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Archive for the ‘Research’ Category

Women Gain in Donor Value

Posted by Christopher Dann
Tuesday December 10, 2013
Categories: Demographics, Fundraising, Research, Trends
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Compensation equity between men and women is as complex a topic as it is heated.

We’re not going to either wade into its complexity or approach its heat. But both aspects of the topic have been largely responsible, we assume, for the Bureau of Labor Statistics attention to it. And we have now a new report, Highlights of Women’s Earnings in 2012, with data useful to our understanding of another complex topic, the donor marketplace.

The bad news in the report, as the always reliable American Consumers Newsletter points out, is that “the decades-long increase in the earnings of women who work full-time came to an end…[and] Women are joining men in the struggle to stay even.”

But there is a lot of good news, at least for fundraising, in seeing what came of those decades of progress that brought women’s earnings as a percent of men’s, full-time wage and salary workers from approximately 62% in 1979 to 82% in 2012. Two graphs from the report illustrate.

graph1

% Change in constant-dollar median usual weekly earnings by
educational attainment and sex, 1979-2011

The table shows that women have made more earnings progress through education. And we know, coincidentally, that more women than men have been enrolled in and graduating from colleges and graduate schools in recent times. With education attainment second only to age as a determining factor in giving, we have here documentation of one perspective on the increased capacity of the donor market.

With very little exception, the donor base research we have conducted for a wide variety of nonprofit organizations over the past 20+ years have shown female majorities in the donor bases or as giving decision makers.

graph2

Distribution of full-time wage and salary employment, by sex and major
occupation group, 2011 annual averages

Of the occupational groups on this graph, bachelor’s degrees are required mostly among management, business, and financial occupations, professional and related occupations, and office and administrative occupations. These three categories accounted for 68.4% of women’s full-time wage and salary employment in 2011 (versus 41.2% of men).

Again, the good news is that the capacity for giving among women has increased very substantially, even if it is now in stasis. This doesn’t tell us either whether the disposition of women to give has changed or whether the nonprofit sector has done what it should to affect greater disposition among women to give.

It certainly doesn’t tell us where any given organization stands relative to the opportunity to benefit from this greater capacity.  That takes research.

Insights into a large class of elite donors

Posted by Christopher Dann
Monday June 24, 2013
Categories: Demographics, Fundraising, Research, Statistics, Uncategorized
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…are the major contributions to our understanding of giving found in the Fidelity Charitable Giving Report, 2013 edition recently published through Fidelity’s website.

Fidelity sampled their 94,000 donors connected to nearly 58,000 giving accounts to produce multiple perspectives on who these donors are and how they give.

Their profile underscores a point we have had occasion to make repeatedly, that the prime time age range of giving begins at 55 when household discretionary income tends to have its growth spurt. While the average age of the Fidelity Charitable donor is 62, the average age at which funds are established is 54.

In all the age profile looks very much like that of most donor files we have researched:

Chart1

While the age profile of Fidelity donors varies little or not at all from that of the general donor population, patterns of their giving do vary.  In contrast to the approximate $3,500 the average itemizing tax filing household gives, the Fidelity donor’s average grant was $3,773 in 2012 and they gave an average 7.1 grants.

Here are the variances from norm of the distributions of Fidelity donor grants:

Chart2

*note, giving in response to Sandy increased Human Services sub-sector giving an estimated 1% in 2012

Donor-advised funds such as Fidelity Charitable have become an important sub-sector on their own. While overall individual giving, adjusted for inflation, dropped 11.3% from 2007 to 2012 (despite Sandy), gifts to donor-advised fund accounts grew 17%. While the former is clearly an effect of what’s happened to the economy, the latter seems to be because of economic uncertainly. Donor-advised funds have become a means of a new form of planned giving.

Finally, some good news

Posted by Christopher Dann
Friday December 2, 2011
Categories: Research
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When the early tallies of black Friday retailing were reported on the Saturday after Thanksgiving, the question was whether they represented pent-up shopping urges and an attitude of gloom-be-damned or a genuine turning of consumer confidence. Confirmation came earlier this week that there has indeed been a turn in consumer confidence.  The picture has looked so bad for so long that it’s nice to see what the rise in confidence looks like:

Indexes below 70 don’t give us reason to relax, but a relatively dramatic turn, especially at this critical time in the fundraising year, certainly offers hope.

Such news prompts us to remember that a good number of those whose support lapsed over the drawn out time of the recession did so out of lack of confidence in the economy and not because they lost their regard for your organization. It’s time to remind them, and fortunately with email there’s a medium available to do that quickly and efficiently.

