Drakes Bay Fundraising
A Next Generation Fundraising Company

Archive for September, 2011

2000 to 2010 Census Data, Part Two

Posted by Christopher Dann
Monday September 26, 2011
Categories: Fundraising

Fundraising is our focus. But we have to pay attention to the contexts of fundraising, especially to organizations’ mission strategies and financial models.

Human resource management plays a role in the financial capacity and general stability of nonprofit organizations that one can readily argue is more valuable and important than in most parts of the for-profit sector.

The Census data released last week reported through copious data on changes in household income from 2000 to 2010. While it had mostly bad news for the for-profit sector and some as well for the nonprofit sector, it also suggested opportunity for the more entrepreneurial human resource managers of nonprofit organizations.

One opportunity can be found in the fact that some of the most experienced employees of our society are returning to work, undoubtedly to restore the nest eggs depleted by the recession. The labor force of men age 55 – 64 increased 67% to 70% during the decade, and that of women 55 – 64 increased from 52% to 60%. Among men and women in this age range nonprofits are not only likely to find the wisdom of experience and the assurance of stability, but also cultivated affinity toward organization’s missions and programs.

Just this week we had the pleasure of new acquaintance with a man who is bringing his media sales experience to an organization he cares deeply about, and we talked very specifically about how he expects to increase its fortunes.

One the other end of the age spectrum, sad to say, there has been substantial decline on household income which we know has a lot to do with unemployment and under-employment – we hope temporarily – of people ready to fill positions organizations must now find volunteers to fill.

Entrepreneurial human resource management is what’s called for; and there couldn’t be a more exciting time to be a professional in that field.

A Ray of Census Sunshine

Posted by Christopher Dann
Thursday September 22, 2011
Categories: Fundraising

Cheryl Russell’s American Consumers Newsletter (www.newstrategist.com) is a consistently dependable digest of demographic data. The September 20 edition reports on Census Bureau data released last week comparing household income in 2000 to 2010. One look at what’s available and we were grateful for Cheryl Russell’s talent.

This is the first of two blogs reflecting in very different ways on the Census data.

She homed in on the fact that median household income declined 7% over the decade. And in the detail – as demoralizing at it mostly is for sellers of consumer products and services – is a bit of good news for fundraisers and nonprofit marketing pros who know who accounts for most of American charity.

Here’s the break-down of change in household giving from 2000 to 2010 by age range of head-of-household:

Under 25           – 20%
25 – 34              – 11%
35 – 44              – 9%
45 – 54              – 14%
55 – 64              – 0.4%
65 +                   + 7%

This perspective helps explain – but just in part; we know by now we are dealing with a complexity of influences – why giving hasn’t suffered the degree of impact some consumer sectors have.

The data give us a ray of hope for the near term, since the majority of most donor bases have median ages in the 60s. We need to hope that the situation improves soon for those now 45 – 54, the age range at which discretionary household income usually peaks and habits of philanthropy begin to mature.

Tax Deductibility is Too Complex for Simple-Minded Position-Taking

Posted by Christopher Dann
Monday September 19, 2011
Categories: Research

It was remarkable to see how quickly nonprofit executives spoke out against the President’s proposal to reduce deductibility of contributions for high-income individuals and households. Forgetting for the moment the rationale for tax-exempt enterprise in the first place, and thus the reason for tax deductibility as a government tax expense, the impact of the President’s proposal – which was mild by comparison to that of the bi-partisan Deficit Reduction Commission – is just not easy to calculate. Nonprofit executives should be more careful.

Coincidentally, the IRS released in mid-August (Publication 1304) an exhaustive (and exhausting) amount of data providing insight into 2006-to-2009 comparisons of individual income and itemized deductions.

While the data demonstrate, in general, that tax-deductibility is important to giving – 75% or more of individual giving in 2009 was claimed as deductible in individual tax returns – there are three problems with asserting that the proposal to reducing deductibility above $250,000 in AGI will hurt the nonprofit sector, never mind asserting it will reduce nonprofit employment, as some have suggested.

The first problem is that we don’t really know how the influence of deductibility plays out at highest income levels. It is reasonable to hypothesize that it becomes less important the higher AGI gets above, say, $250,000.

The second problem is that we don’t know how the influence of deductibility plays out across the widely varied subsectors of the nonprofit sector. Given disparate patterns of giving among the subsectors, we can hypothesize that impact would be widely varied.

The third problem is that we don’t know the interrelated influences of the principal categories of itemized deductions. The IRS data show this:

% of itemized deductions by category
For returns claiming deductions in 2009

State and local taxes               96.3%
Real estate taxes                     87.5%
Contributions                           81.5%
Home mortgage interest          80.0%

There have been studies in the past demonstrating the coincidence of tax burden and household giving. Whether there is a causal relationship is a question now worth pursuing through research.

Incidentally, the first and probably foremost fact derived from the Publication 1304 data is that individual adjusted gross income (AGI) dropped an inflation-adjusted 9%. That might not feel like much to you and me but it meant that in the aggregate more than a half trillion dollars of income was lost, helping mightily to explain why discretionary spending fell during the recession.

The data on itemized deductions also support once again the fact that generosity – the disposition to give – is not a function of wealth. Those in the lowest third income category gave 32% more of their income in 2009 than those in the highest third income category:

Contributions as % of Adjusted Gross Income in 2009

<$50,000                         3.7%
$50,000 – $100,000        3.1%
$100,000+                       2.8%

These data support our long-held contention that for purposes of fundraising we should define wealth as having more money than one needs. They also help explain the common experience of organizations getting estate gifts from people who have not been on their wealth prospect radar screens.





Next Generation Fundraising and Drakes Bay Fundraising merged in the fall of 2013, bringing the longstanding professional acquaintances of their four principals – Tim Oleary, Carol Leister, Cindy Germain, and Christopher Dann – into a single company and combining the special resources and experiences of each to provide clients greater breadth and depth of service.

For more information about Next Generation Fundraising, click here.