Charities are bracing for lean times. Generous Americans can prove their fears groundless.
Americans are cheerful givers. They donate more money per person than anywhere else in the world. Most households keep on giving even during rough stretches – though some give less and some stop altogether. In these tough times, charities are counting on that giving spirit.
Many of them won't know exactly how they fared in this recession year until they tally up receipts in January, including the generosity inspired by the holidays. Typically, total charitable giving – from foundations, corporations, and households – declines by an annual average of only 1 percent in recession years, according to the Giving USA Foundation.
But charities are bracing for the atypical.
More people are in need just when state and local governments are cutting budgets. Assets of foundations are down by about a third, forcing the Bill and Melinda Gates Foundation (the wealthiest philanthropy in the US) to announce it will cut grantmaking next year, and the William and Flora Hewlett Foundation to put a figure on its reduction – as much as 7 percent for 2009.
Foundations and corporations, however hefty their names and checks, account for a relatively small piece of the charity pie. Three-quarters of charitable giving comes from individuals.
Yet assets of better-off individuals have also shrunk dramatically. Many major donors link their giving to their portfolio performance, and charities are seeing a slowdown. As Gordon Campbell, president of United Way of New York, recently put it: "It's a whole new day." He says wealthy donors are asking themselves, should they give $250,000 instead of $500,000?
On the receiving end, charities can use the changing landscape to innovate. For instance, similar nonprofits can benefit from combining administrative staff and thus bumping up in size to take advantage of economies of scale. Last year, in the face of drastic state budget cuts, two social-service nonprofits in Maine combined to form the $23 million YAI Youth Alternatives Ingraham. They reduced costs without reducing programs.
To save money, food banks nationwide are buying shares in orchards. The Maryland Food Bank is building its own kitchen to freeze meals from salvaged food and to repackage bulk cereal. And food banks are increasing efficiency by replacing canned food drives with online ones.
Barack Obama showed what can be accomplished with donors on the Internet, and charities are catching on. Last year, when an earthquake devastated Peru, Oxfam raised $355,000 in a few days via e-mail. Singer Alicia Keys brought in more than $40,000 to fight AIDS in Africa by asking concertgoers to donate $5 through their cellphones.
Givers can innovate, too. Corporations may not have as much cash, but they can free up employees to donate time – as do Marriott, Deloitte, and Verizon with the Boys and Girls Clubs of Greater Washington.
Families can forego a treat and instead treat a favorite cause. They can hold Internet yard sales and pass on the proceeds. Individuals can become monthly reliable donors for small amounts – and consider giving more to make up for those who can't. And like businesses, they can donate time.
When the heart wants to give, nothing can stop it.