For the third year in a row, giving exceeded $300 billion even though overall giving declined 3.6 percent in current dollars. As expected, giving increased in sectors providing services to those most in need: human services, health, and international affairs.

So now that we know what happened last year, what can we anticipate moving forward?  The folks at Giving USA say that giving will recover, but it will be slow going. We can expect at least a three- to five-year period until giving returns to pre-recession levels. It was a hard year, but not as bad as we thought. The loyalty of the majority of donors should be applauded.

This year, the Giving USA Foundation is generously offering a free copy of the executive summary for anyone interested.  Click here to download it.  To order a copy of the full 2010 Giving USA report, click here.

Key findings from the survey include:

• Nearly 90 percent expect 2010 to be as difficult or more difficult than 2009; only 12 percent expect 2010 to be financially easier for their organizations
• While 80 percent of nonprofits anticipate an increase in demand for services in 2010, just 49 percent expect to be able to fully meet this demand level
• 35 percent of organizations ended 2009 with an operating surplus;  Only 18 percent of organizations expect to end 2010 above break-even
• 61 percent of organizations have less than three months of cash available; 12 percent have none.

Hopefully, the Labor Department’s monthly report on employment – expected to come out later this week – will show the significant national job growth that many economists are predicting, and give all of us a sign that recovery is on the way for the many people who rely on the nonprofit sector during this period of economic uncertainty.

In addition, during 2009 half of the museums surveyed for the AAM study reported that their revenues either grew or remained steady.  Giving from individuals, in addition to earned income, helped many museums close the gaps created by freefalls in public support, corporate giving, and endowment revenue. 

Click here to read the full report – “Service Despite Stress:  Museum Attendance and Funding in a Year of Recession”.

Every year, the Arts Council hosts a very successful auction called H’Arts. This year, however, they saw record-breaking results. Compared to last year:

• Attendance increased by 20 percent
• Donation values increased by 50 percent
• Dollars raised increased by 65 percent
• “Fund-a-Need” donations increased by 450 percent

The Collins Group would like to tip our hat to the Arts Council and their success. Thank you for demonstrating that steadfast cultivation and donor-centered fundraising really does produce results – no matter what the economy.

Click here to learn more about the Arts Council project.

I am a benefit luncheon junkie.  I attend an amazing amount every year and I never fail to be inspired, renewed, and rejuvenated at the impact I can have in making our world a better place.  Last week I attended the annual luncheon for Hopelink.  For those of you not familiar with Hopelink, it provides basic needs, housing, and hope to residents of north and east King County, which includes Duvall where I happen to live.  I have been a supporter of Hopelink for a very long time, longer than they have had lunches asking for gifts.  More than 15 years ago, I introduced my kids to charitable giving by sponsoring a Hopelink family in need during the holiday season.  While the program has changed over the years, we still take “wishes” from the giving tree at our church and fill them because we can afford to and we know many cannot. 

Back to the luncheon…1,800 people – an exciting “who’s who on the Eastside” –  attended the two-ballroom event at the Hyatt Regency in downtown Bellevue.  The next day Hopelink announced that they had met their goal of raising $1 million; in fact they surpassed their goal by over $50, 000!

I have been to three events like this in the past month, and would have attended a fourth if they hadn’t been oversubscribed.  All have surpassed their previous attendance levels, or sold out, and have reached or surpassed their fundraising levels from previous years.  It’s clear that our community continues to invest locally and globally to help improve the lives of others and to preserve our planet.  While we see headlines of organizations that report fundraising is well below previous levels, we are also seeing significant philanthropic investment and joy in doing what we can do, sharing what we have, and supporting nonprofits with strong leaders and important missions that resonate with our values. 

Asking with urgency, compassion, and engagement really does make a positive difference.

In late September, an article by Stephanie Strom took my breath away. “Nonprofits Paying Price for Gamble on Finances” sounds the alarm about the mountain of debt nonprofits have taken on in recent years to fund capital projects and other initiatives that could not be supported by philanthropy alone. There is a chart that illustrates how serious of a problem this has become, especially in light of the economic crisis: charities’ debt from tax-exempt bonds quadrupled between 1993 and 2006. Some organizations took on this debt expecting to pay it off with donations and interest earned from other sources. In many cases, their planning and projections have not paid off, quite literally.

Looking ahead, how will nonprofits retire their debt? How will they finance the new projects their clients need or their patrons demand if credit is hard to come by or their financial projections indicate that taking on debt will bury the organization? About a decade ago, I read about an “expert” who opined that capital campaigns weren’t necessary to fund projects – debt was the answer. I wonder if he’s changed his tune.

What can I say, we are living in an unsteady environment, one that bears a striking resemblance to the Atlantic Ocean I traveled for six weeks aboard a 134-foot brigantine in college. After we got our sea legs, the steady upward-downward motion of the seas began to feel normal. Not safe – there was that water spout that veered dangerously close to our vessel in a Force 9 gale – but normal. After our research voyage, it took longer than you would think for us to adjust to the stability of terra firma.

So how will we know when we’re back on solid ground in the world of philanthropy? Yesterday I received the new Giving USA Spotlight with its title article “Giving Recovery after Economic Depression or Recession”

(http://www.magnetmail.net/images/clients/GIVINGINST/attach/GUSASpotlight_2_2009.pdf)

and it provides some clues and considerations. Researched and written at the Center on Philanthropy at Indiana University (the same outfit that, in partnership with Giving Institute, researches and publishes the annual Giving USA reports on charitable giving in the USA), the spotlight offers solid perspective on the past and some peeks at what we might expect in the future. The bottom line: once the recession is over, it will likely take at least three years for individual giving to return to pre-recession levels.

