Giving In A Recession
Howard Lake | 14 July 2009 | Blogs
It’s still too early to tell what the impact of the current recession will be on UK giving but some interesting data from across the pond suggests that the recession has bitten deeper than many first thought.
Recent figures produced by the annual study Giving USA show that total giving fell by 2% in 2008, or 5.7% adjusted for inflation. This is the worst year on year record in the 54 year history of the study. The only previous year when giving declined at a similar rate was 1974 when giving declined by 5.4%.
Corporate giving fell by 8% in 2008, bequests by 6.4% and individual giving by 6.3%. (all adjusted for inflation). Foundation giving fell slightly, by a mere 0.8%. It is important to recognize, however, that a much greater impact on foundations is likely to be felt in subsequent years when the recession’s impact on size of endowments will begin to bite.
Differences between causes
Most sub-sectors (causes) experienced a decline in giving during the period but this was not universally true. Giving to religious causes and giving to public/societal benefit actually increased over the period. So too did giving to international aid, although accounting for inflation this sector too experienced a decline. Hardest hit appeared to be giving foundations. There are echoes here with Indiana University’s Center on Philanthropy study of million dollar donations. As the recession began to bite in the third quarter of 2008 the number of million dollar donations fell sharply by 36% over the previous quarter. Looking at the last two quarters of 2008, the number of gifts of $1 million or more given to charities by individuals fell 33% in the last six months of 2008 compared to the same period in 2007.
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Blackbaud data on giving
There is further grim news from software provider Blackbaud. Their Target Analytics group conduct a regular quarterly analysis of transactions from 79 organizations including over 35 million donors and more than 66 million gifts. The data for their study is provided direct from the databases of participating nonprofits and it focuses on giving through direct marketing media, including direct mail, telemarketing and the web.
Comparing the first quarter of 2008 with the first quarter of 2009 total revenue fell by a whopping 7.8%. Participating organizations also suffered a decline in donor numbers of around 5.8% (the median). Much of this decline appears to have been due to a collapse in new donor acquisition. The numbers of newly recruited donors fell 12.9% over the period. Retention rates have also suffered, although overall retention declined by only 1% over the period. Some good news at least.
In aggregate the statistics make for grim reading. While the UK obviously differs from the US in many significant ways this work does at least provide a flavor of what the UK might expect when data becomes available for the same period in this country later this year.
The details of the Giving USA study may be found at The Indiana University Lilly Family School of Philanthropy , while the most recent report from target Analytics may be downloaded from Blackbaud.
- Sector finances finally recover to pre-recession levels but smaller charities still struggling (9 May 2018)
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.