5.0 percent growth in contributions is highest rate seen since 2000
American individuals, estates, foundations and corporations gave almost $250 billion to charitable causes in 2004, according to Giving USA 2004. This is an increase of 5.0 percent over the revised estimate of $236 billion for 2003.
We attribute some of the growth in contributions to a relatively strong U.S. economy. Giving follows the economy. With increases in the GNP and personal income, contributions have increased as well. People have wanted to give, but they have held off until the economy and stock market became more stable.
But why hasn't the growth been more substantial? According to our evaluations and those of the researchers for Giving USA, there is still an undercurrent of uncertainty about the economy, and the recovery has not benefited all segments of the population.
These numbers paint a promising picture and suggest a positive trend for 2005, but we note that contributions to organizations in the human services sector actually dropped by 1.1 percent, which is the third consecutive year for a decline in this sector.We, at EHL Consulting, are very concerned about implications resulting from this ongoing decrease in charitable support and we will continue to monitor trends in giving to social service agencies in the coming years.
Three other major observations about the 2004 results have relevance to all nonprofits:
- Giving by bequest increased significantly again, reflecting the start of the intergenerational transfer of wealth that we have been expecting;
- Support for education continued to increase;
- Individuals (either alive or deceased) continue to outpace giving from foundations and corporate sources.
The December 26th Tsunami & Giving
Although a common perception is that the December 26 tsunami disaster that devastated the regions surrounding the Indian Ocean was one of the leading beneficiaries of giving, contributions made in 2004 for relief are a very small portion of the estimated total, less than one-half of one percent. Much of the tsunami relief giving will appear in 2005, and, at between $1.5 billion and $2.5 billion, tsunami relief contributions likely will be a low percentage of the total estimated charitable contributions for that year.
Action Steps for Responding to This Report:
The Giving USA report is one of the most important predictors about trends in philanthropy. In looking forward, we suggest seven actions that each nonprofit should consider so that results in 2005 and 2006 will be strong:
- Develop a formal, written campaign action plan for the balance of 2005.
- Review your list of "lapsed" donors and consider how to reach out to them.
- Convene your "Development Committee" to consider new strategies.
- Do you have a planned giving program? If not, now is the time to develop a program that reaches out to donors who could make testamentary commitments.
- Foundation and corporate support are appropriate for certain types of organizations. If you qualify, do you have a current database of foundations that you could contact? If so, have you developed research to connect your organization's "friends" to the boards of the foundations you have identified? Given the competitive nature of philanthropy, personal relationships and contacts become critical.
- The largest nonprofits reported the most significant percentage increases in giving in 2004. Small (those with less than $1 million in contributions) and medium-sized organizations (those with charitable support between $1 million and $20 million) have to work even harder and invest more time to garner bigger gifts and more donors.
- Major gifts still dominate giving, with 90% of giving coming from 10% of the donors. 2004 saw a shrinking donor base, even though total giving accelerated. Therefore, each nonprofit must address the strategies required to secure big gifts concurrent with finding more giving sources.
The Giving USA Foundation, the nonprofit arm of the American Association of Fundraising Counsel (AAFRC), produces the report. Robert Evans, managing director of EHL Consulting, is a member of the Foundation's Board.
For more information about the Giving USA 2004 report, go to
www.givingusa.org or call us to request a copy of the full report.
