Groups that solicit and manage donor-advised funds continue to crowd into the upper ranks of America’s biggest charities, according to new Chronicle of Philanthropy data.
The United Way hangs onto the No. 1 spot in The Chronicle’s latest Philanthropy 400, the annual list of the U.S. nonprofits that raise the most in private support. But its hold is tenuous: Only $23.5 million separates it from the next group in line, Fidelity Charitable.
United Way Worldwide and its affiliates raised $3.87 billion in the 2014 fiscal year, representing flat performance — a mere 1.5 percent growth — compared with 2013. Fidelity Charitable, a donor-advised fund manager associated with a financial-services company, gained 3.2 percent in 2014, raising $3.85 billion.
Three other donor-advised fund managers, plus another organization — Silicon Valley Community Foundation (No. 5), which relies heavily on such funds — rank in the top 10.
Other big developments this year: Community foundations, public broadcasting, and universities saw their support soar, while other education groups, social services, and arts and culture experienced declines. [See “Who’s Up? Who’s Down?”]
Private support among all of the Philanthropy 400 grew by 5.1 percent in 2014 compared with the previous year, an increase just below that of giving to all charities reported in the most recent “Giving USA” report released in June by the Giving USA Foundation.
The finding that large charities are roughly keeping pace — rather than performing more strongly, as has usually been the case over the 25 years of The Chronicle’s rankings — may indicate that the recovery from the Great Recession continues to be uneven, says Una Osili, director of research at the Lilly Family School of Philanthropy at Indiana University, where “Giving USA” was researched and written.
“My immediate reaction to this is that we’re seeing a reflection of larger shifts in philanthropy,” including a rebound in big gifts but not necessarily in smaller ones, says Ms. Osili. “We’re also seeing this in higher education, too. Large gifts have increased over time, but participation rates in annual campaigns have started to decline.”
Another possibility is that smaller groups may be finding it easier these days to compete for donors, she suggests. “We’re starting to see new philanthropy becoming more democratized, with smaller organizations also able to attract support, with this interest in giving directly [to beneficiaries], and the Internet making it much more feasible to support organizations of different sizes.”
Outlook Is Positive
The Lilly School’s latest research, Ms. Osili says, indicates that foundation giving is likely to remain strong for the near future, as are big gifts from individuals. Meanwhile, corporate giving is shifting away from cash support into strategies like cause marketing, she says. Another important trend is the increased attention charities are paying to planned giving, as their baby-boomer donors enter old age, she notes.
Other developments worth watching: a more diverse (and female) donor base and millennials arriving at the age when they will start to give bigger gifts. “For nonprofits, these changes mean thinking about how best to reach a new segment of the population and working to develop strategies that meet the needs of these donors,” she says.
The big picture forecast, while generally bright, is fragmented and cause-specific, she cautions. Ms. Osili advises fundraisers to educate themselves about the philanthropic vehicles that donors are increasingly drawn to: donor-advised funds and online giving.
Community Foundations Grew Most
Among all causes represented on the 400, community foundations fared best last year, seeing a 24.8-percent rise in private support. The Nevada Community Foundation saw by far the largest increase in support of all organizations on the list, from $2.8 million raised in 2013 to $98.9 million last year, thanks largely to three big gifts: two by anonymous supporters plus a $70-million pledge by Alfred Mann, a health-care entrepreneur.
Among other Philanthropy 400 results:
- Charities needed to raise a minimum of $64.3 million to make this year’s rankings. Last year the cutoff was $62.2 million.
- After community foundations, public broadcasting (up 19.7 percent) and private colleges and universities (up 13.5 percent) saw the biggest increases in private support.
- Education groups saw the biggest drop in private support last year, a loss of 19.3 percent. The only other causes to see declines were social services (down 7.6 percent) and arts and culture (down 5.8 percent).
- Of the 49 groups that reported getting more than half of their private support in noncash donations, 48 percent are international groups. One of them, Kingsway Charities (No. 224) reported that it got nearly all of its $117.6 million in support from in-kind gifts. Support was down 29.3 percent in 2014.
