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Notes on the Economy and Charitable Giving

By Laurel Amabile, Director of the Annual Program Fund,
Office of Stewardship and Development, Unitarian Universalist Association
September 2008

As soon as people feel confident that this economy is strong and will last, giving will pick up. [1]

Perceptions about financial stability can influence the amount of money people contribute…in most age and income groups, people most worried about money gave a significantly lower percentage (nearly 40%) of the household income to charity than those who did not worry.

Beliefs, Attitudes, and Behaviors that Impact Charitable Giving

Research clearly shows that the decisions of consumers, voters and investors are primarily controlled by beliefs. “Scarcity theology” is one of the beliefs at work in many religious organizations. Those in leadership roles in religious organizations can benefit from understanding the motivations at work in their congregations that affect giving and inspire generosity.

Three modes in which humans live: Taking, Getting, and Giving.

  • Taking—To take something from another. The nature of this relationship is one-sided gain. (Gain-Lose)
  • Getting—To sell, trade, exchange or barter for mutual gain. To work for compensation. The nature of this relationship is conditional and transactional. (Gain-Gain)
  • Giving—Giving is reciprocal, involving giving and receiving which becomes a single beneficial act that transcends notions of gain and loss. The nature of this relationship is co-creative and transformational to both giver and receiver.

Generosity is an outward expression of understanding the blessing of abundance and, in turn, being a blessing to others through giving behavior. Stewardship is the practice of using all we have been blessed with wisely and with care.

Generous behavior is an expression of love and compassion. For many faith traditions, true generosity is a reflection of the generosity of God and the abundance of all creation.

Every gift breaks the barrier between the mundane and the extraordinary. Melancholy springs from neglecting this fulfilling principle of a life well lived. [2]

What We’re Learning from Past Experience and Current Research [3]

Giving potential is present in people even during an economic downturn and despite taxation strategies. Typically, among congregations….

  • 5% give 25% of the budget
  • 10% give 25% of the budget
  • 25% give 25% of the budget
  • 65% give 25% of the budget

These figures parallel the distribution of wealth in the United States. Most of the 5% group are as capable of increasing their giving levels as those in the 65% group. Of the Americans attending worship services regularly…

  • 35% do not give a regular amount
  • 20% give round dollar amounts ($10, $20, etc)
  • 6% give a percentage of income less than 10%
  • 26% give 10% of their income

People who put their financial commitment in writing give, on average, two times as much as those who do not pledge in writing. People who make commitments based on a percentage of their income give three times as much as those who base their giving decisions on dollar amounts.

Statistics on giving during the seven economic recessions since the Great Depression indicate that what happens in the economy has less of a negative influence in giving than one would think. The factor that carries more influence is how effectively congregations ask their people to give.

Giving to religious organizations has steadily risen since 1996, nearly doubling the average contributions in inflation-adjusted dollars, from $44.93 to $96.82. [4] During the years 1998 through 2002 there were sharp increases in philanthropic giving despite a downturn in the stock market in 2001, with $1.1 trillion donated. Wealthy people become highly anxious because of concerns about protecting assets.

According to Herb Miller, congregational consultant and author, spending data of congregations, there are indications that economic stressors seen in the 1978-1982 era of high energy costs, health insurance costs for clergy, and travel expenses for clergy are being repeated, and more intense. This is resulting in fewer smaller congregations (with fewer than 125 attending weekly) being able to support full-time ministries and sustaining financial viability. Instead, large multi-site congregations are becoming more and more prevalent. Of the “mega-churches” reporting, at least 75% provided funding to a variety of social ministry programs in their community, including programs for teen youth, families and inliiduals (cash or vouchers), counseling services and support groups, hospitals and nursing care facilities, thrift stores, temporary or permanent housing/shelter, senior citizen programs, substance abuse and 12-step programs. [5]

As for Philanthropic and Charitable Giving in General…

Choices for dividing our wealth include:

  • Spend (taxed), or
  • Save (defer taxes), or
  • Charitable Giving (limits taxes paid)

Approximately two-thirds of all philanthropic gifts come from the wealthiest three percent of Americans. Wealthy people give their largest portion to foundations and combined funds (like United Way), followed by giving to religious and educational institutions. Business owners give the most, even if they are parents of young children. Among average American households 60% of charitable giving goes to religious organizations, followed by giving to support human needs, 15% to educational institutions and the Arts. [6]

According to the Giving USA Annual Report on Philanthropy for 2007 [7], charitable giving broke the $300 billion mark in 2007, including donations made by individuals, foundations and corporations. This is an increase of 3.9%, with a significant increase of 6.9% in donor bequests. Individuals contribute the largest portion of the charitable dollars, $229 billion, with another $23 billion in bequests. Religious organizations receive the largest share of the total donations (33.4%) totaling over $102 billion. Human service agencies in general have seen increased giving since 9-11 and the Gulf Coast hurricanes.

Giving data shows that younger contributors are giving at increasing levels, and tend to give to those organizations addressing the human needs in the global arena. Younger donors give about as much to charitable causes as older donors, expressing a particular desire to “make the world a better place.” [8] Data also shows that those attending religious services at least once a year give more to both religious and secular causes than those not attending at all. According to survey data, younger donors report their willingness to give at higher levels than they are currently being asked.

The relationship between giving (charity) and income is mutually reinforcing. Both elements prompt increases in the other. Research conducted in 2000 shows: 1) Each dollar of income stimulates $ .14 of new giving. 2) Each charitable dollar is associated with $4.35 of extra income. 3) Of the extra income, $3.75 was due to the $1.00 given to charity. [9]

Fundraising consultants that excel in today’s economic climate offer the following advice: [10]

  • Interpersonal relationships are central.
  • “Donors give for their reasons; don’t forget.”
  • Focus energy on the inliiduals who demonstrate the greatest interest in the organizations and who have the capacity to give.
  • Effectively involve the high level staff and leaders of the organization.

Footnotes

  1. Gary Moore, presentation, April 2006.
  2. Notes from “Trends & Strategies” presentation by H. King McGlaughon, Jr, April 2006.
  3. Miller, Herb, New Consecration Sunday Stewardship Program, 2007; Herb Miller’s Nuggets, Vol. 5
  4. Lake Institute on Faith & Giving/Center on Philanthropy, based on statistics noted in Giving USA: The Annual Report on Philanthropy for the Year 2006.
  5. Lake Institute on Faith & Giving/Center on Philanthropy.
  6. Moynihan, Brian, “Wealth and Philanthropy: Who Gives (and why),” Boston Globe, December 25, 2006.
  7. Giving USA: The Annual Report on Philanthropy for the Year 2007. As noted in the online article written by Joanne Fritz, About.com.
  8. Harris Interactive Donor Pulse survey data.
  9. Brooks, Arthur, Who Really Cares, 2006.
  10. Campbell & Company. From an article by Joanne Fritz, Top 10 Tips on the Fine Art of Cultivating Donors, About.com.

Download this document (Word) (PDF).

For more information contact apf @ uua.org.

This work is made possible by the generosity of individual donors and congregations. Please consider making a donation today.

Last updated on Thursday, July 14, 2011.

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