Giving to charity continued to grow in 2018, but not as robustly as in the past. Overall giving increased by less than 1%, but the growth between 2016 and 2018 was a meaningful 7.1%. As has always been the case,  individuals and families contributed the lion’s share of giving at 68%, but their total giving declined 1.1% from 2017. The most significant increase in the percent given came from foundations, including gifts from family foundations and distributions through donor advised funds. Foundation giving increased to 18% of overall giving, a 7.3% increase over the previous year. Giving to the arts essentially held steady from 2017 and continued to represent some 5% of total overall giving.

Giving USA 2019 offers several important insights into the trends uniquely affecting museums and performing arts organizations. Here are a few takeaways to consider in planning for the upcoming year:

Larger gifts from high net-worth individuals should continue to be a focus.

According to the 2018 U.S. Trust Study of High Net Worth Philanthropy, 90% of high-net worth households gave to charity, with a quarter of them giving to the arts. The Quarterly Report, also referenced in Giving USA, found that the overall increase in giving in 2018 was driven by a 2.6% increase in gifts of $1,000 or more; gifts under that size declined by around 4%. While maintaining efforts to increase gifts at all levels, arts organizations should prioritize their focus on larger gifts from individuals, through upper-level membership programs, project-related major gifts, and campaigns.

Campaigns are an important tool for attracting major gifts.

Cultural organizations continue to benefit from campaigns, which crystallize institutional priorities into fundable opportunities for donors and encourage larger gifts. Theatre Communications Group recently reported that 40% of theaters were currently in a capital campaign, and another 38% completed a campaign between 2012 and 2017, leading to a 23% increase in overall giving and a 55% increase in trustee giving during this period. This year’s Giving USA also reports that organizations in every region of the country received multi-million-dollar gifts in 2018, supporting capital, endowment, and programmatic initiatives, listing a sample of 18 representative gifts of $10,000,000 or more. As fewer individuals are giving and a greater percentage of philanthropic revenue is coming through larger gifts, now is the time institutions should consider organizing and launching a campaign.

Don’t discount online giving.

Blackbaud Institute’s 2018 Charitable Giving Report showed that online gifts represented 9.5% of overall giving to arts organizations in 2018, and the 5.8% growth in online giving to the arts outpaced other non-profits by four times. While this noteworthy growth rate in overall online giving to the arts may be a function of the membership culture unique to museums, these trends illustrate the significance of making online giving a convenient option for donors and members, especially considering the decrease in smaller gifts.

Despite the complex issues that affect charitable giving in our country – from policy and tax law changes to social, economic and other factors – the voluntary, philanthropic support of arts and cultural organizations has never been stronger, with donors giving $19.5 billion to the arts in 2018. Reflecting on the numbers and trends outlined in this year’s Giving USA report, this is a time for optimism and opportunity, as we engage those donors whose generosity lights the fire of creativity, casts light on the human condition, and brings beauty and enjoyment through our nation’s arts and cultural organizations.

Takeaways From Giving USA To Help You Plan Better:

Giving to the Arts: The Numbers

Giving USA 2019: The Annual Report on Philanthropy for the Year 2018, was released in June, and amid a complex climate for charitable giving, individuals, bequests, foundations and corporations gave an estimated $427.71 billion to charities in 2018.

Giving to arts, culture and humanities organizations stayed relatively flat, increasing 0.3% to $19.49 billion.

• In current dollars, giving to arts, culture, and humanities increased 13.4% between 2016 and 2017, and increased 0.3% between 2017 and 2018. Cumulatively, current-dollar giving to arts, culture, and humanities increased 13.8% between 2016 and 2018.
• Adjusted for inflation, giving to arts, culture, and humanities increased 11.1% between 2016 and 2017, and declined 2.1% between 2017 and 2018. Cumulatively, giving to arts, culture, and humanities increased 8.7% in inflation-adjusted dollars between 2016 and 2018.
• Contributions to the arts, culture, and humanities subsector comprised 5% of all charitable donations in 2018.
• Donations to the arts, culture, and humanities subsector reached the highest inflation-adjusted amount record to date in 2017, and remains the highest to date.
• Donations to the arts, culture, and humanities subsector have amounted to between 3% and 5% of total giving over the past 40 years.

