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Amid financial meltdown, charitable gifts in US fell in 2008

Wednesday, June 10, 2009 | 12:01 a.m. CDT

NEW YORK — Charitable giving by Americans fell by 2 percent in 2008 as the recession took root, only the second year-to-year decline in more than a half-century, according to an authoritative annual survey released Wednesday.

Particularly hard hit were social-service charities, which suffered a 12.7 percent drop in donations at a time when most of them were reporting increased demand for their services.

The last overall drop in giving was in 1987, the year of the record-shattering Black Monday stock market collapse.

The Giving USA Foundation, which has conducted the survey since 1956, expressed relief that the 2008 decrease was not worse, given that many Americans lost more than 2 percent of their wealth during the year.

However, the report underscored the daunting circumstances facing America's nonprofits, many of which have been forced to lay off staff and cut programs because of declining revenue.

According to the report, total giving in 2008 was $307.65 billion, down from a record $314.07 billion in 2007. Two-thirds of public charities experienced decreases. Among the few sectors to improve were religious and international affairs organizations.

"We definitely did see belt-tightening," said Del Martin, chair of the Giving USA Foundation. "This drop in giving meant that nonprofits have had to do more with less over the past year, but it could have been a lot worse."

The report predicted tough times throughout 2009 for the social-service sector. Of 228 organizations that were surveyed, 60 percent said they were cutting expenses, including programs and staff, due to funding shortages. Among organizations serving young people, 74 percent said they were underfunded and unable to meet current demand.

Major national nonprofits such as the Salvation Army, Catholic Charities and the American Red Cross have laid off workers.

"At the national office, we are finding it very challenging to raise funds to support operations," said Patricia Hvidston, Catholic Charities' vice president for development and communications. "At the local agencies, we have evidence to show that last year's donors have become this year's clients. It's pretty dramatic."

Hvidston provided January-through-May donation figures for Catholic Charities for the past three years. The figures show a stark regression — $2.9 million in 2007, just under $2.5 million in 2008, and $1.95 million this year.

Most charities were faring adequately in 2008 until the final quarter of the year — traditionally the quarter that brings the most donations, said Stacy Palmer, editor of the Chronicle of Philanthropy.

The downward trend has continued into 2009, Palmer said, "and that means a lot of groups are doing pretty badly."

"It can take a long time to recover back to the levels before the recession, and demand for services is soaring," she said. "That's when nonprofits see the crunch."

The overall 2 percent drop was calculated in current dollars, Giving USA said. Adjusted for inflation, total giving was down 5.7 percent, the largest drop recorded since the Glenview, Ill.-based group began tracking America's charitable donations.

Individual giving, the largest category of gifts, was an estimated $229.28 billion, or 75 percent of the total, in 2008 — down 2.7 percent from 2007.

Corporate giving decreased 4.5 percent to $14.5 billion, while foundation grant-making was $41.21 billion, up 3 percent, the report said.

Donations by category:

—Religious organizations received $106.89 billion, 35 percent of the total, an increase of 5.5 percent from 2007.

—Education organizations received $40.94 billion, down 5.5 percent.

—Health organizations received $21.64 billion, down 6.5 percent.

—Arts/culture/humanities organizations received $12.79 billion, down 6.4 percent.

—International affairs organizations, which include relief and exchange programs, received $13.3 billion, up 0.6 percent.

—Environment and animal welfare groups received $6.58 billion, down 5.5 percent.

The report is based on research by Indiana University's Center on Philanthropy, including examination of some 400,000 federal tax forms. Summing up the findings, Martin urged nonprofit leaders to be upbeat.

"Consider the year we lived through. Wouldn't several American industries be delighted if their profits had dropped only 2 percent? Or even 5.7 percent?" Martin wrote. "Automakers and lending institutions would certainly rejoice at figures like that."

 

 


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