The general assumption about all forms of philanthropy in economic hard times — individual, foundation, corporate — is that as money tightens, contributions decline. All such gifts are influenced, after all, by the donor’s actual or perceived level of wealth and income. When assets deflate by 30 percent, and cash gets more scarce due to credit constraint, you would expect the philanthropic system to go into the deep freeze.
And there are certainly many indications that it is doing so. Many/most of my colleagues are working on budget projections with 5 to 30 percent declines in combined revenues (some have multiple scenario budgets underway). And rumors are circulating about suddenly stalled annual and capital campaigns.
But if history is any indication, at least these charts suggest our general assumption may be wrong. Prepared by Alexander Haas Martin & Partners, and presented (or so I’m told) during the recent Grantmakers in the Arts conference, they show obvious increases in philanthropy during stock market rallies, but also increases during market lags.
And we’re even seeing a few bold philanthropists (in Warren Buffet style) increasing their giving and their staff during this financial freefall.
Of course, another useful chart would show how the distribution of philanthropic giving changes during tough times. My guess is that growth in giving goes disproportionately to human welfare and social service causes, rather than (or perhaps instead of) arts and culture. Does somebody have that chart?
[ Thanks Paul, for the link! ]
UPDATE: Tommer Peterson at Grantmakers in the Arts sent along the following chart (click to enlarge image) that shows trends in foundation giving by category over a ten-year period (recall that the particularly nasty market was from 2001 through 2002 and 2003). For specifics, see his comment below.
Thanks for picking up my post. I included links at the end of the post to charts prepared by Alexander Haas Martin & Partners that show giving to arts/culture, education, religion, human services, health, and the environment mapped against the Dow and S&P. Not exactly what you’re looking for, but of some comfort nevertheless.
I’ve sent along a chart from Foundation Grants to Arts and Culture that shows a decline in giving in some fields during the post 9/11 downturn, but shows arts and culture staying fairly steady. The full report, the work of GIA and the Foundation Center, is available Grantmakers in the GIA online library.
Tommer
NOTE FROM ANDREW: I’ve posted the chart in the weblog entry above as an addendum. Note that the chart relates to foundation giving only, not individual or corporate. Thanks Tommer!
Giving USA would have the best information, but I think you’d have to contact them directly as a media rep to ask for it. It’s not online for free. From my previous life in the nonprofit consulting world, I do remember a key message one year about how arts are a “lagging indicator” of stock market performance (arts supporters are generally wealthier individuals more likely to have strong financial ties to the stock market). I know that in “disaster” times (e.g., tsunami, hurricanes), giving tends to stay the same for all sectors, and disaster giving is above and beyond for the human services, but I’m not sure how that plays out in terms of economic crisis.
Thanks for posting the chart, Andrew!
Here’s a related article that suggests applying the concept of “triage,” as practiced by emergency medical personnel, when resources are in short supply. Written by Katherina Rosqueta, Executive Director, University of Pennsylvania, School of Social Policy & Practice, Center for High Impact Philanthropy, and published by Philanthropy News Digest.