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Giving Spirit

People Are Still Donating to Charity — Just Not as Much

Retail statistics for the holiday season show that Americans are still shopping despite the recession; they’re just spending less than in past years. The same trend seems to be playing out for charitable donations.

“People are still giving, but they’re giving less,” Roger Lowe, senior vice president of communications for the American Red Cross, told Reuters Life.

Last year, with the recession growing, donations to charitable causes in the U.S. totaled $307.6 billion, down from from $314.1 billion in 2007, according to the Giving USA Foundation, a consultancy for nonprofits. This year’s figures are unavailable as yet, but are expected to hover in the same area, although it typically takes six to 12 months after a recession ends for charitable giving to fully rebound, according to Charity Navigator, an independent charity evaluator.

Still, tough times seem to have reinforced people’s resolve to help others; 70% of those polled by Giving USA believe it’s more important to donate now, given the state of the economy. And with 80% of those polled saying they favor charities that help the poor, widespread economic hardship might be causing people to think about the plight of those even less fortunate.

The numbers also suggest that Americans are more apt this year to donate to organizations that meet needs within their own communities, rather than national nonprofits. In particular, giving to churches and religious organizations actually rose 1.6% last year.

Peter Fissinger, president of Campbell & Co., a consulting firm for nonprofits, recently used a webinar to discuss the Giving USA numbers, and found plenty to be optimistic about. For example, corporate giving was down by 8% in 2008 while corporate profits fell by 16%, and individual giving (which accounts for 75% of all donations) decreased by 6.3%, although U.S. household net worth fell nearly 18%.

When Giving Is Difficult

Wesley Watkis, managing principal and financial advisor for the W&W Group, a financial-advisory and investment firm, writes of three ways people can donate to charity during hard times and still have enough left over for themselves.

Reduce the amount, but still give. “Perhaps you used to send a large check to your favorite charity, but can no longer spare the money. You don’t have to give a large gift in order to make it worth the effort, however,” he writes. “If you can pare down your expenses to find the money, or even find $10 in a month to give, the charity will be glad to have it … even that small amount can make a big difference in someone’s life.”

Consider in-kind donations. “If no amount of money is available in your budget, what about giving away some of the items clogging your basement?” Watkis asks. Many charities will take donations of usable household items, which they can sell to raise cash. “Be sure that you are only giving away items in good order, however,” he adds. “Sending broken items forces the charity to pay money to take it to the dump, and actually takes money away from the people they are trying to serve.”

Time is money, too. “Even if it’s not money or food you are giving to the food bank, for example, they still need volunteers to sort through the donations and to make packages for those in need,” Watkis notes. “Many other types of nonprofits are also desperately in need of volunteer help, and volunteering is a fabulous way of continuing charitable giving during a recession.”

Certified financial planner John Gin recently wrote in the New Orleans-based Times-Picayune that people should always consider the laws surrounding charitable giving and try to maximize the tax benefits in order to afford higher donations. That includes giving to qualified organizations recognized by the IRS and properly documenting donations.

Gin also suggests donating stock or mutual-fund shares as one charitable option, as well as making contributions a regular part of one’s budget through payroll deductions or automatic bank withdrawals.

Meanwhile, Fissinger’s webinar concluded with a panel discussion that produced several bits of advice for nonprofits struggling to bring in enough donations to continue their services. They include:

  • Stay in touch with donors, even if they can’t give as much as they did at one time;
  • Explain to donors how their contributions impact the organization’s mission;
  • Appreciate donors and thank them frequently;
  • Focus on annual gifts, major gifts, and bequests;
  • Tell a compelling story;
  • Engage donors continuously; and
  • Look at development as a long-term investment.
  • —Joseph Bednar

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