising small donations online from large numbers of people. How applicable is this fundraising model to nonprofits that don't have the kind of constant visibility of a political campaign or a strong online donor base?

Bob Evans:
    We can all take some lessons from the Obama campaign successes and apply them to non-profit fundraising efforts. Recognize that 90% of all dollars, however, generally come from 10% of the donors so developing a strong on-line presence for giving takes an investment of time and money that smaller, newer non-profits may not have right now.

Constantly communicating with donors and prospects on-line is a critical strategy and one that we encourage all of our clients to utilize.

By using on-line giving technology, you may be able to receive more gifts (and possibly larger ones) than if you depend on direct mail; online gifts also come more quickly than when using direct mail.

Question from Mariana Nork, American Association of People with Disabilities:
    As we get deeper into the presidential campaign, how do you believe this will also affect the fundraising environment, based on history? The campaign giving is unprecedented, and seems completely unaffected by the environment, so I wonder how you see this changing as we get closer to the election date and directly affecting individual giving for nonprofit organizations. Thank you--

Melissa Brown:
    While there are certainly some donors who chose politics over nonprofits in campaign years, overall there is NO IMPACT ON CHARITABLE GIVING during presidential campaigns, either historically or in 2007. We have studied this using regression analysis, to see if years with campaigns matter in charitable giving, and the answer is no.

We also looked at 2007 fundraising for presidential campaigns and compare it to giving. The amount raised by all presidential candidates in the field in 2007 ($580 million) was less than 1/2 of one percent of total charitable giving in 2007 ($300 billion). Now, even with unprecedented fundraising by two candidates-presumptive, we are still not very likely to get close to a level of political giving that will affect the total charitable giving.

Question from Chris Simoneau, Tufts:
    Over the past ten years, the number of non-profit organizations has nearly doubled. Would it be fair to say that the growth in charitable contributions has not kept pace with the growth in NPO's during the same timeframe, therefore suggesting that the average amounts received per NPO have declined in real dollars? Also, for individual giving, many organizations are seeing more dollars but from fewer donors. Is this true in the individual category you are reporting on?

Melissa Brown:
    Growth of nonprofit organizations is a difficult issue because of two things:

1) The IRS counts all of the charities that are registered, whether or not they are still active (at least for now)

2) Many charities don't register at all

and 2b) Charities that have registered in recent years might, in fact, have been operating all along and only recently decided that they need to register. This includes, for example, churches which are not required to register but many have; and small nonprofits that reach the income threshold so do register after having been in operation for some time.

So, that said, you are right that the rate of growth in nonprofits (around 5% a year in the past decade) has been faster than the inflation-adjusted rate of growth in giving. But that doesn't necessarily mean that all nonprofits are receiving less. Many registered nonprofits don't receive anything (they are defunct, they are all-volunteer organizations, or for other reasons). The Nonprofit Almanac published this month by the Urban Institute has the best data I am aware of comparing growth of the sector and growth in various income streams for charities, and I recommend it highly.

Your second question is about donors. Giving USA focuses on the really big picture, not so much on donor behaviors. I also work on the Center on Philanthropy Panel Study, where we survey people every two years, but we don't ask about the gifts they make to specific organizations, only to subsectors (education can be my alma mater, my children's school and the library in my town -- one subsector, multiple gifts). Target Analysis tracks direct response fundraising and has reported more dollars, fewer donors and fewer NEW donors. The Fundraising Effectiveness Project jointly sponsored by a large group of organizations and hosted at the Urban Institute has shown that there is fairly high turnover rate (low retention rate) in many types of charities. The Council for Aid to Education reports growing dollars and declining participation rates by alumni (but possibly more other types of donors).

All of this is to say that we are gathering data but do not yet have a complete picture. The Center on Philanthropy Panel Study found that 56% of people gave each of three years; 29 % gave in 1 or 2 of the three; and 15% never gave at all. The people who gave some of the time but not all of the time had, on average, lower income, lower education, and lower wealth than people who gave all three years.

Comment from Tom Robinson, Animal Welfare Nonprofit:
    In response to those asking about galas, we have, for the past three years, dispensed with formal galas and had events that were more fun, casual, and less costly (both in terms of production and ticket cost). The feedback has been overwhelmingly positive, and the event proceeds have been climbing each year. Our next "gala" event is in September, so it remains to be seen whether the economy will affect the proceeds, but with lower ticket costs, I suspect we will see less negative impact than we would if we were still having a formal gala.

Question from Randal Mason, ChangeMatters:
    What practical steps can nonprofits--especially smaller nonprofits--take to prepare for how the economic slowdown might affect them?

Bob Evans:
    All non-profits need to be financially strong and transparent AT ALL TIMES! Tough economies have impacted on the weaker and (generally) younger nonprofits previously.

