JGA Counsel

authentic and strategic philanthropic consulting

Posts Tagged ‘Recession’

Feb 2014 | CAE Reports Record Giving to Colleges and Universities in 2013

by Jeff Small

 

The Council for Aid to Education (CAE) released the annual results of its Voluntary Support for Education (VSE) survey earlier this month. The good news for colleges and universities is that charitable giving to higher education continues to rebound from the deep dive it experienced during the recession.

The VSE estimates that colleges and universities received a record $33.8 billion in 2013. This is a nine percent increase from 2012 and is up 20 percent from the low point of giving during the recession. Donors and institutions have also shown signs of moving back into an aspirational mode with giving to capital purposes rising at nearly double the rate of giving to current operations (6.9 percent vs 12.4 percent).

During the recession, institutions and donors helped to blunt the impact of the drop in giving by shifting gifts away from longer term capital projects and focusing instead on current operating costs. Giving in both areas has rebounded in the past two years, but there has been at least some sense that some signs of growth were corrections in that pattern.

Taken as a whole, the significant overall giving increase, the growth of gifts to current operations at a rate well above inflation, and the rapid increase in giving for capital purposes should give college and university leaders confidence. It seems donors are once again ready to engage and invest in the present needs and the future goals of their institutions.

These results align with a number of other objective economic and charitable indicators, as well as our own experience here at JGA. Consumers, donors, foundations, corporations, and nonprofit organizations have begun to accept that the economic recovery, while not overwhelming, is real.

While these results are extremely promising, the VSE report once again found a troubling decline in alumni participation rates. Only 8.2 percent of alumni gave to their alma maters in 2013, a slight decrease from the 9.2 percent who gave in 2012.

While the year-to-year decrease is not huge, it continues the consistent downward trend in alumni participation that has been occurring since the early 1990s. The impact of this decline has been mediated in part by the fact that the average giving by alumni has increased, it still presents a long term problem for what is the core source of support for colleges and universities.

 

Jun 2013 | Giving Grows in 2012

 by Jeff Small,
JGA Writer and Project Manager
and Giving USA Editorial Review Board Member

 

Giving USA released its annual estimates of charitable giving totals in the United States today. At JGA we believe these estimates are essential to understanding the trends that are driving philanthropic decisions and the overall landscape of giving. We are proud to have members of our firm participate on the board of the Giving Institute and the Giving USA Foundation, groups that have supported this annual tracking of giving for half a century.

Giving USA estimates that giving increased 3.5 percent in 2012 to just over $316 billion. This is the third consecutive year of positive growth in giving.

This string of growth would normally not be terribly notable since there have only been three years total in the past 40 in which overall giving in current dollars declined.  Unfortunately, two of those years of decline occurred in 2008 and 2009 as charitable giving fell off a metaphorical cliff during the Great Recession.

The good news is that despite that unprecedented precipitous fall, charitable giving appears to be rebounding in a somewhat standard fashion. The average growth over the past three years has tracked close to the 2.6 percent rate of growth seen in past three-year post-recession periods, so the unprecedented decline did not fundamentally alter the resiliency of charitable giving in the United States. 

The bad news is that when adjusted for inflation, we are still well below the high-water mark of $344 billion achieved in 2007.  At our current rate of growth, it will take at least another five years to reach that level again.

These findings continue to give us cause for optimism that the philanthropic recovery from the Great Recession has found stable footing.  They also remind us that as fundraisers, you must continue to commit yourselves to strong fundraising fundamentals and building relationships with individuals.  

Rising stock values and increasing consumer confidence and consumption are driving an overall reinvestment in the nonprofit sector, but how is it impacting your donors specifically?

Giving USA can’t give you that information. Those are the types of things you and your staff can only learn through personal connection and contact with your donors. This information, and these relationships, are extremely critical.  As Giving USA reminds us, 86 percent of donative decisions are being made by individuals, couples, and families through individual giving, bequests, and family foundation giving.

Other notable findings from Giving USA 2013 include: 

  • Giving by Foundations and Corporations are helping drive growth: Giving USA estimates that giving by corporations grew over 12 percent in 2012, and nearly 15 percent total over the past two years.  Giving by foundations has also shown double digit growth over the same two year period, increasing nearly 12 percent.  Giving by individuals, in contrast, grew 3.5 percent this year and just under 8 percent the past two years.

 

  • Stagnation of religious giving: Giving to religion appears to have fallen slightly in both current and inflation adjusted dollars.  While revised totals show a slight increase in giving to religion in 2011, the overall growth of giving to religion over the past two years has been slower than the sector as a whole and lags behind all other subsectors.

