In A First, Religious Gifts Decline Slightly

Last year, for the first time in the more than 50 years the Giving USA Foundation has been tracking philanthropy, donations to religious institutions declined.

While the drop in giving was minimal (less than 1 percent), it represents a shift in priorities among American donors from religion and education to health and human services, sectors that increased nearly 4 percent and 2 percent last year, respectively.

“Historically, giving to religion does well in trying times, but last year something happened,” says Robert Evans, a member of the Giving USA editorial review board and co-founder of the EHL Consulting Group, a Philadelphia-based consultancy that serves many Jewish nonprofits. “So many houses of worship and synagogues responded to appeals by members for a reduction in dues, and by necessity, houses of worship gave in.” In addition, major capital projects, including renovations and expansions of synagogues, have mostly been halted.

Overall, American individuals, corporations and foundations donated $303.75 billion in 2009, a decline of 3.6 percent from 2008’s giving totals. This is the second year in a row that philanthropy has fallen, and only the third decline since Giving USA began tracking philanthropic contributions.

Individual giving remained flat, rather than falling, due largely in part to a rallying of donations in the final weeks of the year, when the stock market was rising and the recession seemed all but behind us. (A study conducted by scholars at Boston College, however, showed a 4.6 percent drop in giving by individuals in 2009). This is of particular interest since contributions by individuals account for 75 percent of all charitable giving. And if you take into consideration donor-advised funds (which are included in the “foundation” category), individual decision-makers responsible for corporate giving and bequests, individuals likely account for nearly 90 percent of all charitable giving.

“The message that we would say is a takeaway from this is that donors as individuals really need to be romanced by organizations,” says Evans.

Giving to the category known as public-society benefit organizations, which includes umbrella groups like the UJA-Federation of New York and United Way and which has fluctuated in recent years, declined nearly 5 percent, with giving totaling $22.8 billion in 2009 (Federation giving is not included in the religion category).

The Jewish Federations of North America’s 2009 Annual Campaign was down 13 percent, a figure that is consistent with other federated charities such as The Red Cross and United Way, which saw donations fall approximately 15 percent.

“Like every business and nonprofit, the 157 Jewish federations across North America were affected by the economic downturn,” says Joe Berkofsky, director of communications for The Jewish Federations of North America. “Our donors felt the impact of the recession, and many federations themselves were forced to cut services.”

JFNA’s 2010 Annual Campaign, however, is nearly 5.5 percent ahead of where it was last year at this time, with the average gift rising 2.1 percent.

“Donors are really looking to touch the organizations more than ever,” says Evans. “Whether it is the federation or any umbrella group, there is a need here for organizations in this category to redefine how they are making contact with recipients. These organizations will need to openly communicate why they remain important in the philanthropic marketplace and to demonstrate how they can make a direct impact on those in need.”

Part of the challenge for federations, Evans says, is that recipient organizations — the hundreds of small groups and agencies that receive funding from United Ways and federations — are competing for the same, limited dollars as their patrons. “The needs have grown so significantly over the past year or so that most recipient organizations can’t be totally dependent on umbrella campaign support,” he says.

For the rest of 2010, nonprofit leaders may well have to contend with donor fatigue. “Giving is generally considered a lagging indicator as the economy recovers,” he says. “It will probably take three years to return to pre-recession levels once the recession is officially declared over,” he says.

Overall, however, the message of the Giving USA data is positive, Evans says. “The reality is that [2009’s giving in excess of $300 billion] is a phenomenally great testimonial to the generosity of the American public.”

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