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Charitable Giving Climate Continues to Decline, Nonprofits Say

86 Percent Report Economy is Having Negative Effect on Fundraising, Center on Philanthropy at Indiana University Study Finds

The Center on Philanthropy at Indiana University

August 7, 2009

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INDIANAPOLIS – The fundraising climate for U.S. charities continued to decline in the first half of 2009, according to the latest Philanthropic Giving Index (PGI) released today by the Center on Philanthropy at Indiana University.

The PGI, similar to a Consumer Confidence Index for charitable giving, includes three indexes on a scale from 0 to 100, based on a semiannual national survey of nonprofit fundraising professionals. Higher scores indicate more positive or optimistic attitudes about the climate for fundraising.

The fundraisers’ assessment of the current giving environment fell to its lowest level since the Center began the study in 1998. In the latest survey, the Present Situation Index (PSI) is at 58.0, an 8.7 percent decrease from six months ago and a 28.9 percent decrease from one year ago. The PSI has averaged 82.1 over the history of the study.

Fundraisers’ expectations for the coming six months are slightly more optimistic, but remain below the historical average for the study. The Expectations Index (EI) is at 72.8, a 10.2 percent increase from six months ago and a 13.2 percent decrease from a year ago. The overall PGI, which is an average of the current and future indexes, is at 65.4, up 0.9 percent from December 2008 and down 21 percent from this time last year.

"The steep decline in confidence in current fundraising conditions confirms that nonprofits are still encountering difficult times and anticipate that they may be facing more ahead," said Patrick M. Rooney, executive director of the Center on Philanthropy. "There is an interesting dichotomy between the decrease in the fundraisers’ perceptions of the present situation and the increase in their expectations for the future. This is likley a reflection of continued uncertainty about where the economy may be headed."

Consultants who provide outside fundraising counsel to nonprofits are substantially less optimistic about the current fundraising climate (PSI of 49.0) than other survey respondents. Fundraisers for arts, culture, and humanities organizations and human services nonprofits also are less confident about the current conditions for giving than other types of nonprofits. Development officers from educational and religious organizations were the most optimistic about the present climate.

Expectations for improvement in the fundraising climate in the next six months are highest among religious, education and health organizations, and consultants. Public society benefit, environment/animal and international organizations, arts groups and human services organizations have the lowest expectations for the immediate future.

Just over 86 percent of fundraisers surveyed said the economy is having a negative or very negative impact on fundraising right now, a slight improvement from the 93 percent who reported such an effect in December 2008. Almost 60 percent expect a continued negative effect from the economy in the next six months, while 23 percent said the economy will have a positive impact during that time.

Approximately 57 percent of fundraisers said their organizations raised more money (32.3 percent) or about the same amount (24.7 percent) in 2008 than they did in 2007, while just over 39 percent reported raising fewer dollars in 2008. Nearly two-thirds of fundraisers (62.2 percent), reported no change in the timing of scheduled pledge payments during the past six months, and 67.2 percent saw no change in the payment of pledges in the full amount during that time.

"There is no question that some organizations are really suffering, but nonprofits are resilient," said Timothy L. Seiler, director of public service and The Fund Raising School at the Center. "Fundraisers are still working hard and donors are still giving, albeit perhaps at lower rates and a slower pace."

"Nonprofit executives and boards should recognize that good fundraisers are close to their donors, know what is happening in their lives, and understand best when and how to request a gift. They are the voice of the donor back to the organization," Seiler continued. "Carefully building relationships with prospective donors, demonstrating sensitivity to their circumstances, and offering flexibility in helping them structure a gift will produce positive results."

The PGI survey also asks which fundraising techniques are most successful; survey participants currently perceive major gifts, direct mail and planned giving to have the highest levels of success. With the exception of Internet and email fundraising and direct mail, fundraisers are reporting that their success with most techniques (major gifts, planned giving, special events, foundations, telephone, and corporate gifts) is at or near its lowest levels since the study began.

"For the past 18 months, fundraisers have reported significantly less success with major gifts and foundation grants than they have historically," said Una O. Osili, interim director of research at the Center on Philanthropy. "Since December 2007, reported success with major gifts and foundation grants has fallen 23.1 percent and 39.2 percent respectively. However, nearly two-thirds are still reporting success with direct mail, perhaps because it may bring more immediate returns than other fundraising techniques."

The full PGI report, including results by organization size, donor base and subsector (e.g., arts, environment, etc.), is available to premium services members of the Center’s Web site at http://www.philanthropy.iupui.edu/PremiumServices/login.aspx. Journalists may obtain the full report from Adriene Davis, (317) 278-8972, adrldavi@iupui.edu or Josh Sprunger at (317) 278-8932, jgsprung@iupui.edu.

PGI survey participants are chosen to represent a cross-section of nonprofits nationwide in terms of geographic region, annual revenue size and type of organization. The survey was mailed to 394 nonprofit development executives and fundraising consultants. Of those, 188 fundraisers and consultants responded, for an overall response rate of 49.2 percent. Survey administration and coding of data was conducted by the Center for Survey Research at Indiana University.

The Center on Philanthropy at Indiana University, a part of the Indiana University School of Liberal Arts at Indiana University-Purdue University Indianapolis, is a leading academic center dedicated to increasing the understanding of philanthropy and improving its practice worldwide through research, teaching, training and public affairs programs in philanthropy, fundraising, and management of nonprofit organizations.

Reprinted with permission of The Center on Philanthropy at Indiana University.

 
 
   
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