US nonprofits report improvement in donations

U.S. nonprofit organizations are seeing a slight increase in donations — a sign they hope is the beginning of economic recovery — but the turnaround hasn’t been strong enough to keep up with higher demand for charitable services, a national report released Monday said.

About a third of America’s charities reported an increase in donations during the first nine months of 2010, and they said they expect more good news in the fourth quarter.

Another third said giving to their organization continues to drop and the remaining nonprofit groups are holding steady, according to data collected by a coalition called the Nonprofit Research Collaborative.

One-fifth of the nonprofits surveyed said they would have to cut their budgets for 2011, possibly leading to both staff and service cuts. Another 7 percent reported their organizations are at risk of folding next year because of finances.

Charitable giving fell by 3.6 percent in 2009, when Americans gave $303.75 billion, the second-worse year since 1956, according to the Giving USA foundation. About half of American charities reported a decrease in donations in 2009.

Donation figures for 2010 won’t be available until early next year, but one organization tracking charitable giving — Blackbaud, a Charleston, S.C., company that sells nonprofit software and other services — reported charitable donations were up 4.3 percent for the three months ending with September 2010.

“Technically, we’re in a recovery,” said Patrick M. Rooney, executive director of the Center on Philanthropy at Indiana University, which lead the coalition. “We are beginning to see some positive signs. But despite that, giving still has a long way to go to return to the levels it was at three or four years ago.”

The coalition also includes GuideStar USA, the Foundation Center, the Urban Institute’s National Center for Charitable Statistics, the Association of Fundraising Professionals and Blackbaud.

More larger charities reported increases in donations than smaller ones. Rooney said larger charities have more people focused on fundraising, so they’re likely to recapture charitable attention more quickly.

International charities — those spreading American dollars around the globe — were the most optimistic about increases in donations this holiday season.

Despite donation increases and an improvement in investment income, charities are still hurting financially because of an increase in demand for services plus an ongoing drop in government dollars, he added.

“It’s a tougher time to be not-for-profit,” Rooney said.

The slow recovery mirrors the nation’s recovery cycle, in addition to some factors unique to nonprofits. Continued high unemployment and slow recovery and uncertainty in the housing market are hurting charities.

Uncertainty is the enemy of nonprofit organizations, Rooney said. People are more likely to make charitable gifts and more likely to give significant amounts of money when they are confident in the economy, he said.

Most high income households continue to give to charity, Rooney said, but their gifts are smaller and people whose families make below $100,000 a year are focusing more on paying off credit cards and putting money aside for emergencies than giving to charitable organizations.

Meanwhile, a recent survey of the general public has found that the bad economy may be leading more people to think about giving charitable gifts this holiday season instead of spending money at the mall.

About half of American adults say they’re likely to give a charitable gift for the holidays this year, according to a random telephone survey conducted in November by Harris Interactive, which was paid for by World Vision of Federal Way, Wash.

That survey also found that more Americans have gotten or received charitable gifts since the economic downturn, which World Vision says is a sign that Americans are becoming more charitable.

Seventy-one percent of those surveyed said they plan to increase their charitable giving once the economy improves.

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