What lies ahead for nonprofits this year?
To find out, we tapped two of the nonprofit experts that we profiled in our November issue, Wendy Smith, author of the book, Give a Little, and a consultant to nonprofits around the country. She also advises donors on how to choose the best nonprofits with which to share their time, energy, and money. Below, she offers some statistics on what we might expect in 2011, and beyond.
Nonprofit guru Robert Egger (pictured above) was Be Inkandescent Magazine’s November Entrepreneur of the Month. The author of “Begging for Change,” has some interesting ideas about how the nonprofit industry is likely to change in the coming years. See our Q&A with him, below.
Insights from Wendy Smith
Give a Little
According to the University of Indiana’s Center on Philanthropy, in 2009, individuals, foundations, and corporations gave a total of $303.75 billion to charity, which was an overall decline of 3.6 percent from 2008. Specifically, individual giving declined by 0.4 percent, bequests by 23.9 percent, and foundation grants by 8.9 percent, while corporate giving actually rose by about 5.5 percent.
The 3.6 percent overall decline represents the largest decline since the Center began reporting giving statistics in 1956. Still, considering that U.S. citizens have lost approximately 19 percent (1) of their net worth since the recession began in 2007, their charitable giving remains relatively quite high, which is consistent with the American charitable ethic.
Each year, approximately 75 percent of all giving comes from individuals, 15 percent from foundations, 5 percent from corporations, and 5 percent from bequests.
In 2009, individual giving amounted to $227 billion — a figure that belies the popular myth that the overwhelming majority of giving comes from billionaires, large foundations, and celebrities.
In fact, the Buffet/Gates Billionaires Pledge expects to raise a total of approximately $600 billion. That means that everyday citizens in the United States give this amount every three years.
Over time, social media are going to change the philanthropic landscape in a very significant way. Although total giving via the Internet remains a small portion of overall giving, this is trending upward quickly.(2)
The Internet and social media give nonprofits of all kinds — from local community-based to small projects operating in remote areas of developing countries — an affordable means of connecting with interested citizen philanthropists and engaging them in their work with real-time updates.
Studies show that Generations X and Y are using electronic media to donate via texting and the Internet at high rates.(3) Future generations of citizen philanthropists will give online and through texting without reserve.
I believe this bodes very well for growing the slice of the giving pie that comes from everyday citizen philanthropy through informing, inspiring, and calls to action.
In addition, social media offer the opportunity to counter the imbalance of media attention given to billionaire and celebrity philanthropy and inform citizen donors of the magnitude and power of their giving, as well as the potential impact of additional affordable gifts each year. Learn more at www.givealittlenow.com.
(1) “Household Worth in U.S. Fell in Second Quarter,” September 17, 2010, Bob Willis and Anthony Feld. http://tiny.cc/4y0d1
(2) “Online Giving Grew Fast This Spring, 2 Studies Find” July 15, 2010, Nicole Wallace. http://tiny.cc/2ecqf
(3) ”The Next Generation of American Giving: A study of the contrasting charitable habits of Generation Y, Generation X, Boomers and Matures,” March 2010, Vinay Bhagat, Founder and Chief Strategy Officer, Convio; Pam Loeb, Principal, Edge Research; Mark Rovner, Founder and Principal, Sea Change Strategies. Read more.
A Q&A with Robert Egger
DC Central Kitchen
Be Inkandescent: Based on your experience working as a nonprofit, and advising other nonprofits, what is your forecast for the future of nonprofits?
Robert Egger: I think nonprofits will have to blur the lines that have divided their efforts, work closer together, and become much more sophisticated about helping political leaders see that their collective work is essential to maintaining, and growing the local and national economy.
Perhaps more profound, I think the era a “service” is ending, and will have to be replaced by organizations that empower. It won’t be enough, for example, to merely house a victim of domestic violence—they’ll need to find work.
And it won’t be enough to train somebody and “hope” they get a job that pays a solid wage or offers benefits. WE have to become employers ourselves. WE have to build workforce housing. To coin an old phrase: WE are the ones we’ve been waiting for.
Be Inkandescent: Do you think more nonprofit organizations will consolidate or go out of business?
Robert Egger: While there has been an explosive growth in need for services during the last two years, you could make a case that, in urban settings in particular, nonprofits operate in a saturated market, and many, if not all, groups function in a state of financial anemia. This must change … but not necessarily via “2 become 1” mergers. I’d like to see the sector consider consolidating their voices, their financial interests, and their job-producing statistics first, so that any thoughts of adaptations are based on our collective strength, versus our individual weakness.
Be Inkandescent: Do larger nonprofits have a better chance of making it through 2011 and beyond, or are smaller, more nimble nonprofits more likely to be around in the coming years?
Robert Egger: Big or small isn’t going to be nearly important as what is being accomplished. If groups can demonstrate and document economic growth, empowerment, and offer (in some substantive measurable way) evidence that they are doing more than merely meeting a need (as important as that is), then they will do better than those that base appeals for support on stating the problem.
Be Inkandescent: Are people struggling to make ends meet as the recession lingers less likely to give? Are big donors suffering from donor fatigue? What can nonprofits do to keep their donors happy and giving?
Robert Egger: Americans are generous to a fault, and giving will most likely stay close to current levels next year. However, a new generation of donors is on the assent—a millennial generation almost 80 million strong that has been raised doing community service. Platitudes and pity won’t suffice for them. They want a plan.
During their years of service they have seen what works and what doesn’t … and they won’t genuflect to tradition at the expense of moving the dime. And speaking of dimes, they won’t have economic ability to keep the sector as it exists now, fully funded.
Nonprofits MUST begin to understand that our explosive growth during the last four decades was based on an economy that generated extra money, food, materials, and time. The era of providing “extra” is ending in America. Groups that understand this will have a better chance of attracting donors, liberating clients, and elevating the dialogue. Learn more at www.robertegger.org.