Charity Navigator's Year-End Giving Trends

We (Charity Navigator) recently invited donors and charities to take part in a survey about year-end giving trends for 2011. Via this survey, we also sought to gain a better understanding of the impact that the sour economy is having on fundraising. 565 donors and 101 charities completed our survey. Below is a closer look at the results.

Importance of Year-End Donations

First, we wanted to set the stage and understand the importance of year-end giving to the average charity’s bottom line. So, the first question we asked the charities was “what percentage of annual contributions from individuals does your charity receive at year-end (roughly speaking the time from Thanksgiving to New Years)?" The answers literally ranged from 0% to 100%. But on average, these charities receive 41% of their annual contributions in the last few weeks of the year!

And if we probe deeper it appears that online giving, probably due to its convenience, may actually be stronger during the holidays than other types of giving. Specifically, Network for Good reports that >30% of annual giving via their donation processing system occurs during December. Furthermore, 10% of the donations they process annually come in on the last 2 days of the year.

Just how important are online donations to the charities in this study? The charities reported receiving as little as no online donations to as much as 95% of their annual donations via online tools. However, on average these charities receive 13% of their annual donations online.

Expectations for 2011 Year-End Giving

Next, we wanted to learn more about donors’ year-end giving plans and if those plans matched the charity’s expectations. Of the 565 donors that took our survey, 93% donated during the 2010 year-end giving season. A similar percentage (91%), plan to give this year-end giving season. Of those that are planning to give this year, 57% of donors expect to give the same amount as last year, 25% will give more, 18% will give less. This matches closely to the charity’s expectations. Specifically, 55% of the charities anticipate that giving this year-end will be about the same as last year-end, 26% anticipate giving will be greater and 16% anticipate that it will be less. In fact, despite the current economic slump, charities are rather confident that they'll meet their year-end giving goals.

Let’s take a closer look at the 16% of charities that expect to receive less this holiday giving season and the 18% of donors that plan to give less. The charities attributed the anticipated decline to donors having less or perceiving that they have less to give because of the recession (33%) rather than donors having made unplanned gifts earlier in the year (such as to Japan, the U.S. tornado victims, the African famine relief efforts). Likewise, most donors (78%) say that they plan to give less because of their personal finances.

On average, the donors that plan to give less said they'll give about 25% less which amounts to $1,500 on average. The charities were a little more optimistic with their predictions. Those charities that expect giving to be lower this holiday season as compared to last year indicated that it would be down just 14%. And in predicting the dollar value, it ranged from a decline of just $500 to as much as $3 million with the average at $215,000.

Donors were split on how they plan to give less. About half plan to support the same charities, but give each less money. The other half plan to drop some charities off their list so that they can continue to give to the others at the same level they have in the past.

Motivating Factors

For this study, we also wanted to explore the reasons why people are more motivated to give at the end of the year and whether or not their responses matched what the charities believe to be the motivating factors.

As it turns out, none of the reasons we suggested (tax benefits, receiving an appeal from a charity, the altruistic spirit of the holidays) resonated with the donors. This result is somewhat suspect, especially with regards to the tax benefits (gifts must be made before Jan 1 if donors want to claim them as a charitable deduction for the year). What else could be responsible for Network for Good processing 10% of annual donations in the last two days of the year with a significant spike between Noon and 7pm on December 31st?

Although the charities gave more weight to each of these potentially motivating factors, like the donors they didn’t identify any of these reasons as a significantly motivating factor for why donors would choose to support them at year-end.

Importance of Various Issues When Selecting a Charity

We asked both the donors and the charities to tell us how important various issues are when a donor is considering which charity to support. We wanted to see if there were in any gaps between what donors said was important and what charities believed their donors find to be important.

How Important is Accountability and Transparency (this includes ethics, good governance, disclosure practices)? The majority of donors (87%) indicated that this is a very important issue (rating it an 8, 9 or 10 on the scale of importance. In contrast, fewer of the charities (73%) believed their donors were especially interested in their Accountability and Transparency when considering whether or not to make a donation. This mirrors what we’ve seen during the implementation of CN 2.0 (our expanded methodology that rates both Financial Health and Accountability & Transparency) --- donors are very interested in these issues, yet many charities have failed to realize that until their donors question their Accountability & Transparency performance.

Not surprisingly, donors are very concerned about the CEO’s compensation (56% rating this issue 8, 9 or 10 on the scale of importance) when selecting a charity to support. But the charities’ didn’t recognize this as such an important issue for their donors (12%). There’s room for improvement here on both sides of the coin. Charities could do a better job explaining why their CEO’s pay is reasonable (and doing their benchmarking studies to ensure that it is appropriate). And donors need to understand that charities of a certain size must pay a decent salary to attract and retain competent leadership. Our CEO Compensation Study is a helpful tool for both donors and charities to better understand this issue.

Charities and donors see eye to eye on the importance of a charity’s Financial Health. 91% of donors and 81% of donors rated this issue an 8, 9 or 10 on the scale of importance.

Both charities and donors highly value a nonprofit’s results reporting (evidence of a charity’s effectiveness). On this issue, 89% of donors and 87% of charities rate it an 8, 9 or 10 on the scale of importance.

We also asked charities and donors to rate how important it is for donors to be familiar with the charity. Charities were more likely to see this as an important factor for their donors (81% rating it an 8, 9 or 10 on the scale of importance) than donors (65%). The charities comments, such as “a donor’s personal relationship with the solicitor is important” and the “donor’s personal connection to someone helped by the charity,” highlight their belief that a giver’s familiarity with the charity is of utmost importance. Although several studies support the charity's belief on this issue, our survey indicates that donors may be open to new charities. This demonstrates that there is an opportunity for charities with reasonable CEO pay, strong Financial Health, a commitment to Accountability & Transparency and evidence of results, to attract new supporters.

Types of Charities

We asked donors about the types of charities that they’d be likely to support this holiday giving season. Human Services (62%) charities came out on top with Arts, Culture, Humanities (27%) charities on the bottom. It seems logical that donors would be more likely to support Human Services charities (food banks, homeless shelters and the like) at year-end when the religious nature of the holiday season reminds us to be thankful for what we have and to remember those who are less fortunate. And it similarly follows that Arts groups would be less likely to be on our mind at this time of the year. Adding to that the recession, which historically speaking has been a period during which donors redirect their giving away from cultural nonprofits towards those that help the needy, and we can easily understand the responses to this question.

Now, let’s look at the charities that participated in the survey. Interestingly, the majority of charities professionals that answered our survey were from Human Services (46%) charities. And the least represented in the survey were Arts, Culture, Humanities (4%) charities.

Was this article helpful?

Want more articles like this?

Help keep The Christian Post free for everyone by making a one-time donation today.

We’re sorry to hear that.

Hope you’ll give us another try and check out some other articles. Return to homepage.

Free Religious Freedom Updates

Join thousands of others to get the FREEDOM POST newsletter for free, sent twice a week from The Christian Post.

Most Popular

Free Religious Freedom Updates

A religious liberty newsletter that is a must-read for people of faith.

More Articles