Economy and Election Raise Specter of Depression-Era Fund Raising

November 05, 2008

Economy and Election Raise Specter of Depression-Era Fund Raising

The economic challenges awaiting Barack Obama in the White House are second only to those facing Franklin Delano Roosevelt when he took office in 1933 during the Great Depression, say many historians and political observers.

If the economy has indeed entered a comparable protracted downturn, how will that affect charitable fund raising?

Looking for clues, Robert F. Sharpe, a Memphis planned-giving consultant, scoured the historic record from 1931 to 1941 and produced this white paper.

Based on annual newspaper reports on giving in The New York Times and academic research on philanthropy in the 1930s and 1940s, Mr. Sharpe found a big drop in giving from 1931 to 1933, followed by small but steady increases. Still, contributions did not recover to 1931 levels until the mid to late 1940s.

Some charities fared better than others. While giving to the arts dropped, giving to 49 colleges and universities during the nine-year period from 1930 to 1938, according to one newspaper report, declined by only 2.3 percent, compared to the nine-year period immediately preceding the Depression.

However, the composition of gifts underwent a sharp shift, according to other data on large gifts reported by health, education, arts, religious, and social-service organizations: The percentage of bequests and other planned gifts as a share of total contributions peaked at some 70 percent in 1933 and gradually dropped back down to 20 to 30 percent in about 1940.

No one knows how deep the economic downturn will be, or what dent the Obama administration will have on it, Mr. Sharpe says. “History reveals that giving continues and grows during challenging economic times, but people shift the way they make their gift. They pay much more attention to what they give, when they give it, and how they give it.”

— Holly Hall

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Economy and Election Raise Specter of Depression-Era Fund Raising