Today, June 20, 2011, the latest Giving USA numbers were released by the Giving USA Foundation estimating the giving for 2010 based on the recently released actual numbers for 2008 to include their re-revised numbers for 2009. In past years the revised numbers were usually revised upward. Due to the recession that began in late 2007 and carried through 2008 and 2009, the revision was downward and has created a little (or a lot of) angst among some in the nonprofit community. Continue reading “People Keep Giving Money Away!”
Two weeks ago everything seemed bright on the economic horizon with the stock market moving well and unemployment numbers from April looking better and better all the time. What a difference a fortnight makes.
The news this past week from Wednesday on was not cheerful, and was not bright. Only 58,000 jobs were created over the month of May, well short of the number required to have impact on the unemployment rate. It would take gains of 350,000 per month to truly impact the numbers and lower the unemployment rate, which rose to 9.1% nationally due to more people entering the work force and actively looking for work. There are 7 million fewer people working in our country now, than 2006. That is a sobering thought.
No wonder there is such a lull in economic activity and no wonder there is such caution in spending on the part of those who are working.
In 1992 I took a position with the Sisters of Providence Health System in Springfield, MA and the unemployment rate in Massachusetts at the time was 11%. As we planned our fund raising activities, board members (and others) questioned our strategies; I repeatedly mentioned that we were going to focus on the 89% of the people who were working. During my three years there we increased the number of donors from 600 annually to more than 3,500 annually.
Even now throughout our country, more than 90% of the people are working and being very productive. They are not spending and they are concerned that they may be laid-off or lose their jobs. Debt is being reduced (short term debt continues to shrink) and savings is increasing. Thus the savings rate in America is at an all time high having exceeded the 5% level for 10 consecutive quarters. Currently there is $2.7 trillion (yes…trillion) in money funds in America earning less than .3% annually. This does not count savings accounts, checking accounts or short term certificates of deposit (less than 6 months). There is a tremendous amount of money still sitting on the side lines as people are cautious with their spending. At the current savings rate, the economy will make a fundamental shift at some time – there will come a moment when we shift from being a nation of consumers to a nation of investors. But when is the question.
So in this lull, what should you do to support your organization?
- Stay focused on the needs in the community that your organization is serving
- Continue to ask for gifts that will change people’s lives
- Be bold and confident
- Have a vision for the next 3 to 5 years
- Demonstrate results and success
- Seek community endorsements for the good work you are doing
- Stay close to your donors keeping them informed in a variety of ways
- And continue to seek philanthropic support – last week 3 donors gave our clients significant 7 figure gifts!
These are difficult times still, but over time the difficulties will pass. They always have, and they always will.
All the best,
This is a fun time of the year when you get to reflect on the past and look forward to the future. Over the holidays I read article after article summarizing the growth made during 2010, taking our country out of recession (ever so slowly) and into more future opportunities. And then there were the articles projecting economic growth for 2011, offering both positive and not so positive views of what the future might hold.
One has to consider what this all means for the nonprofit world and the prospects for the organizations and institutions that serve our communities every day, day in and day out.
Here are a few economic tidbits for your consideration:
- The DJIA increased 11% during 2010 hitting 11,577 on December 31st.
- The DJIA first closed at the 11,577 mark on January 7, 2000, 11 years ago
- The S&P 500 increased 12.8% during 2010 hitting 1,258 on December 31st
- The S&P 500 first closed above the 1,258 mark on January 6, 1999 nearly 12 years ago
Since the first of the year, three weeks ago, the market has had some nice gains with the DJIA over 11,800 and the S&P 500 at 1,280. Above I mention an 11 and 12 year difference in the numbers. Now it is down to a 5 year difference as both indexes first hit this mark in 2006. Because of the market recovery toward its all time high of 14,167, we are returning to a period of more investor confidence which will be important for contributions in the sector going forward.
Another factor is the savings rate. Since the 4th quarter of 2008 the savings rate has been above 5% for 8 consecutive quarters. Rather than being a nation of spenders we are becoming a nation of savers. As savings assets increase we may also see an increase in the stock market. Money market funds which are earning approximately .25% (yes, a quarter of one percent) have grown to nearly $3 trillion. This does not count checking accounts, savings accounts and short term CDs which would add to the cash available for investing and/or spending. Prior to the previous 8 quarters, the savings rate during all of 2006, 2007 and most of 2008 was in the 1% to 2% range. This is a significant shift for America.
Though I do not have the complete statistics here, Americans are also paying down credit card debt, which is also at its lowest levels since 2008. For the past 18 months, consumer credit card debt has continued to decline easing the burden on American families. The amount of debt over that period has fallen from $975 Billion to $852 Billion. Still a lot of money that is owed, but a significant drop none the less since the debt was growing up until that time.
Americans are still being cautious with their resources – but there is room for them to become optimistic. What messages are you sending your donors and constituents about the needs your organization is meeting every day, day in and day out? With the gains during 2010 and anticipated gains for 2011, there is reason to believe things will continue to improve across the nation and for the nonprofit sector. However, one item looms large for many nonprofits – and I will write about it next week – the impact of state government cutbacks as nearly 40 states may be on the brink of bankruptcy and thus unable to meet their financial obligations.
As always, I look forward to any additional insights and comments you may have on this topic.
All the best,