Changing Donation Patterns: A Warning for Charitable Organizations. Highlights

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1 Vol. 8., No. 3 - Summer 2001 Changing Donation Patterns: A Warning for Charitable Organizations Michael Hall - Vice-President, Research Michelle Goulbourne - Research Associate Larry McKeown - Senior Research Associate Highlights The percentage of Canadians who made a charitable donation (78%) was unchanged between 1997 and The total amount of donations increased by 11% in current dollars, but by only 6% when controlling for the effects of inflation. Giving has increased dramatically more than the national average in some provinces, but has declined in others. The increase in total donations is due primarily to increased giving by the top 25% of donors. It appears that donors are becoming more strategic in their giving. The way in which donors are asked to give and concerns about how donated dollars are being used are becoming increasingly important barriers to giving more. Donation patterns are changing, according to recently released findings from the 2000 National Survey of Giving, Volunteering and Participating (NSGVP) 1. While the total amount donated in Canada increased between 1997 and 2000, giving in some provinces declined, as did giving among a substantial segment of donors. It also appears that donors are becoming more strategic in their giving, and are increasingly concerned about the fundraising practices of charities and the use to which their donations are being put. All of this should be of concern to charitable organizations. The 2000 NSGVP provides a snapshot of giving and volunteering in Canada in 2000 and allows us to track changes since the first NSGVP was conducted in For example, over the three-year period since 1997, the number of donors has increased, while the number of volunteers has decreased (Hall, McKeown and Roberts, 2001). As well, both the average amount of money that Canadians donate and the average amount of time they volunteer have increased. This Bulletin focuses specifically on changes in charitable giving and discusses some of the implications of these changes for charitable and nonprofit organizations 2. Changing Patterns of Donations Although the percentage of Canadians who made a donation over a one-year period (the donor rate) did

2 not change between 1997 and 2000, the total amount given increased. In both 1997 and 2000, 78% of Canadians gave money to a charitable or nonprofit organization. They donated a total of over $4.9 billion in 2000, or 11% more than in The size of the average donation increased by 8%, from $239 to $259. Although the increase in donations appears, at first glance, to be substantial, it is less impressive given the economic and social context in which it occurred. First, when the effects of inflation are taken into account, total donations grew by only 6% in real dollars 3 between 1997 and Second, Canada s population increased by 2.4% over the same period, resulting in 473,000 more donors in Finally, the growth in average donations (8%) has not kept pace with the growth in average household incomes, which increased by 16% between 1997 and 2000 (Statistics Canada, 2001). The national growth in donations of 11% from 1997 to 2000 does not capture the tremendous variation among provinces. Table 1 shows substantial growth in donations in Manitoba, Alberta and Prince Edward Island, with increases ranging from 29% to 34% between 1997 and 2000 (or 22% to 28% controlling for inflation). Part of the growth in these provinces can be attributed to increases in the number of donors. The donor rate in Alberta, for example, increased from 75% to 85% between 1997 and The number of Albertans 15 years of age and older increased by almost 7%, resulting in a 20% increase in the number of donors in that province. Ontario, which accounts for 46% of all donations in the country, displayed a 12% growth in the total amount given. However, this amounts to growth of only 6% when controlling for inflation. Table 1: Population, Donor Rate, Donors and Donations by Province, 1997 and 2000 The total amount given decreased in Quebec and Saskatchewan by 9% and 11% respectively (or by 14% and 15% controlling for inflation). In these provinces the donor rate remained virtually unchanged and there was little population growth. The number of donors increased by only 0.5% in Saskatchewan and declined by 1.3% in Quebec. Much of the growth in total donations appears to be due to increases in the size of donations made by "top" donors who provide the bulk of all charitable dollars (Table 2 and Figure 1). Figure 1 divides donors into four equal-sized groups based on the size of their donations. The top 25% of donors who gave $213 or more provided 82% of the total dollar value of donations in In contrast, the bottom 25% of donors who gave between $1 and $23 dollars accounted for only 1% of the value of all

3 donations. Between 1997 and 2000, the average donation made by the top 25% of donors increased by 12% (Figure 2). In contrast, the average donation of the bottom 25% (who provide only 1% of all charitable dollars) increased by only 5%. The donations of the middle two groups, which comprise 50% of all donors, actually decreased by 3% to 4%. Table 2: Average Donation by Annual Amount Donated, 1997 and 2000 Figure 1: Distribution of Donations by Annual Amount Donated, 2000 Figure 2: Change in Average Annual Donation, from 1997 to 2000 Strategic Giving It appears that donors are becoming more strategic in their giving and are making fewer, but larger, donations. Seventy million donations were made in 2000 compared to 74 million in Donors made an average of 3.7 donations each in 2000, down from the average of 4.0 in The average amount

