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Charitable Giving: The Good, the Bad and the Ugly

June 11, 2009 By:
Robert I. Evans and Avrum D. Lapin
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Let's start with the good news: 2008 charitable giving by Americans declined by only 2 percent from 2007, which had marked the strongest year for philanthropy this nation ever saw.

According to Giving USA, which this week released the results of its annual report, Americans contributed a total of $307.65 billion to charitable causes.

The bad news is that with the uncertain economic environment and the loss of philanthropic dollars due, in part, to the Madoff scandal and declining investments, this year is shaping up to be much tougher, and will continue to present hardships for nonprofits and their supporters.

While many sectors of the philanthropic arena experienced a decline in giving in 2008, some increased.

Donations to religious institutions, for example, increased in 2008 to $106.89 billion. This marks a growth of 5.5 percent, and represents 35 percent of the total U.S. giving. Historically, we have seen that bad economic times prompt people to seek refuge in their houses of worship, which has clearly played out over the past 12 months. And as people find comfort in their religious communities, their contributions rise accordingly.

Further, the area known as the "public society benefit," which includes umbrella organizations like Jewish federations and the United Way, also experienced a national increase in giving of 5.4 percent. Some federations, like all nonprofits, were able to hold their own with successful fundraising and serious cost containment efforts.

In fact, giving to United Jewish Communities -- the umbrella organization of the Jewish federation system -- and Jewish federations collectively represented 9 percent of all giving in the public society benefit category, playing a critical part in keeping giving to this sector solid.

The Philadelphia-area Jewish community also managed to dodge the full brunt of the Bernie Madoff fiasco, as compared with other communities.

Still, our community -- and the whole nonprofit world -- is seeing a discernable shift in giving.

Yes, we are dealing with cutbacks and other cost-trimming strategies that have now become commonplace in our economy. But we are also seeing a new, fresh perspective from donors, who are raising important questions and who have greater expectations.

At the core of the changes in the nonprofit sector is the emphasis on fiscal transparency. Nonprofits must act accordingly and swiftly. More cautious donors expect greater transparency than in the past; it is therefore imperative that nonprofits comply with those expectations.

Jewish nonprofits everywhere are working to modify their business and communication plans, but too many are still failing to appeal to their own constituencies. And this prompts what we see as a severe lack of support of Jewish causes by Jewish donors.

On the list of top 60 philanthropists from last year compiled by Slate and the Chronicle of Philanthropy, 16 are Jewish by birth or affiliation. Yet there is a notable absence of giving to Jewish-related causes.

It is important that those who are capable of contributing recognize the current state of the economy as a call to action to help sustain their Jewish communities. They need to make their resources available to all type of Jewish institutions, including synagogues, social-service agencies, community centers, day schools and Israel-focused efforts.

At the same time, some older and more traditional nonprofits that resist change will be forced to merge and/or modify their missions. And inevitably, there will be some organizations that will cease to exist.

Still, we are confident that Jewish institutions, programs and services that are strong and committed to improving the community will survive.

It is worth remembering that not all change is negative. The future remains bright as we search strategically for serious investors in the Jewish community of tomorrow.

Robert Evans is a member of the GivingUSA editorial review board. He and Avrum Lapin run EHL Consulting Group, a Willow Grove-based national firm that works with Jewish and non-Jewish nonprofits.

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