The global nonprofit sector is as big as it’s ever been. The United States alone has 1.5 million registered nonprofit organizations, and counting. For meeting planners looking to incorporate CSR activities into their programs, that means whittling down philanthropic options is more complicated than ever. Choosing a cause, then researching and finding the right charity, can add up to a lot of legwork.
However, with industry organizations that analyze charities and philanthropies advocating for a heightened focus on transparency, narrowing down potential charitable partners is getting easier. This past October, the BBB Wise Giving Alliance, which reports on and evaluates more than 1,300 national charities, released a study showing that 47 percent of American donors primarily consider a charity’s finances when verifying its trustworthiness. Twenty percent cited ethics, 14 percent name recognition, and 11 percent results.
In a letter to the public published on the website The Overhead Myth, the alliance — along with GuideStar, which compiles information on nonprofits, and Charity Navigator, which ranks charities according to financial performance and other factors — asks donors to use broader judgment when choosing a charity, to look beyond financials and consider other factors such as results and impact. They also urge nonprofits to more proactively share information about their mission and inner workings. “While overhead can help us identify cases of fraud or gross mismanagement and serve as a part of an organization’s dashboard of financial-management metrics,” the letter states, “it tells us nothing about the results of your work (i.e., how you meet your mission).”
DO YOUR HOMEWORK
Philanthropists Pat and Marion Dugan started Charity Navigator in 2001 to help donors learn more about where their donations go. The organization uses financial information and other performance factors to rank charities, publishing a steady stream of top 10 lists, donor advisories, and, this past June, its 10th annual Metro Market Study. Divvying Charity Navigator’s database of more than 7,000 charities into 30 metropolitan areas, the study ranks and compares those markets and how they have an effect on their local charitable organizations.
“If the local economy is not doing well, that can definitely hurt an organization’s ability to raise funds, and that can ultimately drain their working capital,” said Sandra Miniutti, Charity Navigator’s CFO and vice president of marketing. “It’s important to take that into consideration when you’re evaluating specific charities. Maybe a major corporation has left the community, or just in general, the economy is poor and donors don’t have the ability to give. There’s a rational explanation, therefore, for why the charity’s fundraising has dropped off and they’re dipping into their rainy-day fund.”
The report also identifies other indicators of a city’s charitable landscape, such as market size (New York City has the most charities, at 697), fastest-growing charities (San Francisco tops that list), and where donors are most and least generous (Boston and Portland, respectively). Meeting planners can use Charity Navigator’s website and Metro Market Study to quickly narrow down charities in a specific city, or by mission, rating, and other factors. “There’s a lot of tools to help slice and dice the data,” Miniutti said, “and quickly find charities that might be of interest.”
FULL STEAM AHEAD
The call for more transparency is also coming at a near high point of charitable giving in the United States. According to Giving USA: The Annual Report on Philanthropy, total contributions in 2013 were $335.17 billion, up 4.4 percent from 2012.
“What we’re seeing is that the economy is improving, and people are giving,” said Keith Curtis, president of The Curtis Group and chairman of Giving USA Foundation, which has produced the Giving USA report for 60 years. “We’ve had four straight years of increases, so that’s positive, but we’re not quite at the levels we were pre-recession. But we are getting back there, probably in the next year or two, if things continue to improve.”
Giving USA takes an annual snapshot of the charitable landscape in the United States, pinpointing what’s up, what’s down, who’s giving and how much, and where it’s going. Although individuals are becoming more generous, giving by corporations is down 1.9 percent, according to the report. In 2013, about 87 percent of contributions came from individuals, while corporations made up just 5 percent of the pie — the smallest piece.
But Curtis notes that that small percentage doesn’t tell the whole story, partly because it doesn’t include certain types of donations, such as marketing dollars spent on sponsoring an event. “Corporate giving is based on pre-tax profits, and in the previous year those profits were very high, so corporations gave a little bit more,” Curtis said. “And companies are not only giving money, but also providing a lot of volunteers for nonprofit organizations.”
WHO’S DONATING WHAT?
“It’s not too surprising to us, but to others it is, where the vast amount of that money comes from,” Curtis said of the more than $335 billion donated last year. Eighty-seven percent came from individuals, including private family foundations and bequests — and that number is increasing. Another growing trend is for individuals to set up foundations or donor-advised funds to make their donations.
Where donations are going is changing, too. Since the economy is on an upswing, donors are starting to support a broader spectrum of charities. Giving to education rose by 8.9 percent last year, making it the area experiencing the most growth. Organizations benefiting the environment, arts, animals, and health were also strong, with growth ranging from 6 to 8.5 percent.
“Now that we’re coming out of the recession, they’re starting to give to some of those areas they gave to before,” said Curtis, who added that things such as human services and basic needs tend to see more donations than, say, arts and culture during economic low points. “We have had four straight years of increases [in giving]. What we’re really seeing with Americans is that as their confidence in the economy is recovering, so is their philanthropy.”
Recipient organizations seeing fewer donation dollars include religious and international charitable groups — although religious organizations are still the biggest recipient, at 31 percent. According to Giving USA, this is the result of declining religious affiliation and attendance, and fewer donations going to international charitable organizations for disaster relief.