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Giving Up First Time in 5 Years;
Report Offers Important Lessons

By Jeffrey Byrne, President & CEO
Kansas City

For the first time since 1999, fundraisers are hearing great news about growth in charitable giving in the United States.

According to Giving USA 2005, giving in the United States increased by nearly 5 percent in 2004, to a record-breaking $248 billion. And last year was the first time in five years that charitable giving grew in the United States in both current dollars and real dollars (inflation adjusted dollars).

The numbers are even more striking when you consider that giving to Tsunami relief efforts accounted for less than one-half of 1 percent of the total. And while much of the giving to Tsunami relief efforts will be reported in 2005, according to the Giving USA Foundation which issued the report, the total dollars are nonetheless anticipated to be a small percentage of giving this year, falling somewhere between an estimated $1.5 and $2.5 billion. This similarly tracks the impact of giving on 9-11 relief efforts in 2001 and 2002.

Consistent with nearly five decades of giving data, individuals made up the lion’s share of giving in the United States. People like you and me accounted for a whopping 84 percent of all giving in the United States when you include gifts by living individuals and bequests, or after-death gifts. This means that all the Fortune 500 corporations and foundations like the Rockefeller Foundation, the Carnegie Foundation and the Bill and Melinda Gates Foundation combined only accounted for 16 percent of all giving in the United States last year.

Nonetheless, foundation and corporate giving were both up in 2004. This trend is encouraging, given the constant barrage of reports in the media about dramatic declines in corporate profits. Americans poured $24 billion into gifts to foundations last year, up 11 percent from the previous year. This includes private foundations and giving to foundations established as public charities. This increase can be attributed, in part, to the interest of donors in recent years in establishing donor-advised funds at community foundations.

Of recipients of charitable giving, religion continued to account for the largest percentage of all charitable giving, at nearly $90 billion, or 36 percent. Education was second at nearly $34 billion, or 14 percent. While giving rose to most other sectors (arts, health, environment/animals, and public-society benefit) rose, giving to international organizations increased only slightly and giving to human services organizations declined last year. This is a trend to watch as 2004 was the third year of inflation-adjusted drops in giving to human services organizations.

So, how do you assimilate all this data into your daily job? How can you best use the Giving USA report to enhance your development efforts?

1. Take this message home and educate your volunteers and donors. Volunteers who understand that the vast majority of giving comes from individuals will be empowered and energized to get going on the important work of developing a major gifts program. Donors will understand the importance of giving to your cause as increased pressures from other sectors chip away at your charitable giving.

2. Develop your own thorough understanding of the numbers and how they relate to local giving. How does your organization measure up to the numbers? Are you getting your share of the pie?

3. Use the numbers to jump start a major gifts program. Identify 25 individuals with whom you will share the report. More importantly, help those donors understand how you fit into the “big picture.” (See Number 2). Do this strategically and deliberately and make sure you allow enough time for your chief development officer and CEO to make personal calls as you begin the cultivation process. A successful major gifts program is not a direct mail campaign.

4. Develop a case for support for your organization that is compelling, compassionate and presented in terms your donor can understand and relate to. Involve your volunteers in this important work of case development, starting from the very heart of your organization with your mission and vision. Then be sure you and your donors can articulate your case and state how a change (increase) in giving based on the current year’s numbers can make a difference in the lives of the people you serve.

5. Start a planned giving program and market it to your constituents. With the vast majority of giving (84 percent) coming from individuals, and national demographics shifting as Baby Boomers age, now is the time to begin cultivating donors for planned gifts. Identify planned giving prospects among your donor and constituent base and plan an information and education campaign to help them understand the benefits of planned giving. Include a business reply card that your prospects can mail back to you requesting additional information and telling you if they have already included you in their estate plans. Then be sure to follow up in person. A well-planned and executed planned gift cultivation effort now will pay tremendous dividends over the next several years.

6. Develop “Lists of Ten.” Identify 10 foundations from which you want to seek support. Do the same with 10 corporations or corporate foundations. Place key giving officers at these organizations on your mailing list. Send them newsletters and news clips about your organization. Invite them for a tour of your programs and facilities. Meet with them in person to share your mission, your vision and your organization’s funding needs. Include your CEO and top volunteers. Develop a first-name-basis relationship with these key prospects. Most importantly, be impeccable with your word and deed and put as much energy into helping them report a positive return on their investment by sharing clear outcomes from charitable dollars you receive from these sources.

7. Be “in the know” about your local philanthropic community and get to know your local community foundation. The trend of donors establishing private foundations or donor-advised funds at their local community foundations places additional responsibilities on you, as the chief development professional, to know how to best approach a donor for giving to your cause.

8. Above all, when you are engaged in solicitations – whether they be to individuals, foundations or corporations -- LISTEN to the donor and truly engage in their conversation. Presenting the need and sharing the latest giving statistics is simply not enough. Connect your need to your donor’s interests, priorities and passions. Savvy donors can tell if you’re interested in them or are there for just a “quick buck.”

The numbers from Giving USA for 2004 are only as good as the practical way you apply them for learning and for your own development plan. Don’t let the opportunity to share the “big picture” become just another “clipping” in your Board packet. Take time to understand the numbers, how they relate to your organization and, more importantly, how you can develop sound cultivation and solicitation strategies to get “your share of the pie.”

Note: Jeffrey Byrne & Associates, Inc. will join with local community foundations, the Giving USA Foundation™ – AAFRC Trust for Philanthropy and the Center for Philanthropy at Indiana University to present Giving USA findings in a free community workshop. To learn more or to find an event in your community, visit our website.