Drakes Bay Fundraising
A Next Generation Fundraising Company

Archive for March, 2012

More about donors and spending

Posted by Christopher Dann
Tuesday March 20, 2012
Categories: Fundraising, Statistics
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New Strategist Publications’ Best Customers, mentioned in our last post, offers insight for nonprofit managers beyond its data on cash contributions.

We’ve often said that since all giving is voluntary it comes from discretionary money. So when we are prognosticating at budgeting time about what the future holds for giving, we pay attention to what is happening in discretionary spending for consumer products and services. Discretionary income has been down for a long time, so paying attention to competition for discretionary dollars is important.

Here from the Bureau of Labor Statistics 2009 Consumer Spending Survey are some telltale categories:

The impact of depressed discretionary income had varying impact on giving, as other research has shown. The Bureau of Labor Statistics Consumer Expenditure Survey reports that while general cash contributions (excluding giving to education, religion, and politics) increased an annual average of 3% from 2000 to 2009, that rate slowed to less than 1% between 2006 and 2009.  They report that gifts to educational institutions dropped 75% and gifts to religious institutions dropped 10% across those years.

The question we keep asking ourselves is whether the pent up desire for some of those things on which people have not been spending their discretionary income is going to have greater impact on giving as economic recovery progresses.

Best Donors

Posted by Christopher Dann
Monday March 19, 2012
Categories: Fundraising
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New perspectives on the donor marketplace emerge from New Strategist Publications’ Best Customers, published at the end of 2011. Having more than 750 pages of data and annotation on every conceivable product or service, it is based on the Bureau of Labor Statistics’ 2009 Consumer Expenditure Survey. Included are sections reporting on cash contributions to “Charitable Organizations,” “Educational Institutions,” “Political Organizations” and “Religious Organizations.”

We are disappointed to find the BLS’ dollar figures – because they average across all households whether or not they give – understate what the average giving household gives. But indexes based on the average at 100 are very helpful in giving us relative values by various demographic perspectives.

For “Cash Contributions,” excluding the other three categories, here are the indexes for four key demographic measures:

 

Variations from these indexes in the education and religion categories are intriguing. Consider these:

  • education contributions at 162 in households headed by people 35-44
  • contributions to religion index higher than general contributions in all age ranges except 55-74
  • contributions to religion index above 100 at all income levels, while those to education exceed the average in on the $100,000 and over range, and there 319% above average
  • for both education and religion single person households fall way below average, indexing 57 and 54 respectively
  • education indexes highest (326) in households with married couples and children 6-17 years of age; religion indexes highest (187) in households with married couples where the eldest child is 18 or older
  • both contributions to education and religion index by education of head of household consistently with general cash contribution patterns…education being the proverbial field leveler

Financial Literacy and Academic Idiocy

Posted by Christopher Dann
Wednesday March 7, 2012
Categories: Fundraising
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You guessed it. This is a rant.

The Center on Philanthropy released a report last month titled Financial Literacy and Knowledge in the Nonprofit Sector. As badly as the nonprofit sector needs the academy to focus brains and careful attention on this subject, this report is hugely disappointing. But its errors and omissions are worth writing about.

First, the report is on a survey study eliciting voluntary response. The idea of assessing the competence of professionals through a voluntary survey is absurd.

Second, therefore, while the survey registered a 15.3% response, 84.7% did not respond. Nowhere in the report is non-response error addressed. The only caveat to be found is a footnote toward the end of the report in the section on methodology …

Third, the footnote says: This study is not nationally representative, but is instead suggestive (my emphasis) of the response of medium-size nonprofit organizations, that is with organizational revenue between $1 million and $5 million. The Chronicle of Philanthropy, incidentally, missed this important note.

Fourth, assessment of financial literacy was based on these three true/false questions:

  • If interest rates rise, bond prices will rise.
  • When an investor spreads money between (sic) 20 stocks, rather than 2, the risk of losing a lot of money increases.
  • Buying a single company’s stock usually provides a safer return than a stock mutual fund.

Seriously. There are a whole lot of questions specific to functions and responsibilities of financial managers in the nonprofit sector that are an awful lot more important than these. They would assess not so much literacy but knowledge and competency. They would get at financial professionals’ skill at managing not only the balance sheet but the balancing of competing interests endemic to nonprofit organizations:

  • Program, financial, and funding source strategies
  • Capital versus operating financial demands
  • Current program demands versus future requirements
  • Paid versus voluntary human resources
  • Free versus monetized services

We look forward to a study that begins by asking what is uniquely required of financial professionals to keep right the ships of nonprofit organizations.

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.