My colleague Matt Gerken has been writing a series of columns on interpreting and using data for your fundraising work. These columns are timely in two ways.
First of all, in our world of “big data” and obsessions with being “data driven,” people tend to fall into two broad groups. First, those enamored by data; those who look longingly for numbers to direct their decision-making. Second, those who look askance at data and harbor concern for the looming and growing technocracy that manages our lives in numbers and metrics.
Matt helpfully debunks this first category in his description of data as a “backseat driver.” Data, he writes, “is not self-interpreting.” And so “true leadership very often involves making tough decisions with little information, misleading information, or even contradictory information.”
It doesn’t follow from this that our use and acquisition of data should be sloppy or non-existent. Refusing to utilize data to help your decision-making would be irresponsible. On the other hand, it means that we should acquire data and then use it honestly and intelligently, aware of the fact that “collecting and reporting on data is a highly rhetorical act” and that data is a “helpful partner” but not a driver.
This approach to data occupies an important middle ground between the data skeptics and the “cheap empiricists”—a middle ground that is extremely important today.
Matt’s columns are timely in another way. The summary of the new Giving USA report on charitable giving was just released, offering nonprofit leaders reams of data and another year of giving trends.
The Giving USA report is a valuable resource for nonprofits, and a great service that the Giving Institute provides. From time to time, there are changes in the trends—like in the 2008 recession, which saw a corresponding downturn in the charitable sector—but in general, the report shows the same thing year over year, as the report authors note. Charitable giving has generally increased for the last forty years (tracking with GDP).
It would be easy to discredit the value of the report then: “another report confirming the same thing it confirms every year!” But that confirmation is valuable. The Giving USA report confirms each year that Americans are an impressively charitable people, that the nonprofit sector is resilient (that’s important this year!), and that the hard work of fundraising professionals pays off—to the tune of nearly half a trillion dollars over all.
But we also want to be discerning in our use of the report. Matt Gerken pointed out last year that the report is released to a media frenzy of identifying trends and spotting what’s new. Giving USA 2019 was especially exciting because the very minor decrease in individual giving (though only when adjusted for inflation) gave commentators an opportunity to justify their handwringing about the Tax Cuts and Jobs Act. “See! We knew this tax bill would damage the charitable sector!”
Well, as we surmised, charitable giving was minimally (if at all) affected by the new tax bill. There were minor decreases in 2018—again, adjusted for inflation—that were well within a margin of error. And now in 2019, we see that the individual charitable giving is back up.
This year’s “Key Findings” summary (itself a one-hundred-page document!) includes a section called “Can Giving USA tell me…” with several bullet points about what it can and cannot be used for. It is a helpful section to confirm the data segmentation that is not included. You don’t need to spend hours trying to find out how much corporate giving went to the religious sector, for instance. They don’t break it down that way.
The report is helpful for looking at high-level meta-trends in the charitable sector. But the extent to which these trends are informative for you requires careful consideration. For instance, the report notes that “many nonprofits and their stakeholders mistakenly believe corporations and foundations comprise the bulk of charitable giving, but overwhelmingly, individuals are the biggest source.” Any fundraiser or board member committed to securing foundation grants and ignoring individual donors is probably ignorant of this data.
That said, in certain sectors foundations are significantly more active than elsewhere. And in the lifecycle of organizations, the revenue streams will change a great deal: foundations are often a great resource for young organizations who haven’t yet built up an individual donor base, and some sectors tend to see a more even share between individuals and foundations. In other words, you need more nuanced sector segmentation to inform your decision-making.
Moreover, many organizations are right to get dollar signs in their eyes when they see the increasing corporate giving. Others, however, risk being led astray by a 13% increase in corporate giving—they’re just unlikely to get those dollars even as the area of giving grows.
Finally, the report is simply interesting to read to see trends across sectors. Religion in America remains the largest sector, by a healthy margin. “International Affairs” grew significantly in in 2018 and stayed mostly flat in 2019, while “Public-Society Benefit,” Education, and the Arts took enjoyed the biggest gains last year.
Those are interesting and important statistics, and they are instructive for individuals thinking about cultural trends. But these trends are minimally valuable for fundraisers and nonprofit leaders. They are too aggregated for you to benchmark your organization’s growth against the general growth in, say, “Health.”
Here’s a better example. The most interesting trend to me is the slope of the line for how individual giving has grown compared to foundation giving since the report began in 1979.
For the last forty years, individual giving (and bequests) has seen a steady increase, with the exception of a few aberrant years. Foundation giving has increased, too, but it is a much steeper climb. Why is this?
For some time, we have seen more charitable dollars coming from fewer donors. Increasing wealth disparity is creating a “donor class” giving larger gifts while fewer “average” citizens are giving. And the two charts attest to this trend. Charitable foundations are the giving vehicles of the very wealthy, not average citizens, and we see in the trends a sharper increase in foundation giving than we do in individual giving. (Corporate giving, too, is closer to the individual trend line than the foundation trend line.)
I find that to be interesting—but it can also be distracting and misleading for fundraisers. One might think that more dollars from fewer donors is a reason to focus just on the big bucks. Stop pursuing the average donor. Just look for those major and mega donors. Pretty soon, that’s all that will be left!
That is bad advice. First of all, most major donors begin as average donors. They come in with modest donations, feel out your organization, and work their way up over time. Second of all, this pandemic and corresponding economic turbulence showed once again the importance of a diversified revenue stream.
In other words, while those trend lines are interesting for any number of reasons, they are not particularly instructive for fundraisers—and they could be destructive, if they lead you astray from better fundraising practices. We have to be wary of letting the data lead us to bad decisions. (I also suspect there are other factors contributing to this trend, not merely related to wealth disparity.)
That is a long way of saying that the new Giving USA report has more of the same, following forty years of charitable trends in America. Individual giving remains the vast majority of charitable giving. The charitable sector continues to grow. Religion remains important to Americans, as well as Education and much else besides.
Of course, there are more pervasive trends—such as our thinning civil society—that are lurking in the background of the report. But for the most part, Giving USA 2020 is another positive sign of American charity.