In 2008, private giving to charity fell by 6%, the largest drop since 50 years ago when giving data was regularly tracked. Is that drop short term or long term?
Monday’s Wall Street Journal (February 1, 2010) posted some ominous headlines—particularly for the non profit world. First, front and center, Obama’s 2010 budget is set at $3.8 trillion dollars with a $1.6 trillion shortfall. Second, a number of analyst are predicting that the stock market is ripe for a deep drop. Third, the Journal reports that the charity world is in for a rough ride with more mergers and closings ahead.
How do each of these headlines spell prolonged trouble for the non profit world?
For many charities, the US government has long been a significant contributor. But under Obama’s plan, government debt will amount to 5% of the gross domestic product. Put it more simply, we’ll be paying down our country’s debt for a long time. And who ultimately pays that debt? The individual. And if the individual is paying debt, that means they have a lot less disposable income to do things like, well, giving.
The stock market dropping again? In 2008, charities across the country saw a significant dip in gifts of publicly traded stock. While we saw some recovery of those gifts in 2009, the fact is that many will still wary or had sustained such heavy losses they simply didn’t make as many gifts. Another significant market drop may signal people digging in for the long haul, and, well, not giving.
The factors of a troubled economy, job losses, market losses, and fears of the impact of government debt have already played havoc on the incomes of charities across the country. Some charities have already merged with others to increase efficiencies. Some of cut budgets, cut staff, cut services and soon some will face closing as a current reality.
For those charities relying upon government grants, the picture is especially bleak. The message is perhaps one we don’t want to hear. Maybe charities have gone back to the same proverbial well too often—the donor or the government—and its now time to look at new options for funding.
Those new options should particularly include revenue generation—enterprise activity. That kind of activity may well be the hope of the more than 1.5 million non profits in the country.