Post-2008 giving realitiesFINANCE, Giving Friday, August 31st, 2012
By Jim Sheppard
People want to know more about where their charitable contribution is going.
It has been four years now since the great economic adjustment of our generation. It was a perfect storm of a crash in the equity market and the housing market. Historically, we have had adjustments in the equity market and adjustments in the housing market, but we have not had large simultaneous adjustments. And, unlike other significant market adjustments, we have not yet seen a recovery. The impact has been far reaching.
A lot has been said about the impact on churches. In reality, about one-third of churches are up from 2008-2009, one-third are down and one-third are flat. Despite what many may say, the economy is not the main reason for that, except in a few cases. The downturn in the economy may have accentuated the effect on some, but internal factors actually have a lot more to do with the downturn in giving.
The bigger effect of the economic adjustment has been on the mindset of givers. As the people in our churches think about their giving, their paradigm has shifted. Prior to 2008, money was “easy come, easy go.” Don’t worry so much about where you give it because you can always make more. Not true anymore, because our hard-earned dollars are harder earned than ever before. As a result, donors are now much more careful in where they want their money to go.
If you are planning an accelerated giving initiative of any kind – annual giving, capital funds, ministry venture capital or legacy giving – there are new realities in play. To optimize the success of any giving initiative will require taking these realities into account.
Increased vetting of giving options. People are a lot more careful where they give in the post-2008 era. The tendency is to give more money to fewer, carefully selected choices. Givers will vet their charitable options according to criteria they have established, which will include, among others, transparency of financial disclosure and stewardship of resources. For example, does the church or ministry organization do a good job of stewarding financial resources?
Portfolio management perspective. This one is huge. Prior to 2008, we saw this among high-capacity givers. Now we are seeing it at all levels. People are investing (i.e., giving) to churches and ministry organizations where the highest “ROI” is perceived. ROI is defined as impact. In other words, what results is the church or ministry organization getting? The big shift is that givers will move money from those they perceive to be “low performers” to “higher performers” in terms of impact. Churches cannot assume their people know; they have to make sure they have told the church’s story well and have clearly demonstrated the impact of their ministry.
Reducing debt is popular – at least for now. This is the after-effect of seeing what debt did to people in the crash. For years, church members have had low motivation toward giving initiatives that were focused on reducing or eliminating debt. But now, reducing or eliminating debt is seen as a real positive and givers are motivated to invest in it.
Transparency about finances. Historically, churches have not disclosed a lot of financial information. However, people now want to know more about where their charitable giving is going. They want to know how the church is doing – income statement and balance sheet. Churches do not get a pass on this, especially among younger donors.
Jim Sheppard is CEO and principal of Generis, a consulting firm in Atlanta, GA, dedicated to accelerating generosity for churches and ministry organizations. Sheppard is co-author (with Chris Willard) of the newly released book, Contagious Generosity: Creating A Culture of Giving In Your Church. www.contagiousgenerosity.com, www.jimsheppard.net