Let the Numbers Be Your Guide

The Giving USA Foundation just released their report about charitable giving in the United States for 2018. The Annual Report on Philanthropy contains research from over a million nonprofit organizations and several thousand religious institutions. According to the report, charitable giving in the United States hit over $427 billion last year. Although this was a slight increase from 2017, when accounting for inflation, it was actually a decline – the first since 2013.

The Report shows that in 2018, 68% of charitable contributions came from individuals. Those who have not paid attention to past reports are often surprised to find out that individuals are the biggest source of support for charitable organizations. Those not involved in the charitable sector often assume that business support and grants from foundations provide a majority of an organizations income, but as you can see, donations from corporations only accounted for 5% of charitable support and foundations provided 18% of charitable support. Another 9% comes from bequests.

The report speculates that between a strong economy, a year-end stock market drop, and new tax law created a complex giving environment. Individual giving dropped dramatically from previous years. Speculation is that the change in tax law created a rise in foundation giving grew as more individuals turned giving through donor advised funds and family foundations.

So what might these numbers mean to you and your organization? When analyzing the development function of an organization, I like to compare the mix of charitable support for each organization with the statistics from the Annual Report on Philanthropy.  Every nonprofit is a little different but these figures can provide a benchmark for the level of support that your organization might receive from each source. For those organizations that do not have a well-established history of charitable support, the percentage from each source can be a guide for the allocation of resources. For example, an organization that is just beginning to raise funds might want to spend 68% of their time and resources soliciting individuals since 68% of funding comes from individuals. Since 18% comes from Foundations, organizations can spend 18% of their time writing grants. Following this logic, organizations could spend 5% of their resources seeking sponsorships and 9% of resources on planned giving. Fundraising can be an art, but it is also a science. Information like that from the Annual Report on Philanthropy should be a guide in how you execute your development function.

Posted in Planning.