There are two factually accurate headlines that could run today about the newly released numbers on US charitable giving in 2008:
Charitable Giving Exceeds $300 Billion. Second Highest Level of Giving Ever!
Charitable Giving Falls Dramatically. Largest Percentage Drop on Record!
What’s going on here? Did Americans step up to support the growing needs of nonprofits or did they freeze their giving as the economy fell apart?
There is no simple answer to that question. Here’s what you need to know (all stats come from Giving USA, a publication of Giving USA Foundation).
Total giving in 2008 was $307.7 billion. The total giving in 2007 was $314.1 billion. This represents a 2% drop in giving. These two years represent the only years on record where giving exceeded $300 billion.
However, Giving USA adjusts their statistics to account for inflation (as do most providers of economic data). Adjusted for inflation, the drop from 2007 to 2008 was –5.7%. The next largest year over year drop was the –5.4% fall in 1974. Even ignoring inflation, total giving dropped 2%. Since 1968, this is only the second time non-inflation adjusted giving fell (it fell 1.3% in 1987).
So what’s the take away? I would say that the best way to think about charitable giving in 2008 is that it contracted sharply, but that the contraction was less than many people feared and the total amount given was within the range of the level of giving seen over the past few years. Giving as a percentage of GDP was 2.2%, within the normal range and very close to the 2.3% of GDP that was given in 2007.
What if we only look at gifts made directly to secular nonprofits (excluding gifts to religious institutions and foundations)? On an inflation adjusted basis, donations fell 8.5%, the worst drop on record but not terribly different than the 6.1% drop in 1975. And even on an inflation adjusted basis, the amount given to these nonprofits exceed the level given in every year from 1968-2004 (from 2005-2007 giving to this group was between 4.4 and 9.3% higher than the 2008 level).
Charitable giving behaved more or less as it normally does when the economy sours. This is, by most measures, the worst recession in a very long time and so we’re seeing charitable giving get hit. But it is only declining in line with the way it normally behaves.
Things are tough, but there was no apocalypse.
Update: On a non-inflation adjusted basis, giving to secular, direct nonprofits fell 5.0% (excluding religious institutions and foundations). This is the first year over year decline on record (since 1968). Much like the non-inflation adjusted numbers for giving over all, this represented a decline from 2007, but still represented the second highest level of giving on record.
I just chatted with a reporter about inflation adjusted vs. non-inflation adjusted and for the record, inflation adjusted numbers are the “correct” ones to focus on. That being said, if a nonprofit reported to their board that they received $5,000,000 in donations in 2007 and $5,150,000 in donations in 2008, they would report that as an increase, even though under the inflation adjusted methodology used by Giving USA, this fundraising total would represent a decline.