- Among organizations that provided projections for their 2015 giving, the three that estimated the largest increases were Direct Relief International (at No. 44, up 97 percent), Jewish National Fund (No. 361, up 53 percent), and Oxfam America (No. 387, up 36 percent). All are international groups.
Long-Term Trends
This year marks the 25th anniversary of the Philanthropy 400. The Chronicle found illuminating trends in the survey’s historical data, which has been revised and updated by Williams Suhs Cleveland, a doctoral candidate at Indiana University’s Lilly School:
n Public colleges and universities have claimed the largest number of spots on the 400 over the years, with 1,652 making the rankings, including repeat appearances, followed closely by private ones (1,444 spots) and international groups (1,256).
- Giving to public universities increased 151 percent since 1991, compared with 72-percent jump for private colleges.
- Donor-advised funds and community foundations surged from 2 percent of total giving on the Philanthropy 400 in 1991 to 18 percent this year.
- International groups also saw their fortunes rise over the past quarter century. Such charities made up 7 percent of all private support raised by the 400 when the rankings began, compared with 16 percent in the latest list.
- Over the 25 years, the Greater Kansas City Community Foundation climbed furthest, from No. 400 in 1991 to No. 56 in 2015. The Institute of International Education fell furthest, from No. 46 in 1991 to No. 382 in the latest rankings.
Capital Campaigns
As usual, many of the biggest gains in the current list can be chalked up to capital campaigns and sometimes even a single big gift. At least 68 organizations on the 400 ran capital campaigns last year; 31 were colleges or universities, and only two were social-service charities.
Among the list’s biggest gainers: New York’s Whitney Museum of American Art (No. 188) more than doubled its private support, raising $140 million as it entered the homestretch of a capital campaign begun in 2007 to finance an expansion. After closing its home of nearly 50 years on the Upper East Side, the museum this spring opened a new building in Lower Manhattan by famed Italian architect Renzo Piano.
Launched just before the recession, the campaign gained momentum over time. “The Whitney had tried to expand four times previously with no result,” says Alexandra Wheeler, director of development. “So a lot of people who were longtime supporters said, ‘I’m not going to give you any money until there’s a shovel in the ground.’ " The new location, near an entrance to the city’s vaunted High Line park, also generated excitement. The park opened in phases starting in 2009, and donors over time saw how the museum could become the cultural anchor of a newly vibrant neighborhood, says Ms. Wheeler.
Major gifts drove the campaign; $75 million — more than half of the museum’s private support in 2014 — was raised through donations of $1 million or more.
California’s University of the Pacific (No. 194) saw its private support rocket from $16 million in 2013 to $133.4 million last year, a jump of 729 percent. It is using the bulk of a $125-million bequest — a gift more than 10 times the size of any other in the institution’s history — to spark endowment giving. Robert Powell, an entrepreneur who dropped out of high school, and his wife, Jeannette, pledged the money to the institution in 2007; Mr. Powell died that same year and his wife died in late 2012.
This year, the university began a $330-million campaign in which $85 million of the Powells’ donation will be used to match gifts to endow scholarships or academic programs. The university set the minimum gift for the one-to-one match at only $50,000, yet the campaign’s already netted around $115 million. “We’re hitting every end of the spectrum of philanthropic interest,” says Burnie Atterbury, vice president for development. Among those who gave $50,000: a clergyman and his wife, a librarian — “people of very modest means.”
Mr. Atterbury sees this as a “watershed” moment for his small, private university. At the end of the campaign, he expects Pacific’s endowment will top $600 million — up from roughly $260 million before the bequest.
‘Boots on the Ground’
Among the current Philanthropy 400, some organizations that doubled down on donor stewardship saw their private support grow.