However, we urge that every non-profit build up its endowment program so that it has a constant (and growing) income stream well beyond that of fees and annual giving. Our rule is that you should have no less than 3 times annual budget in endowment and at least 5 times is really better. Building restricted and unrestricted endowment will be the savior for the long term.

In a slower economy, too, you probably will see fewer donors so therfore you need to be trying to get larger gifts and more support from your current donors/friends. And surely you are asking your Board members to open their doors and outtreach to people they know and who would respond positively.

Depending on the purpose of your agency and funding streams, you also need to be preared for a decrease in funding from places like United Way (if you are getting those dollars now).

Question from Kathy, church council member:
    Did your research reveal any possible reasons for the drop in giving to mainline Protestant groups,and/or conversely .. why the increase in other faith group giving?

Melissa Brown:
    The National Council of Churches of Christ of the USA provides the data that we use in looking at Mainline Protestant and other religious giving. My understanding is that Mainline Protestants are seeing declining numbers of adherents, and that many more evangelical faith traditions are growing. There are others who are far more knowledgeable than I about this topic, however. The Journal for the Scientific Study of Religion, for example, has featured articles about declining giving by Catholic "boomers" and other similar studies written by scholars.

Question from Liz, Large Corporation:
    Is the Unietd Way of America giving any guidance to their corporate sponsors on levers they should use to help them determine their giving campaing goals for 2008 and 2009?

Richard Belous:
    The most important thing United Way is doing with its corporate partners is helping them with our new LIVE UNITED campaign. LIVE UNITED goes well beyond the traditional UW workplace campaign to include not only giving but volunteering and advocacy. We have set very bold goals in the areas of education, income and health and have suggested ways that our corporate partners can advance the common good in the various communities that they serve. It is our experience that when our corporate partners and employees are "jazzed" about LIVE UNITED (and we have gotten great reations to it)that the resources will be there. Go to www.liveunited.org to experience this.

Question from Kathy, small nonprofit:
    What are the indicators that foundations and individual donors are most interested in regarding a particular nonprofit as they determine whether a worthy one to give their support?

Bob Evans:
    Every donor -- regardless of type (individual, corporate or foundation) -- has certain parameters that a recipient organization must meet. Some donors will not support capital (bricks and mortor) needs while others will limit their giving to that area. Some donors do not want to be the first one to step forward and wish to see that others have already given before they do.

All donors want to support strong agencies and ones that are financially transparent so what materials are readily available for distribution? Is your 990 on Guidestar and has Guidestar given your agency a good rating?

What impact is your agency making already? How many people are better as a result of the work your agency does?

Who else is involved in the work of the agency (at the Board level, especially)?

Question from T Wilson, Interfaith:
    What is the projected direct mail average gift from 2007 to 2008. Are we seeing this same type of decrease in giving in the planned gifts?

Melissa Brown:
    Target Analysis Group tracks direct response fundraising and publishes a quarterly report that lags about 1 quarter (e.g., the report out now or soon to be out will be about the end of the 1st quarter of 2008). Tracking their results is probably the best recommendation I can make for understanding direct mail.

The Center on Philanthropy will be releasing its Philanthropic Giving Index for spring 2008 in a few weeks. While it won't have average gift amounts, it will show the collective "score" of a few hundred fundraisers for their current success with various fundraising methods. That is also a good way to "take the pulse" of the current situation.

Question from Bob Zimmerman, Zimmerman Lehman (consulting firm):
    Would you agree that nonprofits should avoid talking about the economic crisis as it affects their organizations, but should talk about it as it affects their clients? Donors are not interested in investing in sinking ships--it's a bankrupt strategy.

Bob Evans:
    Generally, I agree with you about this. However, nonprofits may have to show how their income streams are being impacted at a critical time. Generally, red ink discourages giving. Therefore, an agency must be pro-active about its finances and its donor base. Do not take ANY donor for granted; rather, more/increased stewardship of friends/donors is critical!

Question from Caroline, large national nonprofit:
    During a recession, as folks with more moderate income reduce their giving, how important are small monthly gifts ($10-$50) paid out over the year? Are moderate-income people more likely to give in this way, and have non-profits tapped into these kinds of gifts successfully?

Melissa Brown:
    This is probably a fundraising strategy question rather than a research question, but the topic is fascinating. Giving USA 2008 doesn't provide information about this in particular, but the Center on Philanthropy Panel Study (on which I also work) has looked at household giving in strong economic years and in less-strong years. We found that some households do stop giving entirely but that many do give every year, although the average gift amount declines in less-robust times (as you would expect).

