What happens to giving during
recessions?
A recent examination of charitable
giving during recession years in America shows that a slowing economy
definitely affects donations to non-profit organizations.
A 2001
Giving USA report on charitable donations found that after an
economic downturn, charitable giving typically does not keep up with increases
in inflation. Upon revisiting the subject in 2008, it was found that giving
slows slightly during recessions. In the five recessions since the one between
1973-1975, giving fell an average of 1.3 percent adjusted for inflation. In
non-recession years from 1966 through 2006, giving has increased an
inflation-adjusted average of 4.3 percent. (Both of these calculations adjust
for inflation using the consumer price index and match figures reported in
Giving USA 2007.)
In two economic slumps, in 1973 and
again in 2001, donations failed to keep pace with the growth in inflation for
three years straight. Giving also declined after the 1987 stock market
collapse. Scholars now attribute most of the 1987 decline to pre-payment of
gifts in 1986, when donors gave early to take advantage of deductions that were
restricted when new tax laws took effect in 1987.
This topic was studied in-depth in the
Giving USA e-newsletter,
Spotlight, in September.
Is working with the “new
wealthy” different from working with people who have long held a secure
financial position?
There’s an old maxim about the rich being
different from you and I. Does that hold true for the new wealthy? Giving USA
Foundation recently examined the question in its quarterly e-newsletter,
Spotlight. Below are some findings you
may find useful in your work.
People
with wealth who are less than 55 years old are likely to give differently—using
different vehicles for giving and sometimes giving less money—than the older
Boomers and the “Silent Generation” (born 1925–1945).
Younger
wealthy donors, those aged 55 or less, are more likely than older donors to be
using a variety of giving vehicles (foundation, donor-advised funds, trusts,
charitable gift annuities).
Also,
younger donors are more likely to give online, although online giving in
general is not a major source of funds for most charities.
Younger
wealthy donors are more likely than older wealth holders to say their giving
will increase as their wealth increases,but
their current giving levels are lower, on average, than those of older donors,
even at the same wealth level.
High-income/high-wealth
donors want to give to charities they trust and that have impact.
High-net
worth individuals report interest in giving more IF they trust charity’s
leadership and have increased information about impact.
High-net worth
individuals are concerned about operational efficiency.
Wealth comes in many
forms, and several studies have shown that households are more likely to give
from some types of wealth than from others. The
Bank of America High-Net
Worth Philanthropy Study finds that entrepreneurs and business owners are
highly likely to give and give comparatively high amounts. The same study found
that individuals with inherited wealth are less likely to make charitable gifts
from the inheritance, unless they have no heirs.
Tip: Most people give out of
income rather than assets. With wealthy individuals, the reverse seems to be
true: people are giving wealth that they have earned themselves, but not
necessarily income and not inheritance. When approaching wealth holders about
major gifts, invest more time in building relationships with wealthy
individuals to learn both their needs and motivations in giving. Ask about
various types of assets: land, securities, and business. Know about the family
and the individual’s desires to share wealth there. Consider the individual
circumstances of a particular donor and tailor a plan that meets those needs:
an annuity, stock gift, charitable lead trust, and many other options that can
be appropriate.
For more information, contact
Sharon Bond at the Foundation at
sbond@connect2amc.com
or 847/375-4836. The Foundation’s Web site is
www.givingusa.org.
