The Reality of Charitable Giving

“Charitable Giving In The U.S. Reached All-Time High In 2016: $390 Billion,” trumpets the headline in the Chronicle of Philanthropy.  But that just seems bogus.  A more important fact is that charitable giving was at 2.1% of GDP—again.  In fact, that percentage has stayed pretty steady (between 1.8-2.1) for the past 40 plus years.  No matter how Giving USA and the Chronicle try to paint it, the fact is we aren’t growing at all. The Giving USA report goes on to say that individual giving is up with living individuals up 2.6% from 2015.  That, however, is mirrored by a 10% loss in giving via bequests.

But, what, actually, does that mean?

A few years ago, the same reports were boldly announcing a growth in planned giving as bequests had increased by some phenomenal number.  In one year and all due to a $1 Billion (that is with the B) bequest that—this being true for most planned gifts—will not be repeated and will not be increased.

Lately, I’ve begun to wonder why we even give any credence to these sorts of studies. First off, rather than looking longitudinally, they report year to year and proclaim trends that aren’t trends at all.  More to the point, they lump all nonprofits together—from the all volunteer organization limping along at a $100,000 or less operating budget to the 400 largest organizations.  And I’m sure this is no surprise to you, but all organizations are not created equal.

So we all talk about the charitable giving pie.  The one that shows that living individuals give around 75% of all charitable dollars, and bequests add another 8 or so %.  Corporations give between 3-6% and private foundations around 14%.  But for my clients—those organizations whose operating budgets are under $2M (often way, way under) those percentages are turned around.  For most of my clients—and most of the charities in the US—the bulk of charitable revenue comes from private foundations.

The other important information that is not given, is how the money is gotten.

Most of the revenue from foundations comes from grants that have been given as a result of a proposal and a very competitive process.

For individuals, most of the money is coming from a very small pool of people who are giving 7 and 8 figure gifts to an equally small pool of nonprofits.  The remaining 10-20% of the dollars come about mainly through events, mail appeals, peer to peer fundraising, most of which doesn’t make a fraction of what the famed ice bucket challenge brought in.  And a big chunk of this bottom 20% does come from large gifts ($5,000-$999,999) made by individuals.  And again, most of that goes to the larger nonprofits who have robust development staff.

What this all should mean to smaller nonprofits is that they really need to rethink the way they approach fundraising.  Major gifts cannot remain the property of the big guys.  Smaller nonprofits must focus much of their time building relationships and asking for larger gifts.

Until they do, charitable giving will remain at about 2% of GDP and the charitable pies of smaller nonprofits will continue to be dangerously skewed.

Janet Levine works with nonprofits, moving them from mired to inspired with increased fundraising capacity and more engaged boards.  Learn more at www.janetlevineconsulting.com  You can sign up for the monthly newsletter and schedule a free 30-minute consultation.