Changes in Charitable Gift Giving
Donors now seek assurance that their charity donations are being put to good use.
'Tis the season for parties, gifts and family feasts. But it’s also the time when many people donate to nonprofit organizations. “People tend to be more giving around the holidays,” says Chris Grundner, president and CEO of the Delaware Alliance for Nonprofit Advancement (DANA), a membership organization. “Maybe they’re walking down the street, and they see the Salvation Army volunteer ringing the bell and decide to put money in the kettle.” Some nonprofit organizations have targeted campaigns at this time of year. Meals on Wheels Delaware, for instance, began its Adopt a Senior campaign on Oct. 30. “We’re reaching out to people as they begin to spend time around the holiday table, but their neighbors may need help with their nutritional daily intake,” says Anne Love, director of donor relations. Some donors have their eye on tax deductions. Or they’ve received a bonus, and they want to give a portion to a cause. Regardless of the reason, the good news is that charitable giving grew 4.9 percent in the U.S. in 2013, the largest gain since the 2008 recession, according to Blackbaud’s “Charitable Giving Report: How Nonprofit Fundraising Performed in 2013.” But in this post-recession world, the way we give has changed. Many donors want assurance that the funds will go to good use. Nonprofits, meanwhile, are adapting the way they approach development, not only to meet donor demands for accountability, but also to cast a larger net.
The Power of One
Anyone who’s lived in the Delaware area for some time remembers the day when corporations generously gave to multiple causes across a broad spectrum, from arts and culture to education and what Love calls the “front line” of need: food and housing. “Now we see more targeted corporate donations,” Love says. “If they’re a financial institution, they may focus on financial planning for people who are struggling.” Companies are also allowing employees to choose a charity for earmarked payroll deductions. “People have been empowered to make giving decisions and the company supports them,” says Stacey Haddock Schiller, who has a marketing and communication business with several nonprofit clients, including the Delaware Financial Literacy Institute and the First State Community Loan Fund. All of which is prompting nonprofits to focus on individual donors. Individuals, however, often lean toward either areas of interest or a particular non-profit. “I choose causes that are close to my heart, such as my hometown church and Delaware Breast Cancer Coalition,” says Robin Glanden of Newark. Dave Yantis of West Chester was impressed by the Make a Wish Foundation, even before his daughter developed neuroblastoma when she was 6 months old and benefited from the foundation’s services. Those interested in a cause, such as fighting hunger or homelessness, may find multiple organizations that address the concern. Giving to all might not be financially feasible. Donors want to give to the organization that gets results. “They’re starting to ask questions they didn’t ask before,” Grundner says. “They want more transparency and more accountability.” To make sure their dollars count, Schiller and husband Joel read annual reports and serve on boards. “We’re looking at what the nonprofit is doing and how they’re demonstrating their impact,” says the Wilmington resident. Volunteering is a good way to see what a nonprofit does with its dollars. At the least, visit the nonprofit’s office. “Find out about the cause, meet the board members and make sure everyone is singing from the same song sheet,” Grundner says. “Nonprofits should have nothing to hide and welcome those conversations.” And in Delaware, where there are one or two degrees of separation, connecting with the decision-makers is easy.
The Big Picture Counts
Donors—whether individuals, corporations or foundations—can often dictate how the nonprofit uses the funds. Many favor a specific project; they don’t want the money to support overhead, also known as administrative costs. Sixty-two percent of Americans believe that the typical charity spends more than it should on overhead, according to the organization Giving Evidence. This is nothing new. A 2001 survey by the Better Business Wise Giving Alliance reported that half of adult Americans felt a nonprofit’s overhead should be 20 percent or less of its budget. But nonprofits—like for-profit companies—need updated technology and talent. “No one would ask a bank X, Y and Z how much overhead they have,” Grundner says. If donors want increased accountability and transparency, nonprofits need the resources to create reports. Meals on Wheels Delaware is audited every year by an external auditor, says Love. Charities with a strong infrastructure have a better chance of succeeding, according to an article in the Stanford Social Innovation Review on “The Nonprofit Starvation Cycle,” which refers to cutting overhead so much that a nonprofit can’t effectively serve the people and the community. Grundner would prefer that donors base heir giving on results.
Front and Center
And those results must be apparent. The Lewes Historical Society, headquartered on a complex in the heart of the historic district, has multiple properties around town, making the society highly visible. The Historic Lewes Farmers Market is held on its grounds, which also hosts antiques and craft shows. “We present multiple facets to the community, whether it’s taking a stand on a preservation issue, hosting an exhibition or working with the tourism office,” says Mike DiPaolo, executive director, who also credits the city government for preserving the town’s assets. The Delaware Shakespeare Festival, founded in 2003, in the past few years has grown from an annual event to a series of activities and community outreach efforts, particularly those aimed at at-risk youth. The organization has doubled its revenue, partly due to performance ticket sales. But if you think memberships or tickets can float a nonprofit, think again. Often they only support the cost of the performance or membership programming. Admittedly, arts organizations have taken it on the chin. In hard times, people are more likely to give to human-services organizations. But consider that the arts create a “culturally rich community—they’re a huge part of what makes the community an interesting place to live,” says David Stradley, producing artistic director of the Delaware Shakespeare Company. There’s an economic development aspect. Corporations need culturally interesting venues to attract new recruits, he points out. Not everyone wants to watch Netflix after working 9 to 5.
Different Ways to Give
Of course, organizations need donations throughout the year, Schiller says. “What else might you be able to do that’s of critical importance to those organizations?” Consider your “talent, time and treasures” when it comes to supporting a cause. When Grundner’s wife, Kelly, died of a brain tumor, he started the Kelly Heinz-Grundner Foundation in 2004, which later merged with the National Brain Tumor Society. You don’t need to be wealthy to start a foundation or scholarship fund. At the Delaware Community Foundation, the minimum fund is $10,000, although there are various plans available to build the fund. These foundations are fueled by donations and interest on the investments. “It really starts building,” says Fred C. Sears II, president and CEO of the Delaware Community Foundation. A fund or foundation helps donors target giving. The Global Delaware Fund, founded by the late Matt Haley to help children and adults in need locally and abroad, is managed by the Delaware Community Foundation. When Sears’ mother passed away, he formed a fund in her name for homeless dogs. In 2008, Harvey Hanna & Associates established the Delaware KIDS (Kids in Distressed Situations) Fund. This year, the company plans to make 12 visits to 12 needy families to fulfill a need, such as providing money for utilities or toys for the kids, says Ryan Kennedy, director of marketing for Harvey Hanna. Legacy or planned giving is another option. Donors leave a portion of their estate and/or part of their life-insurance policy to one or more charities. The Lewes Historical Society’s endowment fund blossomed from about $100,000 in 2001 to up to $1.2 million largely because of bequests, DiPaolo says. No matter how one gives, the goal is to see beyond the donation. “People give money to the Food Bank of Delaware, but I ask them if they’ve been there? Have they been to Lutheran Community Services or seen neighbors line up at the Sunday Breakfast Mission?” says Kennedy. “It’s eye-opening.”Grundner agrees. “Delawareans should realize that we all benefit from nonprofits, and services will go away without their time or money. Nonprofits are woven into the fabric of our society and they shape who we are and who we can be. That’s why people should give.”