Friday, May 28, 2010

Anybody's Bet

The Center on Wealth and Philanthropy in conjunction with the Association of Fundraising Professionals have just issued the following press release detailing the current state of 2009 household charitable giving. The Center reports a five percent drop from 2008 levels.

Paul G. Schervish directs the Center; Paulette Maehara is president of AFP.

In my view it may be a bit early in the game to prognosticate on what the final seven months of the year will bring. In the past major gifts have been important bellwethers of individual giving often fueled by the actuality and perception of stock market behavior. As of 10am this morning the DJIA is off 62 points from yesterday's almost 300 point jump - and that after losing 1000 points in the past several weeks.

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HOUSEHOLD CHARITABLE GIVING DOWN FIVE PERCENT FROM 2008

Totals in 2010 Projected to Rebound by 3-4 Percent

CHESTNUT HILL, Mass. (May 27, 2010) - Individual charitable giving in 2009 amounted to $217.3 billion, a decline of $11.2 billion or 4.9 percent from the estimated $228.5 billion total in 2008, according to the latest report by researchers at the Center on Wealth and Philanthropy at Boston College and published by the Association of Fundraising Professionals. This 5% decline is in addition to the 6 percent decline that the Center calculated for 2008.

For 2010, the researchers project annualized individual giving totals (also known as household giving) will range between approximately $222 billion and $227 billion, an increase between 3 and 4.5 percent over the estimated total for 2009. The projected growth is based on analysis of the first two quarters according to scenarios that assume relatively low and high economic growth.

The full report, which will be published in the July/August 2010 issue of Advancing Philanthropy, the magazine of the Association of Fundraising Professionals. The report's findings are based on estimates produced quarterly by the Individual Giving Model developed and housed at the Center on Wealth and Philanthropy. It is the nation's first model designed to estimate future and real-time charitable giving by households on a quarterly basis.

The Individual Giving Model estimates how the most recent changes in financial resources affect the aggregate level of household giving which excludes charitable giving from foundations, corporations or bequests from estates. The IGM is designed to be calibrated annually and modified every three months based on data that are released quarterly or more frequently, such as price and market indices, along with components of income and net worth.

Launched last year, the IGM was constructed by CWP Senior Research Associate John J. Havens and Director Paul G. Schervish to provide more current and potentially more accurate indicators of how charitable giving is progressing on a national basis. This is especially useful for charities and other fundraisers, which previously had to rely on annual estimates. This is the second estimate report issued based on the IGM.

For the new report, Schervish and Havens expanded and recalibrated the IGM based on information available as of April 15, 2010. The findings are based on data from the Federal Reserve, the Bureau of Economic Analysis, the Bureau of Labor Statistics, the National Association of Realtors, Standard and Poor's, Dow-Jones, and a variety of other sources of data in the public domain.

"The Individual Giving Model is still in the development and testing stage but we believe the model's estimates nevertheless provide near real-time guidance concerning the state of individual charitable giving," said Havens.

"We're very optimistic about the growth in charitable giving in 2010 predicted by the Individual Giving Model," said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. "The research developed by the Boston College Center on Wealth and Philanthropy certainly corresponds with what fundraisers experienced last year and what we're seeing so far in 2010. I believe the Giving Model will be an important tool for fundraisers, especially as it is refined even further in the future."

"I share Paulette Maehara's optimism,"said Schervish. "2010 may just turn out to be the beginning of good news for fundraisers and charities. But it may not be until 2011 that we see the amount of individual giving returning to its pre-recession 2007 purchasing power."

As Havens explained, "Our IGM shows that individual giving declined in real purchasing power an additional 5 percent in 2009 over and above the 6 percent loss in 2008. So it will be some time before we can reverse these declines. Fortunately, charitable giving in the first two quarters of 2010 seems to be on an uptick. However, growth may not continue the rest of the year if the fiscal crisis in Europe brings a second recessionary dip to the United States."

The Center on Wealth and Philanthropy (CWP) is a multidisciplinary research center specializing in the study of spirituality, wealth, philanthropy, and other aspects of cultural life in an age of affluence. Founded in 1970, CWP is a recognized authority on the relation between economic wherewithal and philanthropy, the motivations for charitable involvement, and the underlying meaning and practice of care. For more information, visit www.bc.edu/cwp or call 617-552- 4070.

The Association of Fundraising Professionals (AFP) represents over 30,000 members in 212 chapters throughout the world, working to advance philanthropy through advocacy, research, education and certification programs. The association fosters development and growth of fundraising professionals and promotes high ethical standards in the fundraising profession. For more information, go to www.afpnet.org.

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