Where did the money come from, where did it go and how do we apply these trends to future fundraising?
Milestone giving in a milestone year. What better news could I hope for in my term as chair of Giving USA Foundation?
As the longest-running and most comprehensive report on charitable giving in the country, Giving USA has served as a benchmark for philanthropic trends. This year’s report, released today, is not only groundbreaking for reaching its 60th anniversary, but for the information it reveals — Americans gave an estimated $358.38 billion to nonprofits in 2014, surpassing the peak last seen before the Great Recession. That total slightly exceeded the benchmark year of 2007, when giving hit an estimated inflation-adjusted total of $355.17 billion.
The 2014 total jumped 7.1 percent in current dollars over the estimated $334.94 billion Americans donated in 2013, according to Giving USA 2015: The Annual Report on Philanthropy for the Year 2014. In addition, 2014 marked the fifth year in a row where giving went up; the average annual increase was 5.5 percent.
All four sources that comprise total giving upped their 2014 donations to America’s 1-million-plus charities:
• Individuals, $258.51 billion, increased 5.7 percent over 2013
• Foundations, $53.97 billion, increased 8.2 percent over 2013
• Bequests, $28.13 billion, increased 15.5 percent over 2013
• Corporations, $17.77 billion, increased 13.7 percent over 2013
As to where the money was directed (in billions of dollars, rounded):
The 60-year high for total giving is a great story about resilience and perseverance. It’s also interesting to consider that growth was across the board, even though criteria used to make decisions about giving differ for each source.
Two examples illustrate this point: Individual giving is affected by available disposable income at the household level, wealth and growth in the S&P 500. All three increased last year, as did the amount people spent in general — not just on charitable donations. Corporate giving decisions, on the other hand, have historically been driven by changes in pretax profits and GDP. Other factors might be affecting how much they donate—time, and further research, will tell.
Other trends that we see from these numbers are:
• Nonprofits have been receiving very large gifts from high-net-worth households. These contributions are worth noting because we believe they are starting to account for a lot of the growth in individual giving. This trend accompanies the fact that while the total number of donations made annually to charities isn’t changing much, the average gift size from individuals is rising.
• Nonprofits are being asked more and more to be accountable for what they do with donations. And on the whole, nonprofits are responding with transparency.
• Even though donations from individuals to several large donor-advised funds didn’t grow dramatically in 2014, overall this vehicle for giving has grown in terms of both dollars and importance over time, and we think that pattern will continue.
• Just like society at large, nonprofits are not immune from the rapid pace of technology. Consider that not too long ago, online and mobile giving were unheard of; other recent innovations that are changing how nonprofits and donors engage with each other include social giving startups and crowd-sourcing models. And, campaigns that employ hashtags, like #GivingTuesday, are becoming commonplace.
• There is more and more interest among donors to learn what strategies are being used by nonprofits they support, as well as what impact their donations are having. In response, nonprofits are collecting pertinent data so they can report back to their stakeholders on what matters to them.
• The importance of data hasn’t completely replaced other methods charities use to make decisions, however. While metrics are paramount, to drive innovation and change in the philanthropic sector, hard data are being bolstered by such things as anecdotal knowledge charities have gleaned over time but that can’t be found in a database, information about what inspires certain types of donors, and other factors that can’t be measured by crunching numbers.
As part of the introduction to the report, some other Giving Institute members and I provided our tips on how nonprofits can apply Giving USA data in their fundraising work. Here are a few of them:
• Study trends over time to learn ways donors have earmarked how their gifts can be used. Within the education chapter, for example, research the impact restrictive donations have made on such big-budget items as endowments, facilities and program support over time.
• Incorporate data and takeaways into your organization’s proposals and communication materials. Transparency with stakeholders is increasingly important.
• Develop more focused and compelling cases for support. Show where your donations are coming from currently, how that matches up with the national picture, and why your budget needs to be adjusted accordingly.
• Dispel myths about fundraising—for example, the misconception that most donations come from corporations and/or foundations.
This is just a taste of the vast information to be gleaned from Giving USA. I encourage you to order a copy so you can maximize this data for your own nonprofit work.