 

  • A return to earth for Giving to international affairs and giving to foundations: Giving to both international affairs and foundations have been on strong trajectories for a number of years, threatening to permanently realign the observed charitable priorities of Americans.  This year giving to foundations experienced a decline of 4.6 percent in current dollars, and international affairs grew only slightly at 2.5 percent.  At the same time, more traditional domestic priorities, like education, health, arts & culture, and the environment & animals grew more quickly than the sector as a whole.

 

 

Feb 2013 | Gifts to Colleges and Universities Increase Slightly in 2012

by Jeff Small

 

The Council for Aid to Education (CAE) released the results of its annual Voluntary Support of Education (VSE) Survey today which estimates the total and variety of gifts to colleges and universities in the United States over the last year. 

According to the survey, giving to colleges and universities increased 2.3 percent to $31 billion in 2012, falling just shy the high water mark set in 2008 of $31.6 billion. 

In general this tracks with giving to the nonprofit sector and the economy as a whole over the past two years, where slow growth has followed the abrupt collapse of the Great Recession.

Another statistic that is reflective of this slow growth is the fact that around half (52.8 percent) of institutions surveyed raised the same or more than they had in 2011, while the other half (47.2 percent) reported declines in giving.

One of the more interesting findings of the survey, from my perspective, was the fact that giving for capital purposes dropped 3.2 percent while contributions for current operations increased 6.2 percent. 

The balance of giving for capital and current operations has experienced a number of fluctuations in recent years, with donors shifting away from capital giving as the economy contracted and shifting back towards capital giving as the economy rebounded.

The CAE points to a strong correlation between giving for capital purposes and the growth and decline of stock values on the New York Stock Exchange. When stock values have increased or fallen, giving for capital purposes has fallen in near lockstep.

The drop in giving for capital also appears connected to a slight decline in giving by alumni.  Total giving by alumni declined 1.3 percent in 2012, despite the fact that alumni giving for current operations increased by 10.8 percent.

So what do these findings mean for you and your institution?

First, it is important to not interpret a climate study as a local weather report.   By that I mean that while it is important to know the currents that are driving the overall system, it is equally or more important to know your own local conditions.

Slow growth in the sector does not mean your organization must be resigned to slow growth, nor does a shift away from capital mean your donors who have expressed interest in capital gifts will suddenly pull away. 

It does, however, give us an important insight into donors and their collective mindset.  As we’ve seen repeatedly in studies like this one, Giving USA, and the Nonprofit Fundraising Study, donors continue to be slow to return to pre-recession giving levels, but they are re-engaging gradually.

So if you want giving at your institution to increase substantially in the near term, you can’t depend on a rising economic tide to make it happen.

You can either cross your fingers and wait for the proverbial lightning strike, or you can make strategic investments in proven fundraising practices that increase donor contact, grow donor relationships, improve internal efficiency, and build a fundraising infrastructure that can withstand the ebbs and flows of the larger philanthropic climate.

Aug 2012 | Will the Election Impact Charitable Giving?

 by Kris Kindelsperger

 

In the past few weeks several clients have asked us if we think the November election will significantly impact charitable giving, especially among high net worth individuals. The answer is “yes, and no.”

Clearly there are individuals who are anxious about the outcome of the fall election.  Some see the election as bringing hoped-for clarity regarding the budget, the deficit, tax policy, regulation, the deductibility of charitable gifts, and many other matters.

A healthy political discourse is always good for democracy.  But, we wonder on the day after November 6, if any of these complicated issues will be “solved.”

Barring a major landslide victory by either party (not something predicted in the most recent polling), the more likely scenario is that the long sought “clarity” may be allusive.

In the short term, donors of all types are likely better served by paying attention to their personal financial circumstances, their relationships with specific charitable organizations, and their own heart and mind to guide their philanthropic decisions. 

So, yes we may know more about the political direction of the country after November 6, but no the election is unlikely to bring true “clarity” to many of our most pressing challenges as a country.

May 2012 | Dare to Dream – and Learn – New Ideas in Philanthropy

by Andy Canada

I had the honor last week of attending my second AHP Midwest Regional Conference. The conference held this year in Cincinnati, Ohio, brought together 120 healthcare development professionals from across the Midwest. 

JGA was the overall conference sponsor and it was great to support this opportunity for professionals to gather, interact, and share ideas. We believe strongly that conferences like AHP are a vital part of our profession. It allows you to take a step back from your daily responsibilities and reflect on what has worked and what hasn’t, hear from your peers about their experiences and learn new ideas.

Angela joined recent JGA client Chris Molloy of the Bloomington Hospital Foundation as they shared lessons learned during a successful campaign to raise funds for Hospice House. Their presentation, Running a Successful Campaign in a Time of Economic Uncertainty, shared best practices from setting the stage to choosing the right volunteer and campaign partners that can help make a campaign a success even in the most trying circumstances.