4 given as a single donation increased from $60 to $70. More donors are reporting that they plan their donations. These donors account for an increasing percentage of the total share of donations. In 2000, one in four donors (25%) indicated that they decided ahead of time which organizations they would support rather than deciding at the time they were actually asked to make a donation (see Figure 3). In 1997, only one in five donors (20%) reported this practice. In 2000, these donors accounted for 39% of the total dollar value of all donations, up from 32% in Figure 3: Percentage of Donors and Donations by those Who "Decide in Advance which Organizations to Donate," 1997 and 2000 Donors are less likely to give regularly to the same organizations. "Regular donors" also appear to be decreasing the amounts they give. In 2000, 41% of donors indicated that they donated regularly to certain organizations and accounted for 59% of the total dollar value of all donations (Figure 4). In contrast, in 1997, 44% of donors gave regularly to the same organizations and accounted for almost two-thirds (65%) of the total dollar value of all donations. Figure 4: Percentage of Donors and Donations by those Who "Donate to Certain Organizations on a Regular Basis," 1997 and 2000 Another possible indicator of a more strategic mindset on the part of donors is that their giving appears to be increasingly responsive to changes in tax credits. In 2000, almost half of all donors (49%) indicated that they would contribute more if governments offered them a better tax credit for their charitable donations. This is a substantial increase from the 37% of donors who indicated this in Increasing Concerns about Fundraising and the Use of Donations Donors are increasingly expressing that they dislike the way in which donation requests are made. The NSGVP asked donors whether they agreed or disagreed with a number of possible reasons for not

5 donating more. In 2000, nearly half of all donors (47%) indicated that they did not donate more because they disliked the way in which requests are made (see Figure 5). These donors accounted for over half (54%) of the total dollar value in donations. In contrast, in 1997, 41% of donors expressed this view and accounted for 45% of all donations. Figure 5: Percentage of Donors and Donations by those Who "Dislike the Way Requests are Made" as a Reason for Not Making More Donations," 1997 and 2000 Donors are also increasingly more likely to indicate that they were prevented from giving more because they think the money will not be used efficiently. In 2000, 46% agreed that this was a reason they did not give more, up from 40% in 1997 (see Figure 6). These donors accounted for an increasing percentage of donations (43% in 2000, compared to 37% in 1997). Figure 6: Percentage of Donors and Donations by those Who "Do Not Think the Money Will Be Used Efficiently" as a Reason for Not Making More Donations", 1997 and 2000 Conclusion On the surface, charitable giving appears to be healthy and on the rise. However, there are a number of warning signs that charitable giving may not be as robust as charitable organizations might hope. The growth in donations has not kept pace with growth in household income, nor has there been a broadbased increase in giving across the population. Donors appear to be more strategic in their giving and to have more concerns about fundraising practices and the use of donated dollars. Charities should consider the challenges that these changes pose to their efforts to improve the support they receive from Canadians. It may be unwise to take donors generosity for granted or to expect that Canadians will continue to give as much as they have in the past. References Hall, M., McKeown, L., and Roberts, K. (2001). Caring Canadians, Involved Canadians: Highlights from

6 the 2000 National Survey of Giving, Volunteering and Participating. Ottawa: Statistics Canada, XPE. Statistics Canada (2001). National Survey of Giving, Volunteering and Participating. The Daily, August 17. Ottawa: Author. Footnotes: 1. The NSGVP is a joint project of the Canadian Centre for Philanthropy (CCP), Canadian Heritage, Health Canada, Human Resources Development Canada, Statistics Canada and Volunteer Canada. The survey was conducted with 14,724 Canadians aged 15 and older who were asked about their giving, volunteering and participating over the previous year. 2. For more information on the results of the 2000 NSGVP, see the overview report Caring Canadians, Involved Canadians (Hall, McKeown and Roberts, 2001) available on-line at 3. The notion of "real" change is based on the use of constant dollars to control for the effects of inflation. This Bulletin measures real change with 1992 constant dollars based on Statistics Canada's annual average, all items Consumer Price Index (CANSIM Matrix 9957). Canadian Centre for Philanthropy, 2001 This Research Bulletin is copyright, and its reproduction or transmittal, in whole or in part, in any form or by any means, or its storage in a retrieval system, without the prior written permission of the copyright owner is strictly forbidden. 425 University Avenue, Suite 700, Toronto, Ontario, M5G 1T6 (416) Please visit our Web sites: / /