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Charity Donations Plummet, But Some Orgs Win Big in Tough Times

The data is in and last year donations to America's biggest charities dropped by 11 percent, four times worse than after September 11.

The last time American charities panicked like this was after September, 11, 2001. Then, after a flood of donations to the Red Cross was mishandled, wars loomed, and the economy sputtered donations dropped off 2.8 percent. That's nothing. The data is in and last year, donations to America's biggest charities dropped by four times that, 11 percent.

Every year The Chronicle of Philanthropy surveys the largest 400 fundraising non-profits in America and asks how much they pulled in from donations, government money is excluded. They also ask about right now. 2010 doesn't look much better so far. Overall large non-profits are not expecting a slingshot back to peak generosity, they predict an average rebound of just 1.4 percent.

A few lessons are buried in this data that help us understand fundraising, American generosity and the nonprofit sector. The first is that the more than $300 billion dollar non-profit industry is wildly diverse when it comes to how the economic collapse affected fundraising. This survey deals just with the biggest 400 of them—a group that gets one of every four dollars donated. Still, we learn how giving shifts in response to a financial meltdown.

Some charities that depend on stock contributions—like the Fidelity Charitable Gift Fun, down 40.3 percent—lost big. Heather Joslyn, an editor at the Chronicle of Philanthropy who worked on this study says,"it does seem that who your donors are, is a factor. If you have been relying on gifts of stocks or real estate that might not have been a winning strategy." Arts and culture groups also lost out as donors with limited money who had to prioritize their giving.

Meanwhile, if you depend on compassion and cash, it wasn't such a bad year. Catholic Charities, for instance, jumped 5.2 percent in their fundraising. Donors are seeing need within their communities and responding. That is a big part of the success for Catholic Charities, Joslyn says. "There is growing need in their community and they've done a good job of making donors aware of that need."

Its going to be a slow road back according to estimates from these big nonprofits. But smaller, newer organizations can still grow, and more importantly innovate. Most of the largest charities are excellent service providers at a massive scale, but they are rarely the organizations that pilot and prototype solutions to root causes of the problems they work hard to ameliorate. We still need to watch, nurture and protect the health of the upstarts. More on that in future posts.

Image: (CC) by Flickr user Stuartpilbrow

CORRECTION: An earlier version of this post incorrectly stated the percent change for Catholic Charities

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