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ARTICLE

3 Ways We Can Raise Charitable Giving as a % of GDP

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The board of a research institute in England focused on philanthropy recently poised this question to the members:

“If we expect nonprofits to save the world what percentage of each country’s GDP should charitable giving be?”

The Giving USA report of charitable giving in the United States finds, almost like clockwork, that charitable giving is 2% of GDP.

With tithing and volunteerism both on the decline, how can we increase this percentage? Here are three ideas:

1. Legacy Giving

When you consider other methods of giving that would truly constitute giving back, the category of legacy related giving comes to mind. In this grouping we see the possibility of substantial leaps in giving percentages. Legacy giving allows individuals, who by the way provide the largest percentage of giving by far, to go beyond stretch annual fund gifts and capital campaign gifts in order to make substantial impact.

If this key area of giving was approached much earlier and more often in the donor life cycle this percentage of GDP needle could be moved. Perhaps herein lies one of the key methods change the stubborn two percent achievement level.

2. Donor Advised Funds

Closely aligned with legacy giving is the rapidly growing area of donor advised funds. This group raises much discussion as to the ultimate value for the charity sector due to the fact a large percentage of the dollars in those funds are not being moved annually to charities to use in funding their mission. So although being counted in the percentage of giving to GDP, most of the dollars are growing, waiting to be allocated.

Keep in mind these instruments of giving have become the growth engine of giving, especially in the United States.

3. Gifts In-Kind

This group was left to last on purpose.

Have we really utilized the potential this type of giving offers?

In certain sections of the nonprofit world, this type of giving is of prime focus. For instance, gifts in-kind of supplies, medicine or food from companies caring enough to give back in a huge manner.

What if this same level of giving was achieved by every business, and also by individuals, through proper education and motivation? If every business and those individuals not living in poverty all strove to give 10% of their product, service and/or belongings, could we really move the percentage of GDP result?

Who knows? Perhaps doubling that 2% of GDP here in our own country is possible. But it will never happen unless we make some drastic changes.

Does your nonprofit organization focus on legacy giving, donor advised funds or in-kind gifts? Let me know in the comments below!

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Jay Love
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth. Prior to starting eTapestry, Jay served 14 years as President and CEO of Master Software Corporation. MSC provided a widely used family of database products for the non-profit sector called Fund-Master. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman. Jay is also the author of Stay Together: How to Encourage a Lifetime of Donor Loyalty.

Comments

  • Ron Newlin

    Brilliant! And another aspect of legacy giving is that, for 60 years (but only 60 years), the model for estate giving has been to create perpetual endowments, where the principal of the gift is tied up for eternity, and only a portion of the interest thereon -- 5% or less -- is actually put to work. We need to emphasize unrestricted or temporarily restricted legacy giving -- fewer perpetual endowments, and more trusts that spin off twice as much usable income for a limited amount of time -- perhaps one generation, after which they are replaced with the next generation's legacy gifts.
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