One need only scan headlines or turn on the television to be inundated with news that only seems to breed, rather than quell, uncertainty.
It comes as little surprise that we at Graham-Pelton have received questions from clients across philanthropic sectors regarding feared negative impacts on philanthropic giving. The unknowns are many, and fear is an understandable response to the unknown.
Whatever the cause of concern, development professionals must have answers for our institutional and organizational leadership when they ask us how to stave off the loss of philanthropic revenue in the current climate. While none of us have a crystal ball, lessons learned in the past can help us articulate a plan for the future.
Our advice: stay the course. And we have the data and experience to support it.
First, note past experience of philanthropy during market fluctuations.
Historically, while significant downturns do impact charitable giving to some extent, the losses in philanthropic dollars are never as dramatic as the market downturns that drive them. For instance, the 2008 recession resulted in a decrease in giving of 7%, but that is considerably less than the 38% decrease the S&P experienced that same year.
Below are three particularly pertinent data points that illustrate why fluctuations in giving are not as dramatic as market fluctuations:
- The variance in giving as a percentage of personal disposable income has never exceeded 0.1-0.2% (in current dollars) from one year to the next in any of the last 40 years.”
- Similarly, total giving as a percentage of GDP has also varied by no more than 0.2% (in inflation-adjusted dollars) in the last 40 years.
- From 2005 through 2010, a period that included the most volatile years of the Great Recession, the net change in philanthropic dollars proved ultimately to be a decrease of less than 1.5% (in current dollars).
Second, philanthropy is driven by factors outside of policy or financial performance.
Even looking back to 2017 and the concerns about how changes to tax policy might impact philanthropic giving, just 12% of HNW donors planned to decrease their giving based on new tax laws. Philanthropy is driven by other very significant and sometimes intangible factors, including donors’ desires to have an impact even when it stretches them financially.
According to the 2018 US Trust® Study of High Net Worth Philanthropy, the top three drivers of philanthropic giving across sectors were:
- personal values
- interest in the issue area
- firsthand or secondhand experience benefiting from the organization in question
None of that changes, even in times of uncertainty.
What’s more, there is a powerful argument to made that for the truly philanthropic, the value they place on making a difference may in fact be heightened by a perception of need in response to crisis.
Third, past experiences support that while giving does not go down during times of vulnerability, asking for gifts does. And that might be the culprit, not the market.
So, should you consider forgoing that planned campaign or departing significantly from an existing campaign timeline? Should you hold off on the planned solicitation of an important prospect because your perception is that she or he is heavily invested and will therefore eschew giving in response to volatility?
The short answer is no.
Doing any of these things will, at the very least, lead to a departure from an existing plan and will cost your organization money – possibly not forever, but certainly for now. If you alter course, your investors may put off giving or not give at all. Worst of all, they may never even be asked.
Instead of departing from your plan in the face of uncertainty, the better answer is to double down. Intensify your focus. Dig into your research. Unflinchingly leverage networks. Explain to your prospects why their commitments are more important now than ever.
As your organizations, our clients, and each of us alongside them ride out this particular storm – not the first, and certainly not the last – remember that if you have a well-thought-out and achievable plan in place, your transformative moment is still within your reach. A win of this caliber far outweighs the relatively small risk you accept in going for it.