From my decade or so as a fundraiser, it seems to me that an organization would want to retain donors at any level--even if it is $2 per month--in order to keep them informed and loyal to the organization. Many nonprofits have set up monthly plans so that donors give the nonprofit permission to charge a gift to a credit card monthly. I don't know whether this is more attractive to people in any income group compared with another, but it seems like a nifty idea with lots of potential use.

Question from Andy Anderson, small nonprofit:
    Our prospects are largely 70+ retirees. Their source of giving funds are from investments. Right now, they are concerned with the recession and the inflation, and feel like it is wise to hunker down. We are in the midst of a capital campaign, and would ask advice on getting the hunkers off the dime.

Bob Evans:
    What we are hearing from donors is that they "do NOT like to be treated as ATM machines." All to often charities-- including UW in the past-- have treated key donors as AT machines. CRM and relationship building is so important. What are we doing besides asking them for money? Are we informing them of what we are doing? A key metric that we look at in our market research is the % agreement rate with this statement: United Way is the best way to make a positive difference in my community. When we place UW second and think about the situation from the donor's point of view-- of wanting to make the largest positive difference in the community-- things happen. We move beyond treating people as ATM machines. We find out what are their real concerns. We can segment the market and not have a "one size fits all" marketing strategy. The Ask is critical, but it has to be pplaced in a larger context of thanking and informing.

Question from Jackie Gaare, large corporation:
    Do you have any insight on how the current economy and gas prices will impact the amount hourly and part-time employees are able to give to corporate campaigns compared to recent years (i.e can we expect them to be hit harder than full-time/executive staff)?

Richard Belous:
    Economic conditions have a major impact on giving levels. Higher gas prices-- as well as higher food prices-- and a slow economy-- should make it more difficult for the period covered by the next GIVING USA than it was in the time period covered by this edition of GIVING USA.

Nevertheless, if the case is compelling, and relationships are built, donors will be there to invest in your products.

Question from Nicola Beddow, Case Foundation:
    While online giving still represents a tiny portion of individual charitable giving, nonprofit organizations are seeing an increase in online donations. And we certainly have observed the online small donor fundraising success in the Obama presidential campaign. Did the study look at trends in new technology tools for fundraising?

Melissa Brown:
    We asked nonprofit organizations in a survey about how they used the interest in fundraising. Those results are not yet analyzed. I do know that 44% of organizations reported using the Internet in some way, and that the vast majority of those (36% of all organizations, or 82% of those using the Internet) said that all Internet-facilitated contributions were 5% or less of their total funds raised.

In another study we did at the Center, the American Express Charitable Gift Study, we found that 10% of donors reported making an online gift in the prior 12 months. Among younger people, it was a higher percentage BUT A LOWER PERCENTAGE OF THEM WERE GIVING AT ALL at that point (fall 2007). The largest category of prospective online donors was in fact people aged 40-65 because they were donors already and were likely internet users.

Question from Ana, Houston, university research center:
    The majority of our programs are federally funded. With the economy as it is and the changing of the guard in D.C., major longitudinal studies' funding is being cut. What suggestions to you have for seeking funds elsewhere?

Richard Belous:
    Diverse sources of funding are critical. We have been asking local United Ways to think beyond the once a year workplace campaign, The local UWs that are going for many diverse funding sources seem to be doing better-- and are in better shape to withstand downturns.

I would not take it for certain that the new team to come to Washington will be less interested in longitudinal studies. I hopoe that major reforms and changes-- and investments-- will be made in our nation's data collection system no matter which party wins the next election.

Question from Cheryl- large corporation:
    Is there any information out there on how volunteering will be affected with the economic struggles? People needing second jobs, gas costs, etc.

Richard Belous:
    Research we have done at United Way indicates that work related problems are the largest constraints people point to as reasons why they do not volunteer.

Question from Peter Panepento -- Moderator:
    Melissa, were there any interesting trends in this year's report that haven't yet been touched on in this conversation?

Melissa Brown:
    Too many to recount in a quickly typed response. Some high points:

Foundation giving rose its highest level ever, and about 1/2 of it is from family foundations.

Corporate giving remained high and seems to be buoyed by in-kind donations, as has been the case in recent years. It has "returned to the trend" after jumping up quite a bit in 2005 after the disasters.

Peter Panepento (Moderator):
    Wow. That went by quickly. Thank you to everyone who joined us today. We had some fantastic questions and an equally fantastic panel of experts. Each of you deserves a virtual round of applause.

Peter Panepento (Moderator):
    Please join us next Tuesday at the same time -- noon Eastern -- to discuss how charities can undertake effective efforts to "go green". This is a hot topic in many corners of philanthropy and we look forward to yet another interesting discussion. In the meantime, please remember that you can find transcripts of all of our free live discussions at http://philanthropy.com/live