When donors have less (or are afraid of having less) they give less.
Charitable giving is generally correlated with (and enabled by) many socioeconomic factors. The most common and intuitive factors are those that influence personal income and wealth. This is why we see revenue earned by non-profit organizations rise and fall with the changes in the stock market, a general indicator of personal wealth.
Figure 1: “The Macroeconomics of Fundraising,” published April 2015 by Target Analytics, a Blackbaud company. “Authors: Carol Rhine and Helen Flannery
It’s possible you may have noticed a slight slump in revenue for your non-profit this fall. For a few of our clients, it came as a surprise. Many didn’t even notice the softness in results because their revenue was still growing from other factors like an increase in new donors or a surge in large gifts.
Blackbaud is also reporting that most non-profits and faith-based ministries saw a decline in overall giving starting in September, so if you also saw this, you’re not alone.
Figure 2: Blackbaud Index Data comparing all non-profit and faith-based non-profit revenue change over time. https://www.blackbaud.com/nonprofit-resources/blackbaud-index
WHY IS GIVING SOFTER THIS FALL?
USA Today reported on August stock market performance, saying the S&P 500 posted the biggest monthly loss in more than 3 years and the DOW also had the worst monthly performance in the past 5 years. This kind of drop would have affected a large number of 401(k) portfolios, making Americans nervous about their finances heading into the year-end giving season. Performance struggled to rebound until November.
Figure 3: S&P 500 1-year trend from Trading View.
According to Fidelity Investments and 401khelpcenter.com, a record number of people sought help with their 401(k) this past August, asking about ways to manage their investments during volatility, the pitfalls of converting to “all cash,” and the possible reasons behind recent market drops. It was one of the busiest periods on record.
In addition to financial woes, the country is in the middle of a presidential election race that has been capitalizing on the fears of Americans in the wake of growing terrorist threats across the globe, and the recent attacks on Paris in November. Americans are on edge and worried about the future, which could also be distracting them from giving.
A recent poll by the Washington Post indicates a growing fear of a terrorist attack on American soil since the attack on Paris. Prior to the Paris attack, nearly 75% of Americans already felt that a U.S. attack in the near future was at least somewhat likely. The state of global events also has over 1/2 of Americans dissatisfied with how we are currently handling the threat of terrorism.
Large gift donors may also be backing off of their support of non-profits this fall to endorse political campaigns. With the rise of “super PACs” that are not subject to contribution limits and the intense battle for presidential nominations, the New York Times reports that “the 2016 campaign fundraising is significantly outpacing recent election cycles at this point.”
The good news is that many of Masterworks’ clients are already showing signs of increased giving in November. Maybe yours is, too?
This kind of continued recovery suggests that the stock market improvement is probably offering the greatest help and encouragement for donors to give.
If you are interested in talking further about how Masterworks can help you to analyze your ministry’s donor giving, contact me at scaldwell@masterworks.agency.