August 10, 2011

How a Double-Dip Recession Could Affect Giving

As economic experts begin to raise the possibility that America will face a double-dip recession, fund raisers are looking to the past to learn what might be ahead.

No recession in recent history has been as bad as the one that just wrapped up. Indiana University's Center on Philanthropy, which produces "Giving USA," noted in June that giving dropped by 7 percent in 2008 and 6.2 percent in 2009, declines that were larger than anything since the study was first conducted in 1956.

Patrick Rooney, the center's director, says that "if we had a double-dip recession, it would be disastrous for philanthropy and charities." But he encourages charities to resist the urge to let the worries about the downturn get in the way of fund raising. "If I were running a charity, " he says, "I would continue to invest in fund raising and steward gifts well. Giving may go down overall, but if you keep fund raising, it is more likely to stay the same or go up if you stay in the game."

Past recessions also show a giving downturn, the center noted in its study of the recessions of 1970, 1974, 1982, and 2001:

In all of those years except 1982, total giving dropped. That is probably because in 1981, Congress passed a measure that allowed people who don't itemize their tax returns to write off their gifts; it also increased the maximum deduction that corporate donors could write off in a year.

The center also found a drop in giving when it examined data back to 1967. Here's what it found: