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The global economic downturn of the last 6 months has prompted concern and speculation within the charitable community. Many charities are scrambling to assess both short- and long-term impacts on their revenue streams, and adapt their strategies to the new realities. New realities include,
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• The number of individual donors is declining, due to job losses,
asset depletion, and plummeting stock values;
• Endowment revenue --both from charity-held endowments, and
external endowments like foundations – is decreasing markedly;
• Impacts on corporate giving and government funding have not yet been widely understood or felt by the charitable sector;
• At a time when the economic climate is tenuous at best, the
demand for services provided by the charitable sector greatly
increases. |
Historically, fundraising has been resilient during economic times, continuing to grow during recessions, albeit at more modest rates:
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Country |
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Annualized growth in donations |
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Canada |
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1984-1990 |
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5.0% |
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1991-1994 |
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0.6% |
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Since 1995 |
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7.2% |
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2001 |
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1.9% |
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United States |
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1967-2007 |
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Growth every year except 1987 |
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1970,1974,1982,2001 |
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Recessionary growth averaged 0.8% vs. 4.3% in |
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non-recessionary years |
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Seasoned fundraising professionals and experts in the field do agree that there is reason for optimism. Historically during recessionary times, donors tend to understand increased social and charitable needs and respond accordingly, both in terms of financial support and voluntarism. As well, the Canadian philanthropic culture is maturing quickly, setting the stage for the largest transfer of wealth in history. Baby boomers are in their prime giving years, and many boomers are experiencing relief in discretionary household income due to the stabilization of gas and home heating prices.
Giving USA’s in-depth ongoing surveying of the sector in the United States reveals general trends that are instructive. The process reveals the following impacts during recessionary times:
• International causes – giving tends to decline as donors turn their attention to domestic priorities
• Religion – giving tends to remain the same
• Education – giving tends to decrease dramatically, as donors view this sector as having greater dependence on government funding
• Health Care – giving tends to decrease dramatically, as donors view this sector as having greater dependence on government funding
• Social and Community Services – giving tends to increase dramatically, as donors (1) view primary human needs as a priority and (2) wish to ameliorate the impacts of the economic downturn within their communities and social circles
In the experience of counsel, fundraising professionals and experts in the sector, certain donor behavioral patterns during recessionary times need to be understood, and should inform an organization's fundraising strategy:
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• Donors will invest with organizations they trust, and narrow the number of organizations they support;
• Donors may be unwilling to commit (ie pledge) but are not unwilling to give (make a one-time donation);
• Donors will prefer to give to capital and programmatic needs, rather than to endowments;
• Companies will be more willing to consider gifts-in-kind of goods and services (particularly goods, in situations where companies have excess inventories);
• Individual donors will be more inclined to participate in giving circles;
• Matching dollars will play a more important role as a catalyst to giving;
• Donors will respond best to those charities that continue to engage them, and are open and transparent;
• Donors will need to see more iron-clad evidence of the impacts of,
• How their charitable investment makes a tangible difference
• How the charity they invest in is doing more with less
• How their giving is creatively and effectively leveraged by the charities they support
• A greater number of donors (individual, corporate and foundation) will need to be approached in order to secure gifts;
• Certain sectors of industry and commerce will retreat from giving entirely for the foreseeable future, but charities should continue to engage and cultivate decision makers. |
Charities are in the business of building long term relationships with donors. Those organizations who retreat from active fundraising, rather than strategically adjusting their strategies, will suffer greatest during the current economic challenges, and will be ill-equipped to retain a competitive position during the inevitable economic upswing.
Data Sources:
“Fundraising During Times of Economic Uncertainty” (presentation by) Paul Marcus, LL.B., CFRE, President and CEO, York University Foundation, AFP Congress, Toronto, November 24, 2008
“Financial crisis creating ‘perfect storm’ for charity organizations,” CBC.ca, November 10, 2008
Imagine Canada Research Bulletin 9
Giving USA: Spotlight (Issue 3, 2008)
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