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June 2013
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What Will it take to Increase Funding?
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Greetings!

  Bruce Arbit photo 

Giving USA, the authoritative source of information on U.S. philanthropy, has released its 2012 annual report. While giving did inch up, it is still down from pre-recession levels, and remains at 2% of the country's gross domestic product (GDP).

  

According to the Chronicle of Philanthropy, giving as a share of GDP has not changed much from 2% over the past forty years! despite growth in charitable organizations and fundraising professionals.

Just a 1% increase in giving, from 2% to 3% of GDP, would add almost $158 billion to the $316 billion raised this year!

 

No where is the challenge to create new sources of funding more evident than the numbers represented in this report.

 
 
In this edition of More Than Money we ask, what will it take to increase giving? As always we welcome your thoughts and inquiries.
 


Bruce Arbit
Founder and President, Melarbit Partners, Inc.

Photo credit: The Chronicle of Philanthropy  

What Will It Take to Increase Philanthropic Giving?


There is no shortage of ideas when it comes to finding ways to increase giving. Check out a few here. Beyond the Starbucks solution and other pleas to reallocate 'superfluous consumption' I think Adam Meyerson, president of the Philanthropy Roundtable, said it best. In addition to more favorable tax treatment for charitable gifts, it's also important to "capture the philanthropic imagination of the American people."
 
For anyone interested in a provocative look at how "restraints on nonprofits undermine their potential," I encourge you to check out Dan Pallotta's talk on TED Talk, uncharitable.

 

Still, not everyone agrees that GDP is the right indicator of giving. Paul Schervish, director of the Center for Wealth and Philanthropy at Boston College, who often provides a fresh perspective, says that this statistic only reflects contributions to 501(c)(3) nonprofits. It does not capture the support people provide informally to family members, especially prevalent among immigrants, or donations made to other kinds of organizations, such as political groups that can improve society. He challenges the notion that "the philanthropic sector is the most moral and important thing you can do with your money." 

 

Regardless, we must recognize that there's a lot of money on the "charity sidelines," and the philanthropic community needs "to build a better mousetrap" says John List, a professor of economics who heads the University of Chicago's Science of Philanthropy Initiative.  

Falling money photo Digging Deeper


Our approach to moving beyond 2% includes:

 

1. Focus on the BIG picture. Big ideas and programs with vision engage and excite your best donors, inspiring them to do more. We have to do a better job of balancing day-to-day operations with a focus on communicating BIG ideas. What are you doing that has the potential to attract and inspire support?

 

2. Embrace Fundraising. Create better conditions for fundraising success by investing in the development function rather than viewing it as a necessary evil. Maximize its value by using it to build an organizational culture of fundraising and philanthropy that extends beyond the development office in order to help your entire enterprise remain relevant and responsive to changes in its external environment.

 

3. Build a better Mousetrap. Consider new models of strategic philanthropy and community investing that leverage and bring together a variety of funding sources to solve problems. Explore how new mechanisms such as crowdfunding, the collective effort of individuals to pool their money, is engaging (and inspiring) new supporters in creative ways. There is a lot of competition for charitable giving dollars and new types of social enterprises and social businesses have emerged that also are satisfying the philanthropic impulse.

 

In the end, we have to remember that giving is very personal. With over 80% of the dollars contributed coming from individuals, there will never be a one-size-fits-all solution. It's what makes our system of philanthropy both challenging and the most productive in the world. 

 

P.S. Join us this coming Monday, July 1, in Asbury Park, on the Jersey Shore, for an informal meetup, hosted by the Community Investing Network of NJ. You'll meet a local restaurant owner and social entrepreneur who is part of this changing world of civic engagement and see firsthand how local community investing is attracting new interest in the social sector. There is no registration fee and it's open to both new and experienced community investors. Sign up if you plan to be in the area.

 

 

About Us
Melarbit Partners is a fundraising consulting and community investing firm that raises money and leverages resources for mission-driven enterprises, entrepreneurs and investors. Our work is based on more than 25 years of direct fundraising, marketing and management experience, along with innovations in philanthropy and a community investing discipline. Learn more at melarbit.com