Do Philanthropic Giving Trends Matter and Which Reports Are Right?
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The independent sector has some truly great resources available that track and report on trends in philanthropic giving; several new reports have been published in the last few months. However, the numbers declared and outlooks predicted by each seem to be very different. This can cause confusion when trying to get a handle on the state of the industry.
Macro fundraising trends at the national level include all sizes of organizations with missions across the spectrum. That means results can be skewed by large organizations. Before considering the merits of the various reports, let's consider that though national trends are important, if you are trying to determine how your own organization is faring, taking a look in the proverbial mirror is a good way to go.
The best indicator of how your organization is performing in fundraising is to compare your current year's outcomes to previous years.
- How many donors have you retained year over year? How many new donors have you secured?
- Has your average gift amount increased? Are you securing donations via a number of avenues, such as online giving, major gifts, peer-to-peer fundraising, social media giving and direct mail?
- Are you achieving good donor stewardship through regular planned communications?
It is also important to know your audience so that you communicate with them the way they want, not necessarily the way with which you are comfortable. Different types of fundraising strategy and activities will be effective at different types of organizations; some will focus on major gift programs, others on grassroots fundraising. It is important for nonprofits to be aware of which types of fundraising are successful for them.
So how should you interpret data from several different reports that seem to convey conflicting information? Let's take a look at three reports to identify what they are individually evaluating, so we can start to understand what type of knowledge we want to take from each.
Giving USA 2022
In 2021, Americans gave $484.85 billion to charity, a reported 4% increase over 2020, according to "Giving USA 2022: The Annual Report on Philanthropy for the Year 2021." However, when adjusted for inflation, total giving remained relatively flat, with a 0.7% reduction in giving.
Credit: Giving USA 2022: The Annual Report on Philanthropy for the Year 2021 by Giving USA Foundation
This is the type of disparity in reports (actually, within the same report) I mentioned. The difference is "today's dollars" versus "adjusted for inflation." Inflation is the measure of how much more expensive a set of goods and services have become over a given period of time. Therefore, based on the Giving USA numbers, Americans gave more in actual dollars, but the purchasing power of those dollars was lower because the price of the goods and services the money could buy increased.
So, if you are in a board meeting and someone says, "Giving increased 4% last year," and then someone else says, "No, giving remained flat last year," don't be surprised. Technically both are accurate, they are just looking at two separate data sets.
Fundraising Effectiveness Project, Q1 2022
Another oft-used nonprofit industry report is from the Fundraising Effectiveness Project. Numbers reported from the Fundraising Effectiveness Project almost never coincide with Giving USA stats. The main reason for that is that the Fundraising Effectiveness Project collects data and reports by quarter, not by year.
One factor the Fundraising Effectiveness Project stresses is that some nonprofit organizations don't report on Q1 donors/donations until the end of the fiscal year. It uses the term "late reporting of data." Such a preponderance of late reporting seems problematic to me, but that is for another article.
One specific data set from this report is one that nonprofits can consider when evaluating their small gift fundraising and major donor efforts against industry trends. I suggest evaluating at least four quarters of FEP reports if you are going to use the data for any decision-making about types of fundraising to employ.
Where the Giving USA report is good for aggregate year-to-year numbers by industry within the independent sector, the Fundraising Effectiveness Project drills down into quarterly detail about types of fundraising.
State-Level Giving Reports
The last type of giving report I'll review evaluates state-level giving. There is not an entity in every state that collects and reports on philanthropic giving. Since I am based in Florida, I will share information from Florida Nonprofit Alliance's "Giving in Florida," published in April 2022.
Credit: "Giving in Florida" by Florida Nonprofit Alliance
The "Giving in Florida" report covers some of the same data as the national reports do, but it also drills down by community. It includes everything from population/giving ratios to giving interests by age. Nonprofits can use this data to plan strategy in a way that will take advantage of trends and that caters to donors by age and interest.
This chart shows reasons people ceased giving to specific charities. Such information should reinforce the value of good donor stewardship, and transparent and ethical financial practices.
Credit: "Giving in Florida" by Florida Nonprofit Alliance
It is easy to see when we consider these three types of reports on the state of philanthropy that each looks at slightly different information. So when one report says giving has gone up and another says giving is flat, it is actually possible that they are both right.
The next time you are asked to report on trends or hear data shared at a meeting, be sure you know what source is being referenced, whether the data is national or state, and whether it is reported in today's dollars or adjusted for inflation. Knowing this information will help the report data seem less conflicting.
As important as fundraising and philanthropic trends are, how your own organization is performing year over year is something to always evaluate. Your nonprofit's fundraising outcomes compared to industry trends are relevant, but improvements compared to your own past performance is a true indicator of success.