Good News, Bad News: Charitable Giving in 2010

This just in - a new report from Giving USA, the annual survey of charitable giving in the United States, indicates that donors remained cautious and wary last year, resulting in a minuscule increase of 2.1% (after inflation) over 2009.

The previous two years experienced the sharpest drops in giving ever recorded in the five decades Giving USA has been tracking charitable contributions - 7% in 2008 and 7.2% in 2009. These decreases easily beat the previous record of 5% during the 1974 recession.

Here's some more bad news:

• Individual giving barely increased at all (a mere 1.1%) from 2009 to 2011.
• Grant-making fell by 1.8% for an estimated $41 billion.
• Environmental, animal welfare, and human service agencies all suffered declines varying from 1-2.3%
• Human services would have experienced the biggest loss - an estimated 5.6% - if you subtracted all the money donated for Haiti disaster relief. This is especially concerning, as in all previous recessions giving for basic needs increased.
• Giving dropped more over time than since the Great Depression.

And now the good news:

• Charitable contributions continue to represent about 2% of the national's gross domestic product, despite the economic downturn.
• Charitable bequests rose 15.9% up to $22.8 billion - the biggest growth in 2010 philanthropy.
• Corporate giving, including both in-kind and cash support, rose 8.8% to $15.3 billion.
• International nonprofits saw a significant increase of 13.5% in donations.
• Arts and cultural organizations experienced a surprising increase of 4.1%

Individuals continue to make up most of the philanthropic pie. Of the total amount ($291 billion) contributed this year, 73% came from individual donors.

The message is clear: a continuing, personalized, targeted focus on building and sustaining relationship with individual donors remains the best way to raise money. Now is the time to continue communicating actively with your supporters. Present your case with passion and creativity, using both conventional and social media. Keep donors in the loop about what's going on financially and how you are continuing to do your good work. Let them know about your current strategies to balance your budget while protecting core programs. Be sure to focus on results achieved. Consider placing a greater emphasis on planned giving and strengthening your relationships with corporate givers, while decreasing your reliance on grants.

So what's the outlook for the future? After the Great Depression, it took 6 years for giving to return to pre-Depression levels, so we may be looking at several more difficult years. Certainly, the trend of ever-increasing charitable donations experienced in previous decades is not likely to return for a long time. Nonprofits need to get used to this new normal of a slow and cautious philanthropic climate. Take the time now to engage your Board actively in assessing programs, staff, and funding for long-term sustainability. Be innovative, entrepreneurial, and pragmatic as you develop an organizational strategy appropriate for these challenging times.