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

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

 

 

 

 

Change in charitable tax deduction appears inevitable

Posted by Christopher Dann
Thursday July 21, 2011
Categories: Research
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While it will be impossible to know with any reasonable degree of certainty for many months what changes will be made, let alone predict its impact on giving, we know enough to start contingency planning.

What’s on the table in Congress and at the White House is the Deficit Reduction Commission’s proposal that the charitable tax deduction be transformed to a 12% tax credit for giving above 2% of adjusted gross income (AGI).

We’ve reported earlier that the Bureau of Labor Statistics has documented in its Consumer Expenditure Survey for 2009 that the lion’s share of household giving – about 2/3rds – comes from households headed by people over 45.  Overall average annual household giving from that sector was approximately $2,100 in 2009 and is probably about that still. So to get a tax credit, these households would have to have an average AGI of $105,000.

These facts offer persuasive rationale for learning the age and income characteristics of one’s donor base, if you haven’t already.

While we have no idea at this point what else tax code reform might do to affect the average AGI (such as the elimination or reduction of mortgage interest deductions on second homes), we at least have a starting point for worst-case scenario planning. That planning should take into account, if only for making footnotes, this probability: if the Congress and the White House bite the bullet on eliminating the charitable deduction, states will surely follow suit. The impact depends, of course, on variable state tax burdens.

Only a fool would predict the impact on giving of this change in treatment of charitable giving for tax purposes. There are no definitive data. Most Americans have not availed themselves of the charitable tax deduction. While there is no doubt that the share of total giving attributable to those who have used the deduction is enormous, there has also been no definitive study of the importance of tax-deductibility on giving among those committed to substantial philanthropy.

 

Recession Bites Assets

Posted by Christopher Dann
Thursday July 7, 2011
Categories: Focus Groups, Research
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Blog #10

Recession Bites Assets

If Gretchen Morgenson’s Reckless Endangerment hasn’t closed your eyes and ears to anything the Federal Reserve may say from now on, there are data from their report, Aftermath of the Storm: Family Finances from 2007 to 2009¹, worth the while of fundraisers and nonprofit financial management executives.

The Fed’s surveys of household finances are usually conducted every three years. But the Great Recession prompted them to re-interview 2007 survey respondents.

The report documents that overall median household net worth fell 23.4% from 2007 to 2009.

Here are data selected particularly with nonprofit organization interest in mind:

Demographic ‘09 Median % Change from ‘07
Select Age Ranges
35 – 44 $69,400 – 28.5%
45 – 54 $150,000 – 25.9%
55 – 64 $222,300 – 13.7%
65 – 74 $205,500 – 11.7%
75 or older $191,000 – 16.6%
College degree $294,600 – 17.2%
Homeowner $244,800 – 21.3%

 

Thanks, again, to New Strategist (www.newstrategist.com) to bringing this to our attention.

 

 

Doing Well by Those Doing Good

Posted by Christopher Dann
Tuesday April 5, 2011
Categories: Fundraising, Research, Volunteer
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There’s a lot being said and written now about donor relationship and donor experience management.  There’s a strong case to be made for volunteer relationship and experience management, even for those organizations that have been very smart and resourceful about volunteer human resource management.

Consider these facts:

  • Ultimate – call it “lifetime” if you will – donor value comes from engagement between donors and the mission and program of an organization.

Volunteers are arguably more deeply engaged in the work of an organization than most donors, often more than a lot of staff people, especially when they are given program-substantive work to do.

  • Research continually shows volunteers are more active and more valuable donors.

We’ve seen this in the cross-tabulations of every donor research study we have done: strong correlations between volunteering and higher levels of household giving both in terms of numbers of organizations and amounts given in the past year.

  • Donors and volunteers look alike.

Both have higher incidence than the general population of college education. In both volunteering and giving, households with committed couples give and volunteer substantially more than those of single adults.

But the most important thing to consider in paying close attention to the volunteer experience is what it means for future financial support, not just current support. That’s because the peak age of volunteer engagement, according to the Urban Institute’s The Nonprofit Almanac, is between the ages of 35 and 54, the range just ahead of the peak years of discretionary income and giving, 55 to 64.

We’ve heard many development people say with sighs that their volunteers don’t support them well with contributions. That may be because they give time instead of money. But it may also be because they haven’t had the experience with the organization that would cultivate their financial support or simply because they aren’t ready.

There’s a far better prospect for value from donors who’ve begun their relationship as volunteers than among those who haven’t. But realizing that value requires investment and vision beyond the current fiscal year.

 

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.