US Giving Growth Only 3% in 2013? Not Likely.

Nonprofit execs, fundraising managers, and consultants are celebrating the just-released Giving USA estimate of giving for 2013. This is completely understandable since it makes them look like rock stars. For most, their fundraising results for 2013 were much higher than the Giving USA estimate of 3% growth. Now they can easily justify spending $90 to buy the complete Giving USA report and report to boards and bosses that they knocked it out of the park in 2013.

The trouble is that the Giving USA estimate has got real problems. Once again, the estimate is unbelievably low. And, there are some serious questions that need to be asked about the estimate’s methodology.

Giving USA reports that giving grew at an inflation-adjusted rate of just 3% last year.

Remember 2013? The stock market continued its torrid post-recession pace. The S&P was up 29% in 2013, the Dow more than 26%, and the Nasdaq was up almost 40%. Interest rates were at historic lows, inflation was nearly nonexistent, Gross Domestic Product grew all year. Real Estate prices rallied. Most major gift donors give assets, not income. Stocks and real estate are assets. Major asset gifts were creating records in 2013.

The best example of major gift impact is that Donor Advised Funds cashed in. Take a look at what happened at Fidelity Gift Fund, Schwab Charitable, and Vanguard Charitable for 2013. Then look at where they now appear on the list of the largest charities in the US. Fidelity alone accounted for more than 1% of all giving in 2013 – if you subscribe to the Giving USA estimate. Collegiate fundraisers also cashed in big. Google “record donations in 2013” and you’ll see dramatic evidence of this. Remember that giving to education accounts for 16% of all US giving.

Individual Donors who gave publically reported gifts of $100 million or more each accounted for $3.5 billion of the $335 billion Giving USA estimate.

There are other significant clues that the Giving USA estimate is very low. The number of nonprofits has increased an average of more than 3% a year for every year since 2000. That alone would account for the Giving USA giving growth in 2013.

Not only is the US population continuing to increase, it is getting older. Any experienced fund raising professional knows that older donors = more charitable giving income.

Then there is the technology factor.

Though nonprofits & churches are chronically slow to adopt new technology, they are still becoming more effective and efficient in their efforts to raise more every year with better resources. The advances since 2007 are significant. The growth in online giving is the best example of this. Better targeting of prospects, improved donor retention and upgrading technology, crowd funding, and online special event management tools are other examples of increasing effectiveness and efficiency in raising money.

Given all of these factors, how can a reasonable person believe that US giving only grew 3% from 2012 to 2013?

Questionable methodology is a problem for Giving USA.

Giving USA claims complete transparency of their methodology. But, can you find the formula they used this year? I can’t.

Their website contains a “Brief Overview of Methodology” but no details. The best you can find online is a paper that examines how they made their estimate in 2002 but since then they’ve reported having changed their methodology more than once.

All of us that are a part nonprofit sector and the press should be asking some tough questions of the Giving USA estimators…

How can you use IRS charitable deduction data from two years ago to accurately estimate giving this year – especially when it omits the majority of American donors?

Giving USA relies heavily on IRS charitable deduction data from two years ago to determine giving in the year that they are estimating. However, only a minority of Americans itemizes their taxes and only a percentage of those claim charitable gifts as a deduction. Think for a moment about the skewed charitable deduction data for recession plagued 2009 if Giving USA estimators were using data from the pre-recession 2007 giving data for their 2009 estimate.

How do you calculate church giving?

Giving to churches and religion accounts for 1/3 of all US giving. But churches are not required to report their results to the IRS. Giving USA says that it no longer uses surveys, so we’re left to wonder about the source of this data.

Why does Giving USA always arrive at the same answer every year?

For more than two decades, in spite of growing numbers of nonprofits, better technology, a growing and aging population and other significant factors leading to a growing US giving total, Giving USA estimates each year are always about 2% of GDP. No other industry has such a consistent performance when compared with GDP. The truth is that anyone can predict the Giving USA report as soon as the final GDP numbers are released… No need to wait until late June for the big announcement, you can do it in February.

Giving USA has no utility.

And the most important question…

What does this annual report do to improve or enhance any nonprofit work or fundraising result?

2013 ended 6 months ago. Nonprofit executive and departmental reviews for that year are long since over. Budgets for the current year were finalized months ago. The Giving USA report was a non-factor in these events. It lacks any kind of utility for practitioners or board members.

One possible reason that the report lacks utility is that the Giving USA staff does not include anyone with any meaningful experience as a fundraising practitioner or nonprofit manager.

So to all who are celebrating their 2013 fundraising results because they are so much better than the Giving USA “benchmark”… Congratulations! But just remember, the yardstick that you are using is really only about a foot long.