Monday, June 18, 2007

Trends in Giving

In a recent study by the Center of Philanthropy at Indiana University, four long-term trends in charitable giving were synthesized from the past 40 years of philanthropic activity.

The first trend reflects the rise of foundation giving and charitable bequests. Since 1964, foundation giving has increased 469% and charitable bequests have increased 242%. This is in addition to a 213% increase in corporate giving and a 176% increase in individual giving. Although they may seem like stunning increases, they are merely commendable compared to increases in the economy and income levels. Foundation giving and charitable bequests are becoming important fundraising options for nonprofits.

The second trend shows a consistent 'share of giving' throughout the United States. Although giving in inflation-adjusted dollars has increased, giving as a percentage of the GDP, income and profits has stayed relatively constant. Total giving as a percentage of the U.S. GDP has remained around 2% over the past 40 years. Why are people not donating more even though their assets are increasing? How can the nonprofit sector get people to move above and beyond historic donation levels?

The third trend links government funding and private giving. If a nonprofit receives funds from the government, they tend to receive fewer funds from individuals, and vice versa. The United States gave $1.8 trillion to nonprofits in 2000, and this type of funding had a significant effect on individual giving. Troubling is that when nonprofits receive government funding, they tend to decrease their fundraising expenditures and staff, yet government funding is now diminishing in many area and these may have difficulties reestablishing ties to and relationships with individual donors.

The fourth trend tracks the increase of nonprofit organizations in the United States -- and their increased segmentation. In 1995, there were roughly 630,000 registered nonprofits in the U.S. By 2005, this number had reached about 1 million (a 67% increase). More amazing is that donations to these organizations have kept pace with the growth. Perhaps the increased specialization makes that possible as people who wouldn't have donated before are now asked by new organizations that match their particular interests and concerns. But for those who do have a history in philanthropy, it can become complicated when the time comes to select one organization to receive your donation.

The future of philanthropy looks bright, particularly with the impending 'trillion dollar transfer' as the aging Baby Boomers give their money to children and to nonprofits. And, it raises the bar for nonprofits to enhance accountability and responsibility for managing charitable interests and donations.
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