Giving USA Reports Victory for Philanthropy!

The press releases announcing the Giving USA Foundation Report on Giving for 2008 are out.  After all the hand-wringing . . .giving goes down about 2%.  That’s $6.4 billion out of the $314.1 billion given in 2007. I am stunned that there isn’t dancing in the streets.  To listen to many in the fundraising profession–the bottom had fallen out from under giving in America.  Campaigns were stopped, fundraisers gave up, foundations cried poor, corporations cited the economy.  It was the worst philanthropic period in the history of our country.And giving is down 2%?  You know the $6.4 billion drop is less than what is predicted by the Center on Philanthropy’s research office on the impact of the President’s still proposed tax increase on families with incomes of  $200,000 a year; they estimate that to be an $8 billion hit.  Many in the media said that that loss was fine; it is still in the President’s budget. This year’s report by Giving USA should be heralded as a victory for philanthropy in America.  With this report, they have reinforced our pride in the spirit of America.  This past year, we withstood the worst economic disaster since the Great Depression, and giving only went down 2%.  Hardest hit were donors giving to their own foundations, which dropped 22%. Remember, however, they only distribute 5% of their asset base.  Therefore in terms of direct impact on philanthropy, this slice of the pie is only 5% of the decrease, not the gross amount. Giving USA’s standard of counting gifts to foundations has always stuck in my craw as a set of bad numbers.  Every other aspect of this segment of the report characterizes direct support– social services, education, etc.  But the dollars that go into a foundation are counted twice—once when they are given and again when they are distributed.  Also, a disproportionate amount of money is now being sunk into personal foundations, which still only represents 10%+ of all giving—and yet, literally none of it goes to philanthropic objectives in the year it is gifted.The next biggest hit, according to Giving USA, was to social service organizations.  Hey, wait a minute. . .  Didn’t I hear many commentators in the philanthropic arena talk about how social service organizations do better in a bad economy?  How many foundations or individuals are telling you they are now giving only to safety-net institutions?  A 16% drop in giving to social services would indicate someone is not giving to those organizations.  In fairness, the social service arena is not always staffed with the strongest fundraising talent and many are frequently seduced by the headlines of nobody giving (see last week’s blog).   However, our social service clients who are participating in our Initiative Fundraising based on the Google Study conducted by the Center on Philanthropy (also the subject of two case studies that will come out in 2010 in Adrian Sargent’s book on fundraising cases) have fared exceptionally well this past year. The report indicates giving by foundations, corporations and individuals all decreased.   It cites that even bequests went down.  Wow, there is an economically driven indicator!  Can you believe fewer people included nonprofits in their estates 40 years ago because they knew there would be an economic crisis in 2008?   This accounts for nearly one third of the actual dollar decline reported. Over the next several weeks we are going to take an in-depth look at the Giving USA Report.   Kinetic Fundraising, Inc. has been invited several times to join Giving USA or its predecessor AAFRC–a trade group for consultants.  While both groups are certainly well meaning, they are largely ineffective in representing the industry.  They have made Giving USA Report a reputable report–especially after they handed it off to the Center on Philanthropy at IU and their research people to manage.  However, its finding are going to undergo greater scrutiny in the future as each segment begins to monitor its own fundraising.  As an example, Giving USA says educational fundraising went down 9% when Council of Aid to Education (CAE) reported an increase of 6.2%.  Who do you believe?  Frankly, I am betting on the CAE since they focus exclusively on their segment of philanthropy.