The "D" Word

Giving USA Report Reveals Depth of the Recession and Competition for Resources

The long-awaited Giving USA report hit the stands today.  There will be much said about these numbers, not the least of which is that last year's total giving projection was significantly reduced upon review of IRS tax returns. In the report released today, Giving USA reduced total giving in 2009 by 8%, from $304B to $280B.  This means that giving dropped off  by 6.5% between 2008 and 2009.

2010 is up from 2009; for a free copy of the extensive executive summary, click here. Some highlights:

• Total giving: $291B, up 3.8%
• Individual giving: $212B, up 2.7% 
• Corporations: $15B, up 10.6%, though there's a notable increase in in-kind giving
• Foundations: $41B, flat--almost half of foundation giving came from family foundations.  

If you want to read a rather dire, but reasonable analysis of the numbers from the Nonprofit Quarterly on the human services perspective, click here.

In all of the reporting I've read, there has been little commentary on what I think is the most important aspect of the trends: the difference between charitable giving and charitable receiving.  Nonprofits experience of giving is mitigated by the growth of the sector.  I've written on this before, but this report brings even more clarity to this distinction.  Simply, the growth in the number of nonprofits is outstripping the growth in philanthropy. Let me show you exactly what I mean using Giving USA charitable giving numbers and the IRS nonprofit census.

Between 2001 and 2010, annual charitable giving had grown by $58.6B, an increase of 25%.  During that same period, the number of nonprofits grew by 415,643, an increase of 48%.  If one does the simple math of dividing the number of nonprofits into the dollars given, dollars per nonprofit (in current dollars) is 15% less.  In inflation adjusted dollars, its a whooping 31%.  During the recession, it has been most intense.  Between 2007 and 2008 giving per nonprofit dropped by 8.4%, and between 2008 and 2009 by 10.4% (in current dollars).  And it appears to be flat between 2009 and 2010.  Conversations with my colleagues and clients confirm these numbers as consistent with their experience.

This simple calculation alone is revealing.  And it doesn't even figure in the growth curve of nonprofits.  I haven't yet met a development professional who isn't expected to raise more money each year.

So, what are nonprofits to do?  That's a tough question.  The number of nonprofits has been growing at about 45,000 per year for the last 10 years.  The number of donors per nonprofit has also been declining--particularly the retention of new donors.  And wealth in America--both annual income and assets--is being compressed upward to wealthy people.  (Click here for a fascinating study on income in America by Emmanuel Saez.)

Nonprofits that will thrive will be innovative and strategic.  They will have compelling vision and mission statements.  They will know how and where they are different from others and how and where they can collaborate.  They will build and broaden their bands of passionate believers.  They will focus on competent and connected board members.  They will create sustainable major gifts programs.  And they will find ways to generate income in addition to charitable gifts.

It's not easy.  And it takes engaged leadership who are committed to the cause and willing to invest the time and energy to get there.  But, I believe those who do will thrive.

Still cheery and optimistic,

Jim

Snail Mail Trumps Online Appeals for Emotionally Engaging Donors

It's interesting that direct mail--no matter how much we complain--still performs better than online media.

If you are a fan of The Agitator, I'm sure you have read the reports and their sound analysis of the effectiveness of direct mail.  An unusual and interesting dimension of direct mail v. online was brought to my attention thanks to communications expert Lisa Sargent.  She recently pointed her readers to a fascinating case study by Millward Brown.  Collaborating with Bangor University, they found that the "research strongly suggests that greater emotional processing is facilitated by the physical material than the virtual."

The research showed that physical materials (1) leave a deeper footprint in the brain; (2) involve more emotional processing, which is important for memory and brand association; and (3) produce more brain responses connected with internal feelings, suggesting greater internalization.

So, in addition to going out and buying some note cards--rather than texting your dad for father's day, don't cut back too quickly on your direct mail budget.  It's likely still worth the cost of paper and stamps. And please don't email your thank you letters!!!  As Jennifer Aaker, professor of marketing at Stanford University School of Business, noted from her own research, people need both warmth and content to deepen their connection to your organization and your cause.

Cheers,

Jim

QR Codes Have Arrived

I now have my own QR!  Want to try it?  Take a pic of this with your smart phone and you'll go right to my website.



QR (quick response) codes are easy to create and are useful to any organization, especially those reaching out to Millennials.  There are many free online services you can use to create them.  Just Google "QR Code."

QRs can be used to link to anything you can create on line:  website, video, pdf, etc.  Print QR codes on your documents, your stationery, your publications, wherever it makes sense.  You can even promote your organization as going green, as you direct your constituents and prospects to online sources for information rather than paper--even meeting agendas.  As iPads with larger screens than smart phones become more popular, QR will become even more viable.

Soon, maybe everything we need to see will be out there in a cloud just waiting for us to log in.

So, have fun.  Enjoy.

Jim