The Fundraising Cliff, Part 1

Submitted on Wed, 1/2/2013 - 7:11am
There is a lot of speculation about what has been causing the challenges that fundraising is facing in the United States. There are opinions and then there is data.

Over the past few months I've been asked a lot of questions about giving trends: What explains the flat trend in overall fundraising? Is it the economy? Was it the election cycle? What about Hurricane Sandy? Are we approaching the fundraising cliff? Will it get better? When will it get better? Did the Mayans predict this?

There are opinions and there is data. I prefer to show actual data and suggest what may be or may not be happening in the nonprofit sector.

What Is Not Happening

There is a lot of speculation about what has been causing the challenges that fundraising is facing in the United States. Here are a few of the more common questions:

Are people giving more to the presidential campaigns and less to nonprofits?

No. The Giving USA Foundation, which estimates national charitable giving over a 50-year span, reports that campaign fundraising has historically had no apparent impact on overall individual giving. It's worth noting that less than 1% of Americans give campaign contributions of more than $200 to political candidates, parties or PACs.

Are people giving less because of possible changes to charitable tax deductions?

No. The exact opposite is more likely especially for wealthier donors. The potential for tax code changes are more likely to encourage these donors to give now instead of waiting. Some have suggested this is one reason why George Lucas recently sold the Star Wars franchise to Disney. It has been reported that Lucas plans to "donate the majority of the proceeds to his philanthropic endeavors." Also keep in mind that only 30% of American taxpayers itemize their deductions, which often gets overlooked in end-of-year holiday appeals.

Are people going to give less because they donated to Hurricane Sandy relief?

No. Disaster giving is not a zero-sum game. Giving to disasters does not take away from other nonprofit causes. Most giving in response to Hurricane Sandy has been to a small number of nonprofits focused on the relief efforts. While giving related to Hurricane Sandy may boost total fundraising in 2012 it is unlikely to change fundraising results for most nonprofits.

Are people giving less because of the economy?

Maybe. The National Bureau of Economic Research said that the recession ended in June 2009, and fundraising historically takes three years recover from a recession. But the Center on Philanthropy at Indiana University says we are experiencing the second slowest recovery since 1971. I believe that uncertainty about the economy is probably a bigger factor here than anything else.

In Part 2, I review what is really happening in the nonprofit sector and what organizations can do about it.

Hear more from Steve at his session at the 2013 Nonprofit Technology Conference, "Five Biggest Trends in Online Fundraising".

Steve MacLaughlin is the Director of the Idea Lab at Blackbaud.