The conference also offered the opportunity to recognize a truly memorable gift from the past year. Sidney and Lois Eskenazi were the recipients of the AHP Midwest Distinguished Philanthropist Award. The award presentation offered the opportunity to reflect back on their spectacular gift and it was great to be there and see the staff of the Eskenazi Health Foundation receive recognition for the wonderful work they do.

The Eskenazi’s had a dream to give back to the community they love and make an impact and the Wishard Hospital project allowed them to fulfill that dream. New programs can’t be launched, new buildings can’t be built if we all don’t dream big and work together to make the dreams become a reality.  

It was a great lesson for everyone in the room and carried on the theme of the conference introduced in Kay Sprinkle Grace’s keynote address. Her comments and thought provoking discussion set the tone for an outstanding conference.

She asked everyone in the room to dream big with their organization and their donors and find connections to make the dreams come true. Kay got us to stop thinking about just “getting back to zero” when looking at the budget and the role of philanthropy and start dreaming about how to truly have an impact.

Budgets are tighter and there are countless things on all of our to-do lists but I would encourage all of you to find a conference or continuing education opportunity that interests you and make the time to go. We can all learn something new from our friends and colleagues in the development profession and these opportunities present a wealth of knowledge and the opportunity to openly discuss new ideas.

Mar 2012 | Slowdown in Post-Recession Giving to Health Care

 by Angela White

 

Amid a slowdown in charitable pledges to hospitals, a study just released by the Association for Healthcare Philanthropy (AHP), indicates health care organizations have increased their reliance on cash-based fundraising, emphasizing annual gifts and special events, such as community runs/walk, golf outings, luncheons/dinners, etc.

However, with an ever-increasing emphasis on cash gifts, I believe that we run the risk of sacrificing our broader donor relationships that culminate in ultimate major and planned gifts.

  • Are we focusing on cash gifts to fund immediate needs at the expense of listening to our donors and their desires for longer term philanthropic goals?
  • Are we undervaluing planned giving as a charitable gift vehicle?
  • Are we sending a signal to our donors that we are more concerned with meeting our annual goals than we are in helping them achieve their philanthropic giving plans?

Of course, all institutions need cash gifts for annual support, yet how we couple immediate gifts with a holistic approach to the donor relationship and giving is critical to the role of philanthropy at each of our institutions. 

The study showed a definite downward trend in securing multi-year pledges in the 2010 fiscal year for major and planned gifts. 

Susan Doliner, FAHP, CFRE, chair, AHP Board of Directors. points to one probable cause for the drop in pledges the report noted. “Philanthropic contributions can make an extraordinary difference in the health of our communities, yet the ongoing debate around health care costs, delivery systems and access combined with economic conditions nationwide have slowed decision-making for major donors considering gifts to health care related organizations,” said Doliner,

Another item of note from the report: “in almost all instances, organizations that devoted more staff and resources to philanthropy did significantly better when compared to benchmarks than did those with less to spend on charity programs and fewer professional fundraisers.”

Learn more about the AHP Performance Benchmarking Service, now in its seventh year,  and the FY2010 Performance Benchmarking Service survey.

Dec 2011 | Fundraising Study Provides Some Positive News

by Ted Grossnickle

A few weeks ago we shared a link to a survey conducted by the Nonprofit Research Collaborative.  This survey and the resulting report are produced as a cooperative effort of the Association of Fundraising Professionals, Blackbaud, the Center on Philanthropy at Indiana University, the Giving USA Foundation, Guidestar, and the National Center for Charitable Statistics.

I wanted to share with you the some interesting findings from the resulting “Late Fall 2011 Nonprofit Fundraising Study,” published this month. 

Slow Recovery, Leaves Some Behind

In general the survey appears to suggest that charitable giving is in the midst of a slow recovery, but that the rising tide may not be lifting all ships equally.  A plurality (41 percent) of organizations reported seeing increases in their charitable revenue through the first three quarters of 2011.  In contrast,  28 percent saw their revenues decline and 31 percent reported that charitable revenues had stayed flat compared to 2010.

New Donors are a Bright Spot

Another series of findings of particular interest related to the number of organizations reporting increasing success in acquiring new donors.  Half of organizations reported that they had more success attracting new individual donors in 2011 compared to 2010.

More See Increases in Gift Size, Than Decreases

In addition, many organizations reported increases in the size of average gifts.  Though 46 percent of organizations reported that the average size of gifts from new and renewing donors stayed flat, more organizations reported seeing increases in the average size of gifts. 

More organizations reported increases in gift size from new donors (30 percent) and renewing donors (29 percent), than those reporting decreases in gift size.  Only 24 percent saw decline in average renewal gifts, and only 25 percent reported decreased average gifts from new donors.

