DECEMBER 2010

ARE WE IN A CHARITABLE GIVING CRISIS ?

Jeff Holt, CPA - Partner, Assurance & Advisory Practice

When presenting the audit results to various nonprofit clients, I usually get asked what the trends are in
the nonprofit world for the next year or so, and invariably the topic of conversation turns to the ebb and
flows of charitable giving and how the economic recession has affected this giving. The next question on
nonprofit board’s minds is – Are we in a charitable giving crisis?

My response generally is no – we aren’t in a crisis, although businesses and individuals hit hardest by
the economy’s slide have shifted charitable giving patterns to long-term pledges and gift commitments,
rather than ceasing to give altogether.

Benchmarking studies performed by numerous philanthropic associations reveal that the most effective
fundraisers use a variety of well-rounded programs and activities to raise money, shattering the myth that
big ticket galas, golf tournaments, and telethons are the only way to attract donors. The most successful
philanthropic programs have a sustained emphasis on building relationships and cultivating major gift do-
nors. Long term planned giving, such as charitable remainder trusts and bequests giving become more
popular as opposed to one time cash gifts.

An interesting but not well known fact is that charitable giving actually increased during the Great De-
pression in the United States. The data indicates that from 1931-1933 there was a significant drop in
giving, followed by a slow but steady increase from 1934-1941 (thereafter followed by a sharp increase
from 1941-1948). Overall, giving trended erratically upward during the Depression due to in large part to
planned giving as individual’s deferred income rose at a faster rate than current giving declined. Be-
quests became a much larger percentage of giving during the Depression and accounted for much of the
growth. According to IRS and other figures, the percentage of giving from estates was much higher than
before or after the Depression.

Observers at the time concluded that charitable giving and the demand for it were, in the vocabulary of
economists, relatively inelastic. People consider their core giving to religion and other deeply held inter-
ests to be more like their utilities than a movie ticket and will cut other things before they reduce their
giving. People do, however, tend to focus their giving in areas where the hearts and minds most tend to
dwell and are less responsive to gimmicks, arm-twisting and other more aggressive types of fundraising
that do not speak to their core beliefs and values.

So while charitable giving may be down in terms of outright cash gifts, the successful nonprofits have
had to shift their focus to tailor their marketing/fundraising efforts to tap into ways people want to
give in periods of economic decline. I recently heard of a nonprofit homeless shelter who successfully
decided to charge its volunteers a nominal fee for the privilege of being able to serve food to the home-
less on Thanksgiving and Christmas Day. While this may to some be extreme, it goes to show that if
people’s hearts and minds are “into” the cause that they will sacrifice their disposable income, even in
harder times, for such organizations.

So are we in a crisis? The answer again is no – not if the nonprofit recognizes and adjusts its fundraising
efforts to the shift in giving methods while still recognizing that there is still a depth of relationship and
commitment to these organizations among their donors.

Rob Schlener - Orange County Lewis Sharpstone - Los Angeles

RSchlener@singerlewak.com LSharpstone@singerlewak.com

Jeff Holt - Los Angeles Stephen P. Carter - Silicon Valley

JHolt@singerlewak.com SCarter@singerlewak.com