March 31, 2008 | Read Time: 3 minutes
San Diego
The turbulent economy caused donations to charity to slow last year and many fund raisers are quite concerned about how the economic downturn will affect giving in 2008, according to a study released here today by the Association of Fundraising Professionals at its annual conference.
Small groups have seen more significant problems than large ones, according to data reported by 398 organizations.
While almost two-thirds of charities raised more money in 2007 than in 2006, the size of those gains dropped last year, according to the survey.
More than a third of charities, 38 percent, said donations grew by less than 20 percent last year, compared with the 29 percent cent who saw that size increase in 2006.
Nine percent of charities said they achieved fund-raising gains of more than 50 percent in 2007, compared with the 23 percent of organizations that increasing giving by that amount in 2006.
Over all, 65 percent of charities surveyed raised more money in 2007 than in 2006, while 24 percent raised less and 11 percent raised about the same amount, according to the survey.
Gloomy Expectations
Asked how their organizations will fare in 2008, just 58 percent of fund raisers believe their organizations will raise more money in 2008 than in 2007, the lowest level of optimism since 2002, when gifts to many charities fell sharply in the wake of the 2001 terrorist attacks.
“It looks like 2008 could be one of the most challenging years charities have seen in some time,” said Timothy R. Burcham, chairman of the fundraising association and vice president of advancement for the Kentucky Community and Technical College System.
The slowdown in the nation’s housing market and economy that occurred in the last quarter of 2007 triggered the drop, said Paulette V. Maehara, president of the Association of Fundraising Professionals.
“2007 seemed to be a typical year for fund raising until the environment changed dramatically at the end of the year with the mortgage crisis,” she said.
It’s not clear yet whether fund raising will continue to decline, she said.
“The million-dollar question is, do these decreases represent a return to normalcy from the very strong year we saw in 2006, or the beginning of a much bigger slide in fund raising and giving?” she said.
The answer will depend on whether the economy improves, she said. “If the housing crisis levels off, gas prices decrease, that could ease tensions a little bit.”
Online Donations Slow
Nearly every technique charities used to raise money faced sluggish growth last year, the survey found.
Direct mail, telemarketing, major gifts, and special events all grew at slower rates. The decline was the most-severe in online fund raising, where growth rates fell by 26 percent.
Planned gifts were the exception to the trend: 54 percent of charities saw an increase in the amount of money they raised through bequests and charitable remainder trusts last year, compared with 52 percent of organizations in 2006.
The increase in funds raised through planned gifts could be part of the intergenerational transfer of wealth that has been predicted in studies over the past several years, Ms. Maehara said.
The survey found a growing divide in fund-raising success between small groups and large ones. For example, 70 percent of charities with budgets of $5-million or more raised more money in 2007 than in 2006. Meanwhile, just half of organizations with budgets of $500,000 or less raised more money in 2007 than in 2006.
Full results of the survey are expected to be available in May, officials of the association said.
