Robust economy = robust giving

Disasters heightened needs in 2005, but latest figures show that 'donor fatigue' did not occur.

After hurricane Katrina struck last August, many stranded residents were reluctant to leave their homes without their beloved pets. But the animals weren't included in evacuation plans. The Humane Society of the United States (HSUS) rushed to the rescue, transporting and sheltering more than 10,000 isolated and frightened animals, and opening a reunion center for pets and owners.

"We redirected 200 staff members and moved in thousands of volunteers," says Nick Braden, HSUS spokesman.

Those efforts struck a chord with Americans, who donated $34 million to support HSUS's action. That contributed to a whopping 68 percent boost in HSUS contributions for the year, from $79 million in 2004 to $133 million in 2005.

Their experience highlights an extraordinary philanthropic response in 2005 to several natural disasters. Yet the $7.4 billion Americans gave for disaster relief is only half of a $15 billion increase in charitable giving for the year.

According to Giving USA Foundation, which released its 2005 report Tuesday, disaster relief is but 3 percent of total giving – which grew to an estimated $260.3 billion. The report and other recent surveys paint a healthy picture for US nonprofits.

Overall, Americans gave 6 percent more last year than in 2004, with the greatest growth occurring in donations to human services, environment and animal welfare, and international affairs organizations. Close to 60 percent of US charitable groups reported growth – even before adding relief donations. That's the highest percentage in five years.

The humanitarian response to the tsunami, hurricanes, and earthquakes clearly did not give rise to "donor fatigue." As confirmation, a recent survey of 5,000 households by The Conference Board finds that 90 percent of those who gave for disaster relief said it was in addition to, not instead of, their regular charitable donations.

"The results show us that a robust economy results in robust giving," says Richard T. Jolly, chair of Giving USA. Not surprisingly, economic conditions influence philanthropy, with some subsectors being particularly vulnerable to variation. "Arts, culture, and humanities" was the only subsector to show a decline for the year (down 3.4 percent). Contributions to health organizations rose only 2.7 percent.

Human services – which had experienced funding declines for three years – registered a huge 32.3 percent jump, to $25.4 billion, including $3.3 billion in disaster relief. Gifts of $2.4 billion to the American Red Cross topped the list.

Aid for environment and animal welfare grew a strong 16.4 percent. With some of its largess, the Humane Society is working to reconstruct animal-care capacity in devastated areas, develop a better disaster-response team, and seek legislation to ensure that animals are included in future evacuation plans.

The Indian Ocean tsunami and Pakistan earthquake spurred remarkable growth of 19.4 percent in donations to international organizations; but the estimated $1.1 billion for disaster relief apparently "crowded out" some regular support. Apart from disaster-relief money, funding dropped by 1.9 percent for this sector. Giving for international purposes amounted to 2.5 percent of total US giving.

World Vision, an international Christian relief and development organization in 96 countries, saw a 14 percent rise in donations during 2005, buoyed by disaster relief and an ambitious campaign to help children affected by HIV/AIDS.

"Our industry is still largely dependent on institutional [rather than individual] donors," says Atul Tandon, World Vision's senior vice president for donor engagement. Yet humanitarian aid allows the public "to turn the question from 'Why do they hate us?' to 'How do we show them our love?' "

Religious groups far outpace other subsectors as donation recipients. Last year, Americans gave 35.8 percent of all contributions (or $93.2 billion) to houses of worship, ministries, missions, and denominational relief groups.

Congregations often channel some contributions into the community or elsewhere. In an extraordinary example, Fountain Baptist Church in Summit, N.J., has pledged $1 million for hurricane recovery in the Gulf Coast, according to Religion News Service. The 108-year-old African-American church has a history of donating large sums to beneficiaries in the US and abroad. In this case, it plans to provide for job and life-skills training for families, assistance to pastors to rebuild churches, and resources for housing and community-building projects.

The Giving USA report covers contributions from four sources: individuals, bequests, foundations, and corporations. Individuals always represent the largest group, and in 2005 gave 77 percent, or $199 billion.

Many more Americans are opting for online giving, which speeds the process while reducing fundraising costs. A recent survey by The Chronicle of Philanthropy showed that online giving to 162 charitable groups rose by 148 percent from 2004 to 2005. World Vision saw online donations soar at more than twice that rate, from $8.5 million to $37.1 million.

While corporations are the smallest donor group, usually accounting for 5 percent, corporate donations in 2005 rose an unprecedented 22.5 percent, to $13.8 billion. (They grew by only 1.6 percent in 2004.) "The high level ... is explained in part by two years of very strong growth in gross domestic product and ... in corporate profits before taxes," says George Ruotolo Jr. of the Giving Institute: Leading Consultants to Non-Profits. "It also shows companies' exceptional response to disasters."

Firms found ways to do their part. Aplus.net, a San Diego-based provider of Internet services to small and medium-size businesses, decided after Katrina to donate a portion of all its sales for one month to the American Red Cross.

"We also donated approximately $5,000 in services and waived fees to Katrina victims and to websites designed to help victims," says Natasha Grach, public relations manager.

Southwest Airlines has had a Civic and Charitable Contributions department for about 15 years, with a budget of close to $4.5 million for responding to needs in each city the airline serves. First priority tends to be people traveling for medical needs, but requests range from arts to child-oriented projects.

"We did our one-and-only company match for employee donations related to the tsunami, and Katrina was an affair of the heart," says Tracie Martin, department manager. Southwest donated tickets for various organizations, and sent in planes to carry evacuees and cargo. It also set up a mechanism for frequent fliers to donate awards tickets to people in need.

While matching-gift programs are not widespread, many employees did their best to take advantage of them after the disasters. The Conference Board survey found that only 13 percent of those polled worked for companies that offered to match employees' donations, but of those working for such firms, 70 percent asked their employer to match their gifts.

Pitney Bowes, of Stamford, Conn., a supplier of office and postal equipment, modified its giving in 2005 by setting up two foundations of $10 million each. One will make grants to support Literacy in Education. The other, an Employee Involvement Fund, serves as a pot to follow employee dollars. "We were able to double our matching rate from 50 cents on the dollar to dollar for dollar, which ... also incentivized more giving," says Matthew Broder, a Pitney Bowes vice president.

While there were signs in the fourth quarter of 2005 of a return to predisaster giving, charities are heartened by the increase in new donors as well as in giving per donor.

• Note: Giving USA's estimates are based on original surveys of organizations and on econometric studies using data from other research institutions. The estimates are developed by the Center on Philanthropy at Indiana University.