More on giving in recessionary times...

[Shawn O'Hara]

Article from CFRE News (http://www.imakenews.com/cfre/e_article001220206.cfm?x=bdrptjW,b2TPWCJy)
October 1, 2008
What Happens to Giving During a Recession? A quick look from Giving USA
Insights into trends and helpful tips from our Participating Organziation The Giving Institute and Giving USA


What happens to giving during recessions?

A recent examination of charitable giving during recession years in America shows that a slowing economy definitely affects donations to non-profit organizations.

A 2001 Giving USA report on charitable donations found that after an economic downturn, charitable giving typically does not keep up with increases in inflation. Upon revisiting the subject in 2008, it was found that giving slows slightly during recessions. In the five recessions since the one between 1973-1975, giving fell an average of 1.3 percent adjusted for inflation. In non-recession years from 1966 through 2006, giving has increased an inflation-adjusted average of 4.3 percent. (Both of these calculations adjust for inflation using the consumer price index and match figures reported in Giving USA 2007.)

In two economic slumps, in 1973 and again in 2001, donations failed to keep pace with the growth in inflation for three years straight. Giving also declined after the 1987 stock market collapse. Scholars now attribute most of the 1987 decline to pre-payment of gifts in 1986, when donors gave early to take advantage of deductions that were restricted when new tax laws took effect in 1987.

This topic was studied in-depth in the Giving USA e-newsletter, Spotlight, in September.


Is working with the “new wealthy” different from working with people who have long held a secure financial position?

There’s an old maxim about the rich being different from you and I. Does that hold true for the new wealthy? Giving USA Foundation recently examined the question in its quarterly e-newsletter, Spotlight. Below are some findings you may find useful in your work.

People with wealth who are less than 55 years old are likely to give differently—using different vehicles for giving and sometimes giving less money—than the older Boomers and the “Silent Generation” (born 1925–1945).

Younger wealthy donors, those aged 55 or less, are more likely than older donors to be using a variety of giving vehicles (foundation, donor-advised funds, trusts, charitable gift annuities).

Also, younger donors are more likely to give online, although online giving in general is not a major source of funds for most charities.

Younger wealthy donors are more likely than older wealth holders to say their giving will increase as their wealth increases,but their current giving levels are lower, on average, than those of older donors, even at the same wealth level.

High-income/high-wealth donors want to give to charities they trust and that have impact.

High-net worth individuals report interest in giving more IF they trust charity’s leadership and have increased information about impact.

High-net worth individuals are concerned about operational efficiency.


Wealth comes in many forms, and several studies have shown that households are more likely to give from some types of wealth than from others. The Bank of America High-Net Worth Philanthropy Study finds that entrepreneurs and business owners are highly likely to give and give comparatively high amounts. The same study found that individuals with inherited wealth are less likely to make charitable gifts from the inheritance, unless they have no heirs.

Tip: Most people give out of income rather than assets. With wealthy individuals, the reverse seems to be true: people are giving wealth that they have earned them¬selves, but not necessarily income and not inheritance. When approaching wealth holders about major gifts, invest more time in building relationships with wealthy individuals to learn both their needs and motivations in giving. Ask about various types of assets: land, securities, and business. Know about the family and the individual’s desires to share wealth there. Consider the individual circumstances of a particular donor and tailor a plan that meets those needs: an annuity, stock gift, charitable lead trust, and many other options that can be appropriate.



For more information, contact Sharon Bond at the Foundation at [e-mail] or 847/375-4836. The Foundation’s Web site is www.givingusa.org.