More information from the Giving USA 2019 report can be found here.

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According to the findings of Giving USA, 2018 was an uneven year for philanthropy, with some subsectors experiencing significant increases, while others saw significant decreases.

It was also a year that saw three unprecedented things: 1) a record year for giving at $427 billion, 2) for the first time since Giving USA began in 1954 individual giving was less than 70% of all giving, and 3) giving to Religion reached its lowest point in more than 40 years, falling to 29%.

Total giving increased in 2018 in current dollars, but just barely, at a rate of 0.7%. Adjusted for inflation giving actually decreased by 1.7%.

Five subsectors saw giving decline, while four saw increases. The biggest increase came in giving to International Affairs, while the largest decrease was in giving to Foundations.

As in previous years, giving by Individuals is the number one source of gifts at 69%, but declined by 1.1% from its 2017 level. Giving from Foundations, many of which are family foundations, increased 7.3%.

While Religion continues to be the number one recipient of gifts, giving to Religion continues to lose market share, reaching an all-time low of just 29% of the pie and actually decreased by more than 1.5% in current dollars. While the trend of a declining percentage of giving to Religion has been ongoing for years, the actual decline in current-dollar giving to Religion is a unique phenomenon; one that has never happened in a non-recession year.

Below, is a quick look at the numbers. We will share more in-depth information in our upcoming sector newsletters.
Sincerely,

David H. King
President & CEO

Quick Look At The Results

The Numbers for 2018 Charitable Giving by Source:

• Giving by individuals totaled an estimated $292.09 billion, decreasing 1.1% in 2018 in current dollars. The only source that decreased between 2017 and 2018.
• Giving by foundations increased 7.3% between 2017 and 2018, to an estimated $75.86 billion in 2018. Between 2016 and 2017 giving increased 12.0%. The cumulative change in current-dollar giving by foundations between 2016 and 2018 is 20.2%. This is the greatest percent increase of any source in this period.
• Giving by bequest remained virtually unchanged in current dollars between 2017 and 2018-to $39.71 billion. Adjusted for inflation, giving by bequest decreased 2.3% in 2018.
• Giving by corporations increased by an estimated 5.4% in current dollars from 2017 to 2018, totaling $20.05 billion. In current dollars, giving by corporations decreased by 2.0% between 2016 and 2017, and increased 5.4% between 2017 and 2018. The cumulative change in current-dollar giving by corporations between 2016 and 2018 is 3.4%.

The Numbers for 2018 Charitable Giving to Recipients

• Giving to religion decreased 1.5% in current dollars from 2017, totaling $124.52 billion in 2018. Adjusted for inflation, contributions to religion decreased 3.9% in 2018. Accounting for 29% of total giving, this is the first time that giving to religion has fallen below 30% of overall giving.
• Giving to education decreased 1.3% in current dollars from 2017-to $58.72 billion in 2018. Adjusted for inflation, contributions decreased 3.7% in 2018. In 2017, giving to this subsector reached the highest inflation-adjusted value recorded to date..
• Giving to human services decreased 0.3% from 2017, totaling $51.54 billion in 2018 in current dollars. Adjusted for inflation, contributions decreased 2.7% between 2017 and 2018. In 2017, donations to this subsector totaled the highest inflation-adjusted amount recorded to date.
• Giving to [grant-making] foundations decreased 6.9% in current dollars from 2017-to $50.29 billion in 2018. Adjusted for inflation, contributions to foundations decreased 9.1% in 2018.
• Giving to health organizations grew 0.1% from 2017, totaling $40.78 billion in 2018 in current dollars. Adjusted for inflation, contributions to health decreased 2.3% between 2017 and 2018.
• Giving to public-society benefit declined 3.7% in current dollars from 2017, for a total of $31.21 billion in 2018. The cumulative change in giving to public-society benefit between 2016 and 2018 is 2.1% in current dollars. Contributions to this subsector reached the highest inflation-adjusted value recorded to date in 2017.
• Giving to arts, culture, and humanities increased 0.3% from 2017, totaling $19.49 billion in 2018 in current dollars. Cumulatively, current-dollar giving to this subsector increased 13.8% between 2016 and 2018.
• Giving to international affairs increased 9.6% in current dollars from 2017-to $22.88 billion in 2018. The cumulative change in giving to this subsector between 2016 and 2018 is 5.2% in current dollars. Giving to the international affairs recorded the highest inflation-adjusted value in 2015, at $25.09 billion.
• Giving to environment and animal organizations increased 3.6% in current dollars from 2017, totaling $12.70 billion in 2018. Donations to the environment/animals reached the highest inflation-adjusted amount recorded to date in 2018.
• Unallocated giving represents 2% of total giving at $6.53 billion in current dollars in 2018.