Among Jewish federations on the 400 — groups that saw their private support rise 9.4 percent last year — the United Jewish Foundation and Jewish Federation of Metropolitan Detroit (No. 235) saw the biggest increase. Its donations rose nearly 60 percent in 2014 compared with 2013, to $112.9 million. It’s only the latest success story for a charity that has enjoyed increases in support and in donor participation for the past five years after a number of years of declines.
Two strategic moves in particular drove giving, says Scott Kaufman, the group’s chief executive officer.
First, the organization has built a team aimed at catering to donors’ desires to support specific projects in addition to annual campaigns. These “boots on the ground,” as Mr. Kaufman calls them, research charities for donors and match them with other philanthropists to amplify the impact of their giving.
The result has been strong growth for “projects with individual major philanthropists, where we’re acting as their partner,” Mr. Kaufman says. “It’s become a bigger and bigger part of the business.”
Another strategic move, which he acknowledges may be counterintuitive: de-emphasizing the number of dollars raised in favor of the number of donors engaged. “If you’re just measuring dollars — the old thermometer in the lobby, showing the hundred-dollar donor and the million-dollar donor — the hundred-dollar donor is going to think, ‘Well, what do they need me for? I can’t even see the needle move.’ " Instead, the organization posts a “donometer” on each floor of its building, to track the number of donors.
One result of the focus on people over dollars: The federation has doubled the number of donors under 40 over the past four years.
A ‘Philanthropic Time Capsule’
At the Minneapolis Foundation (No. 276), a $50 million gift from an anonymous donor helped boost the group’s private support by 158.6 percent in 2014, to $94.9 million. Even without that windfall, says Beth Halloran, the foundation’s vice president for advancement, the group has more new donors and increased contributions to existing donor-advised funds, fueled by both stock-market gains and the organization’s centennial celebration, aimed at raising public awareness about its work.
In addition, the group benefited from increased investment in its fundraising staff: It created Ms. Halloran’s position last year and hired its first prospect researcher.
And it’s just embarked on a creative new campaign, a hybrid of an endowment drive and a planned-giving push: the Pay It Forward Forever Fund. The foundation will recruit 100 donors to give $25,000 each to a fund that will be invested and not used for 50 years. Over the decades, that $2.5 million is likely to grow to roughly $29 million. In 2065, the foundation will spend 80 percent of those funds on the community. Twenty percent will stay in the fund, for the next 50 years, repeating the cycle in perpetuity.
The result, says Sarah Lemagie, the foundation’s communications officer, is a “philanthropic time capsule,” allowing donors to “leave a legacy for the future.”
In response to demand from donors, says Ms. Halloran, the foundation will also launch in early November a resource center aimed at helping people educate themselves and their family members about philanthropy, including information about planned giving.
Charities Aid Foundation of America (No. 293), a donor-advised fund manager that focuses on international philanthropy, has also found that educating and catering to donors pays off. Its private support was up 18.9 percent in 2014, to $89.8 million, and it expects roughly 22 percent growth in donations this year, too.
The organization has benefited from donors’ increased interest in giving to overseas projects, while also building in-house expertise to help them navigate the legal and oversight issues that arise from giving internationally, says Ted Hart, the group’s CEO. (Among those issues, he notes, “you need to make sure you’re not supporting terrorists.”)
Mr. Hart’s organization has added and adjusted its services in response to donor demand; for instance, though it is known for vetting international charities, it has found that some corporate donors have sought his group’s help in evaluating stateside beneficiaries, a task it has embraced.
He offers advice to other charities looking to capture donors’ support: “Don’t be stuck in the mud. Think of new ways to provide service. Because America is growing in its philanthropic interests all the time, there should be the capacity for most charities to grow.”
The Philanthropy 400 survey was conducted by Peter Olsen-Phillips; historical data was revised and updated by William Suhs Cleveland, a doctoral candidate at Indiana University’s Lilly Family School of Philanthropy. Drew Lindsay contributed reporting.
Correction: A previous version indicated mistakenly that “Giving USA” was released by the Indiana University Lilly Family School of Philanthropy. It was released by the Giving USA Foundation.
