Year-End Charitable Giving Bonanza is a Myth
Posted on December 22, 2014
There is an assumption in the U.S. that the best charitable giving season is October, November, and December each year (Year-End). The facts do not support this myth.
Most believe that there are two reasons that year-end giving is good. First, they assume that donors are in the giving mood as they engage in all types of holiday gifting. The second theory is that donors are anxious to make gifts that they can deduct on their upcoming 2014 tax returns. Facts don’t support these assumptions. People give because they are asked…not because they are feeling the ‘giving spirit’. Only 36% of Americans itemize their taxes and about 80% of those take a charitable deduction. This means that fewer than 30% of all Americans could even possibly be motivated by tax benefits in their giving. And, many of those donors made their gifts at other times of the year. In fact, the 10 largest gifts made in 2014 were NOT made in the 4th quarter.
Many large charitable organizations or sectors experience their biggest giving not at year-end but during other times of the year. For example, most gifts to education are made not at year-end but during April, May, and June each year. America’s largest health charity, the American Cancer Society gets its biggest lift in giving during the 2nd Quarter when their Relay for Life fundraising events are taking place nationwide.
The truth is that in most years there is a slight increase in year-end giving – but not a dramatic one. And, in some years, the 4th quarter is not as good as other times of the year.
Economic conditions also play a huge role in when gifts are made. As an example, following 9/11 in 2001 charitable giving virtually dried up for most charities for 6 months. Year-end giving was abysmal that year. Similarly, recession plagued 2008 year-end giving was poor in comparison with the previous 9 months of that year.
Our perception that year-end giving is robust is based on observed tradition. The 4th quarter of the year is prime time for thousands of nonprofits to get very aggressive with solicitation activities. This year, The Salvation Army is spending millions of dollars on paid television and radio advertising while spending millions more on direct appeals in order to drown out as much competition as possible and capture the goodness of Americans as measured in charitable giving dollars.
At this time of year, mailboxes are filled with dozens of requests from many groups who are all seeking gifts at year-end. Phone solicitation activities increase. Benefit galas and events are also more prevalent during the last three months of the year. The problem with this flurry of year-end asking is that it is taking place at a time when competition for the charitable dollar is the most intense. Most nonprofits would find that they get a better return investing in solicitation activities at times other than year-end.
Tradition at nonprofits fuels the year-end giving myth. The fall gala is held the third Saturday in October because that is when it has always been held – not because that’s when giving environment will be the most favorable. Mail drops occur on a predetermined schedule that has never been based on forecasted charitable economic conditions… and, nonprofits are afraid to change the dates because it might skew comparisons to previous years.
The U.S. is the most generous charitable giving nation on the planet. However, new charitable giving forecasting technologies like the Atlas of Giving now make it possible for nonprofits to plan their solicitations when conditions are optimal and take American giving to a whole new level. It’s time to stick a fork in the year-end giving myth.