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The authors describe how the science can “help facilitate donations, whether impulsive – quick gifts involving little analysis but rapid and positive emotional feedback – or deliberate – thoughtful contributions that resist the temptation of fast, feel-good donor experiences and more deeply account for the recipients of the aid and its results.”  Think donor interaction with text-message fundraising campaign versus a major gift donor understanding more deeply the mission and results of your organization. 

Karlan, Tantia, and Welch assert, “Some donors prefer to give impulsively and embrace strategies that encourage intuitive, quick actions that make them feel good. Other donors want to be more deliberate with their giving, and the right tools can help them follow through on those intentions. In both cases, rigorously testing new approaches and strategies can help charities learn what works best for them and the impact they have on the world.”

The authors go on to provide thoughtful examples of nudge techniques for both impulsive giving and deliberative giving with real-world examples and suggestions for how to use the techniques. 

Read the full article online.

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After the interviews are completed, the consultant will tell you if you should launch your new widget and how many widgets you are likely to sell. That would be really valuable information to have before you start making the new widget, right?

But here is the catch — they will not tell you what any of your best customers said they like or don’t like about your company or products. The consultant also will not share with you which of your best customers indicated they would actually purchase the new widget or how many widgets particular customers would be interested in purchasing. And they will not share any specifics about what you could do that would influence a particular customer to purchase a larger quantity of your new widget.

All of the sudden, this process does not seem quite as valuable, does it? I don’t know about you, but I want to know what my best customers like and don’t like about my business, and I certainly don’t want to waste our sales force’s time trying to sell the widget to people who said they aren’t interested.

Would you spend thousands of dollars for a consultant to give you such limited information? I wouldn’t.

Yet, for more than 50 years, nonprofit organizations have purchased this exact service under the label of a campaign feasibility study. Much like the above scenario, a campaign feasibility study provides an organization with valuable information about its campaign fundraising potential. The problem is that clients have had to live with vague feedback simply because the consultant told them that conversations with their top donors must remain confidential in order to collect the necessary information.

This is simply not the case.

The Confidentiality Problem Of Nonprofit Insights

A little over 10 years ago, we decided to test this long-held confidentiality theory. So, we asked clients’ donors, whom we had interviewed for a study, “How would you have felt if we told you the interview was not going to be confidential but, instead, that we would share information with the organization to help them make informed decisions, and that if there was anything you did not want shared, we would put in it the vault?”

Across the board, we heard responses similar to, “That would be great! I always assumed that the consultant was going to run back and share what I said anyway, so I was always a little guarded,” and “I would appreciate that very much. If I’m going to take an hour of my time to give my thoughts, I want the organization to hear them.”

It turns out that even when consultants position the interviews as confidential, the people being interviewed don’t believe that to be the case — essentially assuming fundraising consultants are liars. As someone who has spent nearly 30 years as a fundraising consultant, that was a very difficult thing to digest.

