Charitable Giving Manufacturing Machine
Posted on December 29, 2012
Preparing the upcoming release of total US charitable giving figures for 2010 has become a contemplative experience for me.
I’ve learned that charitable giving is like a complex manufacturing machine with lots of moving parts, some static components, and some highly engineered pieces. Some parts are big; some are tiny. The machine needs continual power, lubrication, and maintenance to produce. I can tell you that the machine worked pretty well in 2010 – total US charitable giving was up – but not for everyone.
(The Philanthromax Atlas of Giving will be publishing the 2010 annual giving total later this month)
A variety of factors influence charitable giving…
Economic factors like unemployment, the stock market, GDP, and consumer confidence all have a correlation to giving… some immediate, some with lingering significance.
Demographic factors also play a role… an aging population, declining church membership, population migration, changing racial makeup of the population, a growing number of 501(c)(3) organizations.
Government policy is impactful. The charitable income tax deduction makes a difference. Government intervention into areas traditionally provided by nonprofits (medical research, elder care, child care, health care, disaster relief) diminishes charitable giving.
Fundraising activities and functions play a significant role… the number of ongoing capital campaigns, a successful new nationwide special event, declining direct mail response rates, the number of deployed fund development professionals. Technologies like online giving, Twitter, Facebook, and texting are changing the giving output. Similarly, the growing number of private family foundations and donor advised funds are having a noticable impact on giving and gift timing.
Public perception and opinion play a role. Are charities really effective? Do the rich give to avoid taxes? Will the Warren Buffet – Bill Gates billionaire challenge launch a new ‘platinum’ age of philanthropy? Are nonprofit salaries too high? A single high profile nonprofit scandal can diminish charitable giving output nationwide. Poor performance at a nonprofit can shake public confidence in all nonprofits and hinder charitable output.
Weather and disasters have a profound effect on giving. Earthquakes, oil spills, terrorist attacks, tsunamis, and other events can generate huge amounts of charitable cash quickly. Some is additive, some is coming from the established charitable economy (other causes). These same events can also damage charitable giving significantly due to the economic impact on affected geography.
In spite of all this complexity, total output of the charitable giving machine does not vary dramatically from year to year. The change is usually less than 5% in either direction. And, thankfully, the machine and its output get bigger almost every year.
The giving machine provides us with a uniquely American experience that solves important problems, enriches life, and fosters our faith. I have a great time monitoring the machine, reporting its output, and analyzing its performance.