Once again, there have been dire predictions for charitable giving after Giving USA published their 2024 findings showing inflation-adjusted giving fell in 2023.
The way charities fare in tough times depends on several things, particularly their reaction to the first signs of a recession. Inexperienced decision-makers may understandably err on the side of caution and begin cutting costs across the board. Some common questions I’ve been asked by clients over the years are: “Should we mail that appeal or switch to digital correspondence?” “Should we postpone that campaign?” “Can we let that position remain vacant a few more months?”
More seasoned fundraisers carefully fine-tune their plans based on the knowledge that opportunities for funding ebb and flow and affect their donors and their organization in different ways. For example, in recent months, some regions have been hit harder by natural disasters like flooding and fires. Urban areas in colder parts of the country where consumers pay more to heat their homes this winter will obviously be affected to a greater extent by higher energy prices.
There are always reasons to give
So why do we not see significant declines in giving during difficult periods? First, charitable giving is high on the priority list for loyal donors. Other discretionary spending is often cut first. Historically, as long as people remain employed, most will continue to give. If a couple decides to postpone a vacation or a home renovation, they may have more discretionary funds to save, spend on other needs or give.
Interestingly, some donors may increase their giving during a downturn while they cut back on other spending. Experience does reveal, however, that it can be harder to begin new donor relationships during difficult economic times because donors tend to focus on pre-existing relationships.
What about your major donors?
When companies reduce staff, it is not normally self-proprietors and senior management who feel the brunt of the job reductions. Major donors may enjoy more job security and may feel a responsibility to increase their giving if they are untouched by factors affecting the ability of others to give.
Major donors generally pay more attention to the form and timing of their gifts. Now is a good time to inform them about the importance of carefully deciding what property to give. For example, some may have seen the value of securities fall in recent months but still enjoy significant gains overall. They may be wise to give those securities and use the cash they might have otherwise donated to diversify their holdings through the purchase of a broader group of stocks at lower current market prices.
What about your older donors?
Many older donors who are comfortably retired may be among those least affected by the current economic conditions. They can’t lose their jobs and may have long ago paid off their mortgages, so they have fewer expenses. Retired people may also be less affected by increased fuel costs because they are no longer commuting and may drive little, if at all.
People over 65 account for over 50% of charitable gifts of appreciated securities, so it is critical to communicate the benefits and ease of giving noncash assets. In addition to outright gifts, they can use securities that have increased in value but yield little income to fund gift annuities and other gifts that provide additional income to help pay higher medical expenses and other costs.
Where’s there’s a will
Keep in mind that the factors that lead people to consider their final estate plans in their 70s and beyond will continue regardless of the prevailing economic climate. A certain percentage of your donors are making or revising their wills and other plans every week, so it is important to continue providing information on ways to make gifts as part of their estate planning. Decades-long research in the Sharpe Knowledgebase® shows the last will often includes charitable provisions for the first time.
Importance of stewardship
Now more than ever, it is important to cultivate donor relationships by spending time thanking donors, sharing with them how their gifts have been used and involving them in other appropriate ways.
Is the sky really falling? Giving doesn’t occur in a vacuum and the reality is that charitable giving remains resilient. ■
As Sharpe Group’s general counsel, Barlow T. Mann, JD, consults with some of the country’s most successful gift planning programs. He is recognized as an industry expert on the economics of giving and is on the editorial board of Planned Giving Today. Follow Barlow on LinkedIn.
