• September 30, 2014

Donations Barely Rose Last Year as Individuals Held Back, Report Says

Donations to nonprofit colleges and other charities are inching up so slowly that it will take at least six more years for most organizations to raise as much as they did in 2007, before the recession hit, predict researchers behind the "Giving USA" report, who are releasing figures on Tuesday that show donations rose just 1.5 percent last year after inflation.

Donations from foundations, corporations, and individuals totaled slightly more than $316-billion, according to "Giving USA."

Among the organizations still grappling with the steepest decline in giving on record is the UJA-Federation of New York, which expects to raise $141-million in its annual campaign this year, down from a high of $153-million before the recession.

"While the stock market has recovered," declared Mark Medin, the federation's chief fund raiser, "the psychology of giving has not."

Donors at all income levels still feel shaky about their finances, he said.

"For working professionals, prior to 2008, you assumed you'd get a raise or bonus every year, but now you don't know if your firm is going to do layoffs again," Mr. Medin said. "Upper-middle-class professionals are far more cautious, and low interest rates are very difficult for retirees."

The New York charity is hardly alone: Donations by living individuals, which account for nearly three-fourths of all charitable giving, rose by just 1.9 percent last year, to $229-billion, according to "Giving USA," which is compiled by the Lilly Family School of Philanthropy at Indiana University and published by the Giving Institute. That is still 11 percent less than living donors provided in 2007, before the economy entered the worst of its decline.

Billionaire Donors Are an Exception

There is at least one exception to the gloomy state of giving by individuals: America's wealthiest are starting to give at rates not seen since the beginning of the downturn.

Donors have made nine donations of $100-million or more in the first five months of this year, including a $350-million gift to the Johns Hopkins University from Mayor Michael R. Bloomberg of New York; a $133-million gift to the New York campus of Cornell University and the Technion-Israel Institute of Technology from Irwin Mark and Joan Klein Jacobs; a $125-million gift to Harvard University from Hansjörg Wyss; and a $110-million gift to the University of Michigan at Ann Arbor from Charles T. Munger.

That's already more than the seven gifts of at least $100-million that were made all year in both 2009 and 2010, according to The Chronicle of Philanthropy's online database tracking donations of $1-million or more.

But even the most prominent nonprofit organizations aren't relying solely on the very rich to shore up their fortunes.

Instead, in interviews with more than 40 fund raisers for charities in recent weeks, The Chronicle of Philanthropy found that groups forecasting the best outlook for 2013 and beyond are those making innovations in how they attract gifts and diversifying their sources of revenue. Such rethinking is widespread: Nearly 40 percent of the 6,000 charities that responded to a study by the Nonprofit Finance Fund said they planned to change how they raised money this year.

Audacious goals also pay off, some nonprofit groups have found. In Louisville, Ky., the local United Way ran a campaign asking donors to give 110 percent of what they gave the year before, leading to a 12-percent rise in contributions. Another United Way, in Decatur, Ala., made a bold bet: that it could increase giving by 30 percent even amid plant closings and layoffs that have devastated the community. It's coming close to that goal.

Bucking Trends

Several national charities are succeeding by bucking conventional wisdom, spending more on fund raising at a time when their peers have cut back.

The National Psoriasis Foundation, which raises money to fight the skin condition, raised nearly $9-million last year and expects an increase in giving again this year, not including bequests, by accelerating fund raising. The charity has hired a fund raiser to seek big gifts, expanded its telemarketing, and hired additional staff members to manage volunteers who organize events to raise money. Its first-ever ballroom gala last year raised $820,000 after expenses.

Catholic Relief Services has also expanded its development staff, adding seven junior fund raisers who focus on building ties to people who give less than $10,000 but are capable of contributing that much or more.

By sending handwritten thank-you notes and cards to such donors, calling them on the telephone, and providing updates since their last gift, the development associates hope supporters will meet with one of the charity's 14 big-gift fund raisers around the country. The approach is working: So far this year, the charity has received 216 gifts of at least $10,000, up from 100 in 2011.

Reaching Goals Early

Other groups have focused on reaching new types of donors.

Drexel University has started soliciting the parents of its students and seeking donations from people who didn't attend the institution.

This year the university reached its goal 12 months early in a $400-million capital campaign after securing the drive's largest gift from an individual, $25-million from a local businessman who never attended Drexel but praised the work ethic of several of its students whom he's hired over the years.

Drexel also started a Parents Council in 2011 that has attracted 60 couples who give $2,500 annually. The institution offers them special perks, such as the chance to meet with the university's president three times a year.

Some of the parents are now giving big, with one couple providing $150,000 to Drexel's Center for Jewish Life.

A growing number of nonprofit organizations are also trying to capitalize on donors' heightened interest in supporting charities that can prove they get results. Omaha's United Way is teaming up with two local grant makers to identify high-performing nonprofit groups in the region. United Way officials hope that by demonstrating that they know which organizations are most deserving, donors will be more likely to support its fund-raising campaign for local causes.

As fund raisers study trends from last year's giving to figure out what to do now, they will find few bright spots in the "Giving USA" report.

The only sharp growth in giving came from corporations, which increased donations by nearly 10 percent, the report estimated, in part because of record profits for companies in the second half of 2012.

Among other "Giving USA" findings:

  • Foundations increased their grants by 2.3 percent.
  • Bequests fell by nearly 9 percent in 2012, after rising more than 6 percent in 2011.
  • Contributions to colleges, universities, and private schools rose by nearly 5 percent, while health organizations raised almost 3 percent more.
  • Donations to social-service groups grew by 1.8 percent in 2012, with many reporting a slowing of contributions after giving rose sharply in the worst of the downturn, and Americans responded generously to news accounts about the plight of the needy. The Cleveland Foodbank, for example, reported that its cash contributions increased by almost 25 percent in 2009 but last year rose by only 4 percent.
  • Religious causes suffered a more than 2-percent drop in donations, though religion still attracted a bigger share of contributions than did any other cause. A new report by the ECFA, formerly the Evangelical Council for Financial Accountability, which represents more than 1,750 churches and other religious charities, found that small groups did even worse: Giving to religious groups with budgets under $5-million dropped by 3.6 percent last year after falling by more than 2 percent in 2011.
  • Contributions to international-relief organizations were flat last year, growing by less than 1 percent. One reason: The humanitarian crisis in Syria, which started dominating headlines last year, has failed to generate as much giving as have other overseas emergencies.

"Syria is largely man-made without a clear sense of resolution and has not prompted nearly the levels of giving we see after a disaster like Haiti or the tsunami," said Sam Worthington, chief executive of InterAction, which represents more than 180 international-aid groups.

An executive summary of "Giving USA Highlights" is available free online at the Giving Institute's Web site. The full report costs $89.95.

Debra Blum is a regular contributor to, and Holly Hall is features editor of, The Chronicle of Philanthropy.

Correction (7/19/2013, 2:48 p.m.): This article originally misspelled the given name of a donor to Harvard University. He is Hansjörg Wyss, not Hansjörf. The article has been updated to reflect this correction.

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