Breaking The Mold Of The Confidential Campaign Feasibility Study

This new understanding caused us to change how we go about conducting campaign feasibility studies. From day one, we make sure the donors we are interviewing understand that we take confidentiality seriously and that they can go “off the record” at any time and know that we will honor their request. This has allowed us to have some frank conversations with donors — conversations they would have likely never had with us when they were suspected of our commitment to their confidentiality.

It has also given us the latitude to debrief with our clients after the interviews so that the organizations we work with can understand what each donor likes and does not like, if they will contribute to the capital campaign, the likely level of contribution and any factors that might encourage them to contribute more. By having these conversations, we allow our clients to make well-informed decisions and be our partner in crafting campaign strategies.

My advice to you: If you are hiring a consultant to conduct a study, be sure to ask if the interviews are confidential and, if so, how they will relay important information to you. If you, too, find that confidential interviews have shortcomings, you can ask your consultant if they would consider doing the interviews without confidentiality, even if that is not their normal practice.

The most important thing is to make sure that whoever you hire clearly communicates the nature of the interview with the interviewees. If it is not confidential, that needs to be made clear when the interview is requested and again by the consultant when the interview begins. If it is confidential, then you need to make sure that you and the consultant honor that commitment to the donor.

From my perspective, the confidential feasibility study model is a barrier to the process, not a catalyst, and a disservice to clients. Not only do I encourage my colleagues in the fundraising field to do away with the tradition of confidential studies, but I also encourage nonprofit clients to request a transparent interview process for their own benefit.

This article originally appeared on Forbes.com.

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The top four reasons:

• Belief in the mission of the organization,
• Belief my gift can make a difference,
• Personal satisfaction, and
• Giving to the same organization each year.

All of these reasons point to the a few key points.

First, your organization must have as its focus an area that resonates with the donor. For higher education, that may seem obvious. However, there are nuances to be found. Yes, we educate. Service and research are also key elements for many, as is a key role as an economic driver. Others serve as cultural centers for their community or region. While determining the mission is outside of your control, it is within our control to ensure that it is articulated and fully illustrated so that it can be understood. It is also within our control to help articulate the distinctiveness of the mission and why it is important. Finally, with so many components, colleges and universities must also be sure to show how each relates to and serves the grander mission. Communication, here, is key.

It is incumbent to determine, define and detail how a gift makes a difference – what is the impact? This presupposes that, working with academic and administrative leadership, funding opportunities have been developed. We have a special role in ensuring that we help to define the “so what” for each of those opportunities. How do they make a difference and, thus, how gifts in support of them make a difference. In short, how the donor can make a difference—not just in our institution, but in lives, individually and in communities.

How do you measure or drive personal satisfaction? When you consider the giver’s motivating factor, realize that the degree to which a donor derives personal satisfaction is dependent upon the degree to which that gift makes a difference. (Back to point number two) This clearly entails our efforts to demonstrate donor appreciation through the appropriate acknowledgement of donor gifts, through appropriate recognition, through good stewardship and in helping them to be connected to us and to others associated with our college or university.

Finally, donors cite as a key reason for making gifts that they support the same organizations each year. This is clearly tied to 1) our mission resonating with the donor’s values, and 2) our showing how their gifts makes a difference in addressing a need that the donor values through appropriate donor appreciation. In short, this reason is largely an outcome of our doing the first three well and only serves to reinforce the importance of our doing them well—particularly donor appreciation.

In summary, if you want to secure larger donor gifts: present opportunities for giving that demonstrate how gifts make a difference and follow up with information that shows how, indeed, they made a difference.

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Download the report and infographic for free at wallacefoundation.org.

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Go here to participate..

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I’ve always been a history buff.  But, a new website has piqued my interest in a way that combines my love of history and my interest in philanthropy.

A History of Modern Philanthropy, found at www.HistoryOfGiving.org, is an interactive website that takes a look at philanthropy since the 1500’s.  Organized by the National Philanthropic Trust, a team of research historians spent countless hours organizing images, document, video and audio clips to tell the story of modern philanthropy. It is a very detailed yet fascinating trek through five different periods of philanthropic history: 1500-1750, “New Meaning in a Changing World;” 1750-1890, “Upheaval & Reform;” 1890 to 1930, “Lasting Change;” 1930 to 1980, “Redefining Philanthropy;” and 1980 to the present, “Global Outlook of Giving.”

