Summer: A Philanthropy-Data Junkie’s Favorite Season

I love summer!

Not because of the beach, time off, sleeping late or the pre-teens splayed on my couches waiting to be entertained. Don’t get me wrong – those are all wonderful.

I love summer because…I’m a data junkie. Philanthropy data, to be specific. And two of my very favorite reports come out in June of every year. Ahh…Sweet June!

First – typically around the third week of the month – is Giving USA: The Annual Report on Philanthropy, the granddaddy of charitable-giving surveys that has totaled, sliced and diced charitable donations for the past 57 years.

And then the very next week, without fail, comes the Commonfund Benchmarks Study of Foundations, a dizzyingly detailed breakdown of how much foundations earn by investing their assets.

So after spending a couple of blissful hours by the pool, with a Diet Coke and these two lovely reports, here’s what I learned:

Individual giving is (still) king 

In 2011, charitable giving totaled $298 billion. That’s billion with a B. And when you consider that individuals – through their outright contributions plus bequests and grants from their family foundations – donated 88 percent of that total, there’s no denying that individual giving is the engine of our nonprofit sector.

It always has been and it always will be. Really. That percentage doesn’t change materially from year to year. And last year, only individual giving grew – foundation giving dropped and corporate giving stagnated.

Foundations are (still) hungover

Foundations lost money on their investments last year. Their rate of return (which is how much they earn investing their assets in stock markets and the like) was negative 0.9 percent in 2011. They lost money.

I thought they were shaking off the worst of the recession since returns were positive in 2009 and 2010. Hopefully 2011 was just a blip. But either way, there’s no denying that for most foundations, less investment income means less money for grants.

It’s (still) not over

For nonprofits, the recession isn’t over. Giving grew last year – and that’s great. But it’s still way short of the $310 billion peak of 2007, the year before the bottom fell out of the economy. The Giving USA report says that if trends of the last few years continue, it could take over a decade to climb back to that high-water mark. 

And since most foundations base their grants budget each year on their average assets over the last three or five years, 2011’s poor showing will hang around for a while, putting a damper on grantmaking.

The good news

Ok, so maybe I’m still on a data high. But the good news in all this is that there’s something nonprofits can do. And be honest…many have needed to do these things for a while. Besides, summer is a great time to noodle where your money will come from in the future.

Take an honest look at your revenue model. Make sure your sources of income are safely diverse, with a large individual donor base supplemented by a judicious number of grants (and maybe even some earned income). The data show that foundations and corporations are struggling at the moment, so don’t put all your eggs in their baskets.

Have you found an individual/foundation revenue split that works for you?

Dust off, renovate and recommit to you individual giving efforts. It’s the only segment that’s growing. It can be used for operating costs, which is what most nonprofits need right now and which most foundations don’t fund. And there’s strength in numbers – losing a donor or two is a bummer, but losing a grant or two can be crippling.

What’s been working as you solidify and build your individual donor base?

Stay focused on efficiency. It’s looking like nonprofits will have to survive in a tougher-than-usual environment for a few more years. So make sure you’re using your hard-won gifts and grants well. That how nonprofits should always operate -solid stewardship is more important to donors and foundations now that they have less to give.

How do you show your donors know they’re getting value for their investment?

Well, only 11 more months until next June… Hey – let me know if you find any good reports to tide me over!

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About Ret Boney

Curious. Strategic. Organized. Dedicated. Champion of nonprofits. Wife. Mom to middle schoolers.
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One Response to Summer: A Philanthropy-Data Junkie’s Favorite Season

  1. Sharon Bond says:

    The importance of your point to “take an honest look at your revenue model” cannot be overstated! I recently recounted to a colleague the tale of a nonprofit in my community on whose board I served for a few years — its major revenue source had been, for literally decades, a grant from another nonprofit; its revenue comes from a small percentage of record, cassette and CD sales.

    Think about that for a moment. Records, cassettes and CDs.

    Did technology happen to enter your mind?

    Well, the obvious happened — because the agreement struck with the record labels does not include sales from the way people buy music today, income to the Music Preservation Fund has been shrinking and shrinking, and thus, its grants to organizations providing free live music in communities across the country has been shrinking, as well.

    Amazingly, the free concerts in my community continue, but the Board that organizes them still struggles with raising money to cover revenue shortfalls. The members need to read Giving USA! 🙂

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