Though we are clearly not out of the woods, and continued global economic instability may jeopardize the gains made both economically and in terms of charitable giving in the last two years, we continue to see indications that donors may be starting to reengage and once again expand the circle of causes which they support.   

It is our job as fundraisers and consultants continue to create opportunities that draw donors back into the fold and maintain the connections with existing donors that have weathered the financial storm.

Oct 2011 | Proposed Tax Changes Could Further Stress Nonprofits

by Ted Grossnickle

 

The Center on Philanthropy atIndiana University released their analysis yesterday of the impact the Obama Administration’s proposed tax changes may have on nonprofits.

 In their view, impact of the proposed 7% reduction of the value of charitable deductions allowed for taxpayers with an AGI of more than $250,000 would be relatively small.  More concerning are the estimated impact of proposed higher tax rates for this income bracket.  Though they represent only 3% of all tax returns in 2008, these taxpayers claimed 43.5% of all itemized charitable giving deductions.

 “Our estimates indicate that if the Administration’s proposals had taken effect in 2009 and 2010, total itemized giving would have declined by 0.4 percent in the first year and by 1.3 percent in the second year,” said Patrick M. Rooney, executive director of the Center on Philanthropy. “This suggests a relatively small direct impact, but combined with the weak economic climate, funding reductions and increased demand for services already affecting some nonprofits and their constituents, these changes are likely to have an additional negative effect in the long term.”

As Rooney points out, with the many other stressors weighing on the nonprofit community currently, the impact could likely be magnified and comes at a time when few nonprofits are at the pinnacle of stability.  What nonprofits need and what donors need, is more stability in the overall economy.

Thank you to the Center on Philanthropy and our respected colleagues at Campbell & Company for supporting this research.

 

Oct 2011 | Coherent or Incoherent: What word best describes your not-for-profit?

by Angela White

 

A colleague recently shared with me a blog post on the Harvard Business Review of an article by Paul Leinwand and Cesare Mainardi entitled The Cure for the Not-for-Profit Crisis.

This is a must read for any of us working with and for not-for-profits in today’s economic times.  Although the issues raised in the article stand the test of time, they are even more important today.

The authors define the crisis before attempting to cure it.  The crisis is not a lack of funding, shrinking donor rolls, or dipping endowments but rather a crisis of coherence.

This is defined as a lack of strategy to connect mission with the ability to deliver/achieve the mission. 

Incoherent organizations lack:  

  • distinctiveness,
  • reliability in service delivery, and
  • focused and cohesive activities that relate to the strategic direction.  

As JGA works with our clients in strategic planning, we focus on these concepts and assist our clients in maintaining their coherence in good and bad economic times. 

Incoherent organizations focus on short-term demands (often proposed by well-meaning donors) and follow growth opportunities that are not linked to strategy and mission. 

Where are you on the coherence/incoherence continuum?

Oct 2011 | Make the Case for Advanced Development Training

by Melanie Norton

 

I was fortunate to attend the National Conference on Philanthropic Planning last week inSan Antonio,Texas.  The Partnership for Philanthropic Planning (PPP), formed in 1988 as the National Committee on Planned Giving, hosts this annual conference for the variety of professionals whose work involves charitable gift planning. 

The annual conference is always an energizing opportunity to learn from and network with others who devote their time and energy to making charitable giving more meaningful.  I’m always impressed with the variety of gift planners, major gifts officers, financial planners, attorneys, accountants, consultants and other professionals who attend and make this such a rewarding experience.

There were many common themes among the participants this year, but there remains an overriding desire among professionals to provide solutions that are in the best interests of both the donor and charitable entity, to do so in the highest ethical manner, and to seek closer relationships among all of the parties in the charitable process.  

As uncertainty prospers, planning and staying ahead of the educational curve is becoming increasingly important.  But, in this era of tighter budgets and fewer staff, breaking away to indulge in professional development is difficult at best.  Staying on top of the latest information takes real dedication. 

The PPP website offers helpful tips for those who might need extra support convincing his or her boss that a conference or other educational opportunity is a good investment.  Consider sharing the following benefits:

  • The opportunity to learn about new approaches or tactics developing in response to donor demographics, economic conditions and legislative/regulatory developments
  • Contact with the nation’s leading experts in the field
  • The ability to converse with quality service providers and vendors, as well as solicit feedback on their services from other attendees
  • The occasion to dialog with fellow professionals – sometimes before and after the event – who do similar work
  • Access to materials, both online and in person, for future reference and sharing with internal staff

Perhaps one or more of the above arguments will help you make the case for your next development opportunity.  Take the time to refresh, learn from the best minds in the business, and form meaningful relationships with your professional colleagues.  These investments of time and resources will serve both you and your constituents well in the future.