May 14, 2012

Rise in Donors to Charities for the Destitute Looks Temporary

New study finds longer-term trends are not so encouraging

A study of 13 religious shelters found the number of donors rose 12% from 2008 to 2010, then tapered off. (Photo: AP) A study of 13 religious shelters found the number of donors rose 12% from 2008 to 2010, then tapered off. (Photo: AP)

Despite accelerated giving, charities like church-based shelters that strive to meet basic needs of the most down-and-out Americans are struggling to remain viable as demand for services accelerates, according to a new study.

A report last week in The Chronicle of Philanthropy said that donors to these charities have raised their giving to fund some of the increased needs, citing a study by Brewer Direct, a fundraising and marketing firm.

But holding onto new donors has been a challenge for the charities, with some reporting that many donors had stopped giving after two years or more.

The number of donors to 13 religious shelters nationwide whose data the study analyzed grew by 12%, to 15,555 people, from 2008 to 2010, before tapering off slightly last year.

During that time, the dollar value of donations of $10,000 or less increased by 30% to more than $1.8 million.

The size of the average gift grew from $152 in 2008 to $175 last year, and the number of annual gifts also rose, from 2.6 to 3.2 gifts per donor in 2011.

Long-term trends are less encouraging, however, as the missions are now losing about a third of their multiyear donors annually, according to Randy Brewer, the consulting firm’s president.

“We know that a lot of active donors in their 60s and 70s are helping adult children who lost their jobs,” Brewer told The Chronicle. “It is somewhat encouraging that we got more people to give, but the level of giving tells us that there are still difficulties in getting people to give more or the same as they used to. ”

Brewer said his firm was helping the missions try new ways keep more donors from withdrawing their support. For example, some groups are asking for smaller sums and making phone calls to follow up on direct mail.

Advisors to wealthy donors capable of writing significant checks might take note of these trends when advising clients where to allocate their charitable dollars.

In the current economic environment, the demand for services at organizations that provide food, shelter and other basics are not going to abate any time soon. And the corrosive political atmosphere, especially in this election year, does not bode well.

Last week, the House of Representatives passed a bill to spare military spending cuts by slashing other spending. If enacted, it would eliminate food stamps for 1.8 million Americans and could compromise other programs such as Meals on Wheels, The New York Times reported. The bill is unlikely to survive a Senate vote, the report said.

How wealthy philanthropists give is also important. Multiyear donations are a critical mainstay of charitable organizations, allowing them more easily to engage in strategic planning rather than focus on short-term funding gaps.

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