In my introductory talks on philanthropy, I often begin by parsing the root of the word itself based on its Greek origins: philo (general love, tending to, caring) and anthropos (humanity or humankind).  I explain that at its simplest, philanthropy is the “love of humankind.” It’s not just about money. And in that sense, when we truly make an effort to tend to and care for others, we are all philanthropists.

The new History of Modern Philanthropy can help us to see to breadth and depth of what is occurring worldwide in philanthropy.  I’ve not made my way through the entire website, but what I’ve viewed so far is interesting and enlightening.  Better yet, as you scroll through the various historical markers, you come to realize how philanthropy is growing while noting how interconnected we all are on this globe.

As Martin Luther King, Jr. said: “We are not makers of history. We are made by history.”  Perhaps your excursion through this new interactive website on philanthropy will help you understand where we’ve been and where we’re heading in this ever-changing world in which we live.

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Tax day has come and gone this year.  Normally, April 15 is the deadline for filing a tax return with the IRS. However, this year, due to the Washington D.C. Emancipation Day holiday being observed on April 15 instead of April 16, 2016, tax day was moved to April 18.  The tax benefit that the United States tax code offers for philanthropic gifts is often cited as a strong motivator for giving.

GiveCentral’s 2016 report titled, Insights on Nonprofit Giving, listed 16 reasons that survey respondents marked in response to the multiple choice question: “For which, if any, of the following reasons have you ever made charitable donations?”  Respondents were able to select more than one response.  The overwhelming top choice with 58% of the votes was To help people in need.  Giving back scored second with 39%.  To leave a legacy was next to last with 4% and just ahead of the Other category, which received 3% of the responses.  Interesting enough, For a tax deduction came in at number 11 out of the 16 categories with 15% of the responses.  Certainly some people found tax benefits as a reason to give.

What wasn’t asked was if the ability to claim a tax deduction affects the timing of a gift.  As any charity will note, calendar year-end giving is usually the strongest and busiest time to appeal to donors citing the year-end as a deadline.  Most donors would not indicate that year-end was a primary motivator, but certainly a leveraging factor influencing the timing of their contributions to an organization to which they had been inclined to support.  If a donor is going to make a gift because s/he cares about the organization, then requesting it during the month of December may resonate on several fronts.  The study also showed the 27% of the responses cited In a holiday spirit as a reason to give.

In summary, the top reasons donors cite for giving are emotional.  They respond to a good story and want to feel good about the causes they support.  Giving from a sense of duty or obligation ranked far down the scale of motivating factors.  It is important to note that peer pressure is a growing trend with 20% of the respondents giving because someone they knew asked them to give.

For the full report of Insights on Nonprofit Giving by GiveCentral, which provides additional information on donor preferences, go to the following link: https://www.givecentral.org/giving-report-2016

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Contributions rose nine percent to $33.8 billion.  “The total is the highest recorded in the history of the survey.  In 2009, voluntary support fell from $31.6 billion, which was then the historical high, to $27.85 billion.”

As is consistent across all sectors, individuals remain the greatest source of contributions at 44.9% of total.

Foundation support was 29.6% of the total, but this figure includes family foundations, a growing source of funding in higher education.

Corporate giving continued its steady decline percentagewise from 22% in 1983 to 15.1% in 2013. 

However, this figure does not include corporate support of contracted-sponsored research, clinical trials, pouring rights, sponsorships, and software partnerships, which is not counted in the VSE survey.

More than $9 billion in funds was contributed by alumni donors, or 26.6% of the total.

What is especially interesting is the significant support from individuals who are not alumni of the institution they are supporting. Just under $5 billion was contributed by non-alumni representing 17.3% of the total.

What does this mean for your organization?  Share your thoughts with us in the comments below.

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