Commentary: Fundraisers are adjusting to a changing upper class

Courtesy of ASPCA

American Society for the Prevention of Cruelty to Animals-which sent workers to help rescue pets after the tornado this year in Joplin, Mo.-says stepping up disaster-related work has sparked new interest from donors.

Noelle Barton and Holly Hall, Chronicle of Philanthropy, 10/16/11 [subscription required to read]

The nation's most successful fund-raising groups appear to be pulling out of the recession: They expect contributions to grow by a median of 4.7% this year, after a median 3.5% gain last year. But only some types of big nonprofits are prospering, and the struggles faced by the rest paint a far more worrisome picture of the state of fundraising. Most of the gains were made by groups that receive the bulk of their contributions in the form of donated products [or] stock gifts, which revived with the market recovery last year. But for nonprofits that depend primarily on cash gifts, the situation was not nearly as healthy. Looking at those groups alone, giving was virtually flat. Many fund raisers now take the view that just holding steady, or managing to raise slightly less than in the past, should be considered a success. Just about every type of giving has been hurt -- individual gifts, corporate and foundation grants. [Also,] the number of gifts and amount contributed by wealthy donors has dropped sharply since the recession started, according to The Chronicle's annual tally of gifts of $1 million or more. Last year, gifts of that size totaled only a third of what such donations were worth just two years before. Arts organizations have been hit especially hard. "Corporate giving has been permanently changed," says Amy Purvis at the Museum of Fine Arts, Houston, which raised $64.6 million last year. "We have seen a lot of corporate support evaporate. There are far fewer corporate foundations these days, and any gifts are coming more from marketing. Six-figure sponsorships of exhibitions have dried up." A few museums have been able to find new corporate sponsors. While the Art Institute of Chicago suffered a decline in overall giving last year, it is about to receive two sponsorships from companies that will underwrite exhibits for two to three months. One company is giving more than $1 million. And the new Smith Center for the Performing Arts in Las Vegas, vaulted into the Philanthropy 400 for the first time by raising $71.7 million last year.

Commentary: Marketers need to adjust to a changing middle class

Matt Carmichael, Advertising Age, 10/16/11

Perhaps there's no more fitting signpost for where America is economically headed than dish soap.

Procter & Gamble, a marketer with its finger closely on the pulse of the American public, last year introduced a bargain-priced dish soap under the Gain name. The move was an acknowledgement of the changing profile of the American middle class. Its price was a nod to the strained economy and its branding under a name popular among Hispanics pointed to the growing diversification of what was once the "traditional" middle class. In short, America's backbone is bending toward the breaking point. In the last decade, consumers overall cut spending 4.2% in 2010 dollars, and the brunt of that was felt by the middle class, which slashed spending between 10% and 13%. Meanwhile, the upper 20% of earners curbed spending only 6%. The blame can't be pinned on the recession, either. In real dollars, median family income is now what it was in 1997. Meanwhile, Census data show us a much more diverse picture as well: 16.3% of the population is now Hispanic. The number of black/white biracial Americans has doubled in the past decade. The Asian population is the fastest-growing by percentages. The number of African-American households earning more than $100,000 grew 88% in the past decade helping propel African-Americans to a trillion-dollar buying force, according to Nielsen. Take the trends together-changes in income, shifts in family types, and the remapping of the racial and ethnic make-up of the population-and what emerges is a very different middle class. Today, half of all households have less than $10,000 in annual disposable income, according to Experian Simmons. While these changes haven't happened overnight, marketers are grappling with how to keep up. Walmart has stopped adding upscale merchandise and put back the bargain bins known as Action Alley. Layaway programs are in full swing at Kmart, Sears, Best Buy and Toys R Us. Hallmark even has greeting cards for the unemployed. Food marketers are shrinking pack sizes as a means of providing lower prices for consumers with less spending power. Some marketers take this as a cue to refocus on the affluent. Not a bad idea, they still have money. But there are 5% fewer of them than there were before the recession.

Commentary: Arts funders should adjust their giving in lower-income communities

Holly Sidford, National Committee for Responsive Philanthropy report, October 2011

The economic profile of our people is changing as dramatically as our demographics. Recent figures show that the richest 20% of U.S. households earn more than half of total income and the bottom 20% earn less than 4%. At least 43 million people (14.3% of the total population) live below the poverty line. The number of people living in impoverished neighborhoods is increasing, and exceeds 25% in places such as Detroit, Cleveland, Miami and Philadelphia. Many rural areas are disproportionately poor. Income disparity in the U.S. is greater than at any time since the 1920s, and puts us in company with oligarchic nations such as Russia, Egypt and Pakistan. These are shocking statistics and represent worlds of stress and pain for millions of people. They also explain why the vast majority of cultural groups, especially those serving lower-income neighborhoods, remain small and financially challenged. The enormous increase in the number of cultural organizations in the past two decades is a testament to the universal desire for arts and culture in every community. The fact that three-quarters of all cultural groups have budgets under $250,000 is a testament to the disparity of resources available to support different communities' artistic aspirations.... The reverberating impacts of the recession, the current political climate and the widespread hostility to government spending threaten prospects for arts and culture funding. These trends are shifting the funding landscape for all cultural groups, but they are most ominous for the artists and organizations based in and serving lower-income communities and marginalized populations. Private funders cannot replace the role of the public sector, but the shifts in public sector funding have both immediate and long-term implications for the cultural ecosystem, particularly for the smaller, newer, edgier parts of that system and the artists and groups serving our least advantaged communities. This is another compelling reason for private funders to reconsider the balance of their grantmaking in the arts.

Related: Arts orgs in lower-income communities shouldn't rely on funding

Reihan Salam, National Review, 10/13/11

Holly Sidford's report for the National Council for Responsive Philanthropy advances an explicit political agenda. One could also argue, however, that arts organizations that aim to serve lower-income communities should pursue means of achieving economic sustainability that don't involve catering to the interests and sensibilities of the affluent, e.g., they might embrace for-profit models that force them to offer services of sufficiently high value that even the economically constrained will consider them worth paying for, at a cut-rate price. This could lend a useful discipline to the work of a cultural group, assuming its mission is to deliver services that people actually want to take advantage of. Social entrepreneurs could be deployed to help arts organizations devise effective business models, an alternative to an injection of funds that often requires expensive fundraising and oversight infrastructure. What we can safely say is that arts funding currently deployed to the largest cultural organizations might be better deployed elsewhere. This will require a shift in the perceived prestige involved in making donations in other domains, a process that has already begun. Educational philanthropy has expanded, and it has definitely grown in prestige, though there has been a fairly effective ideological counterattack from incumbent educational providers and allied interests.