The Foundation Center

December 28, 2011

2011 Year in Review:

A Tale of Two Economies

It was a year of bruising budget battles and unnerving debt crises, of economic recovery and retreat, of the 99% and the 1%. For many, it was simply the "new normal."

Still, after three years of economic hardship, stress, and uncertainty, the year opened on an optimistic note, with a handful of announcements and surveys seeming to find many Americans feeling better about their prospects.

In January, the Fidelity Charitable Gift Fund, the nation's largest donor-advised fund program, reported it had received more than $1.6 billion in contributions in 2010, a 42 percent increase over the previous year, and had authorized more than $1 billion in grants for the fourth consecutive year. That same month, the annual Dunham+Company New Year's Survey found that the number of households planning to boost their charitable giving in the coming year had jumped nearly 30 percent, while the number that planned to cut back on giving was down nearly 50 percent. And the Minnesota Council on Foundations' 2011 Outlook Report found that 35 percent of the foundations surveyed expected to boost their giving in 2011, while only 10 percent expected to give less.

The somewhat more constructive tone did little, however, to change the fact that millions of Americans were struggling to keep a roof over their heads, put food on the table, and/or secure gainful employment -- or that nonprofits, as a survey conducted by the Nonprofit Finance Fund found, expected to see increased demand for their services. Further clouding the picture for nonprofits, especially so-called "lifeline" organizations, was the highly partisan debate in Washington over the 2012 federal budget -- and the likely impact of funding cuts on an already frayed social safety net.

As spring turned to summer, the sovereign debt crisis in Europe and the possibility of the first-ever downgrade of long-term U.S. debt sent markets tumbling, threatening the fragile economic recovery at home and causing many charities and fundraisers to brace for the worst. But a last-minute (if temporary) debt-ceiling deal in Congress, collective (if halting) action by European countries and the European Central Bank to stem the crisis in the eurozone, and steady (if modest) improvement in the U.S. economy helped to forestall the dreaded double-dip scenario -- for the time being.

As a result, by December many Americans were again feeling better about the future. Indeed, with the new year right around the corner, a Chronicle of Philanthropy survey found that donation income at more than half the charities it polled was running ahead of last year's holiday season total -- and that donations at one in five organizations were up by more than 20 percent compared to the same period in 2010.

At the same time, a distressing number of charities continued to report that income remained below pre-recession levels and that demand for assistance was rising faster than giving, while more than a few were looking to collaborations, mergers, and joint ventures to meet that demand.

"A much larger percentage of nonprofits were seeing significantly higher fundraising results before the recession," said Andrew Watt, president and CEO of the Association of Fundraising Professionals, in September. "[And] with many economists predicting a flat economy for several more years, charities face a very challenging environment in the near future....This is the reality charities will have to address."

Board Member

of the Month

Carol Travis  

Robin Masson