Chartable Giving Is Increasing…NOT!!!

This sadly is not true. While press reports may communicate that total charitable giving has increased over the previous measured period this is only the result of the growing US population and income. But when measured as a part of the US economy’s total expenditures the percentage of charitable giving has stayed the same over the last half century. Gross domestic product (GDP) is the standard economic measure used to determine expenditures and output. This measure includes consumer spending. Charitable¬†giving has consistently hovered at 2% of GDP. The fraction of income we give away has not increased.

Over this time period however the number of nonprofits has grown dramatically. By the end of the 1960s there were approximately 132,000 nonprofit organizations registered with the IRS. As of 2016 there are over 1.5 million tax exempt organizations registered as nonprofits. Over 86,000 were added in 2015, and almost 80,000 in 2016. Indeed, since the 1980s the number of registered nonprofits has grown almost tenfold! The 1.5 million number does not include the great majority of religious congregations, approximately 350,000, and nonprofits with less than $5,000 in revenue. Neither of these two categories are required to file tax returns and/or register with the IRS.

The bottom line: Increased demand for donations is competing for a static percentage of giving to the nonprofit sector. Bottom-bottom line: To increase market share the nonprofit sector must change the way it does business including more investment in marketing, more innovation, better fundraising education and training, and a focus on impacts/outcome as an important component of effectiveness. Nonprofits need to operate as a businesses including changing many of the misperceptions about the sector found in this blog.

JRR

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