08/13/2013 09:29 am ET Updated Oct 13, 2013

The Static State of Philanthropy (Part 1)

We love talking about philanthropy. It's such a positive word, both in how it sounds and feels - and what it represents. Why is it then, when we look at what's happening with giving, we get so down? The problem, in short form, is that giving isn't really growing much on its own. It's static. And that word, well, it doesn't make us feel so positive.

Adrian Sargeant, co-author of a report that came out of the Growing Philanthropy Summit and Hartsook Professor of Fundraising at Indiana University, says this: "Despite an increasing effort on the part of nonprofits, individuals today give no more than their predecessors did over four decades ago. Forty years of increasingly sophisticated fundraising practice, the development of planned giving vehicles, the appearance of the Internet, and the rise of new digital channels have done nothing to more the needle on giving. Yet, while giving has remained static, demands on the sector have not."

That's pretty harsh. Unfortunately, it's accurate. Giving USA, the long standing annual resource produced by The Giving Institute with assistance from the IU Center on Philanthropy, tells us that, in the United States, charitable giving is estimated to be around two percent of average household disposable income. We know from Giving USA's 2012 estimates that 72% of giving is done by individuals - 79% if you fold in charitable bequests. So to significantly increase the ability of the sector both to fund and to address society's growing needs, the amount of giving per household must increase.

The Growing Philanthropy report offered 32 recommendations that fall into four areas - enhancing the quality of donor relationships; developing public trust and confidence in nonprofits; identifying audiences, channels, and forms of giving with a strong potential for growth; and enhancing the quality of fundraising training and development. Key recommendations included:
  1. Enhancing the focus on donor retention and building supporter loyalty;
  2. Blowing the whistle on organizations claiming to have zero costs of fundraising;
  3. Encouraging the adoption of monthly giving; and
  4. Developing a public educational initiative that would dispel common myths about the way the sector operates.
Stepping back for a minute, the key question to us is this - "Why isn't the percentage of giving per household growing?" I guess it's the economists in us, seeking to understand what's causing numbers to report what they do. So we asked Carol Rhine from Target Analytics what she thought was behind the trend. Carol is an expert in broad-based donor support. She's passionate about evaluating data and helping nonprofits understand both what data say and what future actions they inform. In response to our question, she gave three potential reasons that all pointed to one disturbing trend - the failure of older generations to pass down the traditions of giving to their children. Her answer? 1. Fewer people are practicing organized religion; 2. Fewer people are giving their time; and 3. We are rapidly adopting technology tools that allow us to distance us from each other.

In future posts, we will explore these three areas, share some data and dig into factors that are working against us we seek to grow the impact of philanthropy.