So as we see glimmers of hope on the philanthropic horizon, continue to carefully evaluate and plan for any fundraising campaign. Evaluate what’s working and what’s not in your fundraising program. Take the time to tune up your major gifts program or rethink the purpose of your special events. Talk with your supporters about how you are faring on the high seas and how you are planning for the future.

We’d love your comments on how you are making sense of often conflicting economic news and, more importantly, what’s next for you and your organization.

1) Advocate for a multi-faceted organizational response to the crisis that doesn’t depend solely upon fundraising. Donors are reluctant to fund band-aid solutions to systemic problems, but may be more receptive to increasing their support in the short-term if it is part of a plan for achieving increased long-term sustainability. Coming to the table with lots of good ideas will make it easier to make the case for a multi-faceted response. For more ideas see this link to the Wall Street Journal article, “Helping Themselves”: http://online.wsj.com/article/SB124025204612335931.html

2) Set realistic expectations by assessing the giving potential of your donor base just as you would for a capital campaign or other major gift effort. Donors who have reduced their giving due to their own financial concerns or prospects who have never given before are unlikely to be the saviors you are looking for. However, other funders remain eager to offer assistance in response to challenges faced by the nonprofit community. An example of what at least one foundation is doing is illustrated on the Meyer Memorial Trust blog posting “The View from Now”: http://www.mmt.org/weblog/archives/the_view_from_now.php

3) Determine what fundraising strategies will be most effective. Best practices don’t change just because you are facing a crisis. The majority of dollars are still likely to come from the small minority of donors with the highest giving capacity and interest in your organization. Don’t be afraid to ask for what you need if additional human or financial resources are necessary to achieve your goals. For more ideas about strategies and resources follow this link to TCG’s free resources page on our website: http://www.collinsgroup.com/pages/events_news_resources.html#resources

4) Act quickly to recruit, train, and mobilize staff and volunteers who are feeling anxious about the future so they can channel that energy into helping with fundraising. This can turn finger-pointers into allies and will enhance your fundraising program even after the crisis is over. For more on this see Barb Maduell’s recent posting on the TCG blog: http://www.collinsgroup.com/blog/2009/09/29/why-do-development-directors-dress-up/

5) Craft a case for support that focuses on the impact of the crisis within the broader community rather than just within your organization. Donors will respond more favorably to a call to action to save vulnerable populations or community resources, than they will to save a shaky program or organization. A good outline to use can be found on the TCG website at: http://www.collinsgroup.com/documents/annual_case_for_support.pdf 

6) Reach out to other fundraising professionals and volunteers to share support, ideas, and lessons learned. If your organization is facing a financial crisis, take comfort in the fact that you are not alone. Check out the inspiring story of Oregon Ballet Theater’s efforts to raise the emergency funds it needed to keep the doors open this past June: http://www.obt.org/news_features.html

http://newsmanager.commpartners.com/ahp/issues/2009-08-03.html

In it he details recent gifts to five health care institutions, including one of $100 million, and relates his conversation with the fundraising professional, Lisa Silverman, whose shop shepherded this gift—and four other nine-figure gifts in the past year and a half. 

These examples point out that while big gifts in a down economy fly in the face of our intuition they are more than possible, and in fact, in some instances even more likely during times of economic turmoil.  Silverman’s approach challenges all of us to focus on cultivating and building donor relationships, and to reframe these times as ones of opportunity and hope.

Many nonprofits have endured a challenging year since the events of last September.  However, as Bill McGinley writes, “Let us learn . . . to not think in terms of luck, but seize the opportunities we are given with vigor and diligence. The time is now to grow your relationship building efforts, work the relationships you have and do all that is necessary to enhance them.”

Called the “Turnaround King,” Kaiser has worked with several arts organizations on the brink of financial collapse and has helped them become sustainable, strong and vibrant community assets. After the market collapse last September, Kaiser began hearing stories of arts organizations cutting their programming and marketing budgets to preserve their financial viability. These actions go against Kaiser’s deep-seated management philosophies and so he began a fifty-state tour to talk about it. Kaiser believes in “great art that is well marketed.” To get there, Kaiser’s book lays out ten principles. Each of these ten principles requires a strong arts manager that will lead and inspire.

What stands out in this recession is the immediate reaction to cut costs. It makes sense; I know in my personal budget, I had to think long and hard about what I was willing to sacrifice. So, too, do arts organizations. However, this is not as easy a task as some “business-minded” folks may think. Rarely do you see an arts organization with excessive spending in one area. So where do you scale back? Unfortunately, in too many cases, the only places available to look are program and marketing budgets. Cuts to programming and marketing always lead to lower revenues in future years; it drives down donor interest, sponsorship, and ticket revenue. Kaiser argues you cannot save your way to health and that with most arts organizations, it is not a cost issue rather it is a revenue issue.  

Following that logic, how then can organizations increase their revenue?  In Kaiser’s argument – and where The Collins Group’s experience would agree – dollars follow a positive and bold vision, thorough planning, and confidence in the leadership. The Washington State Arts Commission and ArtsFund recently commissioned a study to look at the recession’s impact on the arts. One of the key findings was that adaptability and leadership distinguished organizations that are successfully navigating their way through these times:

“Organizations of different budget sizes and different artistic disciplines are experiencing the downturn somewhat differently; however those with on-going mechanisms for feedback from their constituents, and communications between leadership and board, for example, have a common ability to adapt and change course in all areas of the organization more easily.”

It takes strong leadership to steer an organization through these times and that is where, sadly, Kaiser sees the void. So what is standing in the way? How is a strong leader developed? What are the incentives to pursue arts management?

We want to hear your stories. Even if you do not work for an arts organization, what do you think are the qualities of strong organizational leadership? What challenges do you face in pursuing professional development?