Giving USA 2013 and the future of charity

By Nathan Bemis
WRAG Summer Intern

Since the devastation wrought on the nonprofit sector by 2008’s recession, charitable giving has been slowly but steadily rising. Last year, it was up 3.5%. It’s easy to think that any growth in the sector is good, but without an informed interpretation of the data, it’s hard to say. With that in mind, the Hudson Institute hosted a panel discussion on The Center on Philanthropy at Indiana University’s Giving USA 2013 report. Every year, this report presents the raw data on giving, then breaks down that amount by source (72% of donations came from individuals last year, for example, while 6% came from corporations), and finally attempts to explain the why these populations of donors behaved as they did.

The panel began with a presentation of the report’s findings and initial interpretations from Dr. Patrick Rooney, associate dean at IU’s Lilly Family School of Philanthropy. Dr. Rooney, one of the co-authors of the report, began with the idea that if every American were to give up their morning coffee and give $5 to charity each day, $220 billion more could be raised for nonprofit causes in a single year. However, he went on to say that at the current rate of growth, charitable donation would not reach 2007 levels for another six years. He blamed the plodding pace of recovery on household giving, which makes up a large segment of annual donations, but is showing itself to be one of the slowest sections to bounce back. In terms of which types of organizations were benefiting from charity, Rooney reported that despite growth in many other areas, such as the arts and international causes, giving to religious organizations was still falling, although this was to be expected, as each new generation tends to give less to faith-based establishments than the last.

The segment delivered by Wendy McGrady, vice president of The Curtis Group, was all about the action necessitated by the report’s findings. She argued that in today’s culture of giving, donors are consolidating their money into large donations to single organizations instead of spreading it around, and this means that nonprofits need to get competitive. In turn, it means nonprofits should gain and retain board members with connections to high-net-worth individuals, and maintain a presence within the online social network in order to demonstrate technological competence and willingness to keep up with the times, as well as offering donors a quick and efficient means of giving.

Last to speak was Ruth McCambridge, editor of The Nonprofit Quarterly, who wondered aloud if the growth in charitable giving had a limit. New funding techniques are necessary, she posited, not simply to increase revenues to the nonprofit sector, but to keep it alive since many of the ways which proved successful pre-2008, such as government grants, can no longer be counted among the reliable methods of maintaining an organization’s cash flow. She too cited an online social presence as absolutely necessary, but less for the sake of convenient donation and more for the purpose of public exposure and engagement. She gave the example of Kickstarter, and told the assembly a story about a group who created a Kickstarter campaign to put an ad in the New York Times, then gave the donors a chance to vote on what would be done with the remaining money after the ad was published. Tools like Kickstarter, McCambridge argued, generate excitement for nonprofits by directly showing donors the change that their money is affecting, as well as giving those donors options for how to make that change happen. McCambridge seemed to capture the apprehension, as well as the hope, of the entire panel, in the single phrase, “We’re in for a very hard, but very interesting next five years.”

Here’s hoping it’s more interesting than hard.