Survey: smaller percentage of donors are giving.

The traditional pool of donors is shrinking, both by sheer percentage of the American population and in some cases a lack of confidence in the charities those donors have supported.

Americans may individually be donating less money and to fewer nonprofits today than at any time in the past quarter century, according to a new national study. A disturbingly high 58 percent of donors dropped their financial support of a nonprofit because they thought that the organization was no longer trustworthy or reliable.

Nearly one quarter (23 percent) of respondents to a national survey conducted by Barna Research and sponsored by Epsilon, said that they have lost confidence in nonprofits. This crisis of confidence is highest among donors ages 57-75, traditionally the most generous demographic.

A nationwide random sample of 1,012 adults was interviewed by telephone during July, 2002. Of those, 723 said that they had donated money to an organization during the prior 12 months.

According to the survey results projected nationally, an estimated 3 million donors are now giving to fewer nonprofits than they did two years ago, dropping one or more nonprofits they had previously given to regularly. This pattern was most prevalent among donors with high incomes.

The survey uncovered some important demographic and psychographic trends in the donor population that also portend change for nonprofits.

"What surprised me was the degree to which there is a lack of confidence in nonprofits, and the degree to which people are changing their loyalty to the nonprofits they have supported over time," said Phyllis Freedman, a senior vice president at Epsilon, a direct response firm with offices in several cities, including Burlington, Mass., and Alexandria, Va.

According to George Barna, the national donor population is shrinking, with 69 percent of all adults having donated during the past year. He said that it is the first time in a decade that people responding to his research dropped to less than 75 percent. Other industry reports, such as those by Independent Sector, have shown that number bouncing between 75 percent in 1989 and 68.5 percent in 1995.

"We've been doing this research for more than a decade.... The study was a direct comparison of same questions, same methodology, same sample populations over the course of time," he said. He explained, not having studied other industry barometers, that differences in the wording of questions has an impact on the way respondents answer and thus the results.

While there has been growth in the total number of individuals who have donated during the decade, that expansion is attributable almost entirely to general population expansion rather than to deeper market penetration and conversion, Barna said.

A large share of the nation's population growth during the past two decades has occurred among the non-white population segments.

In recent years, the bulk of the nation's population growth has been- and will come from growth within the black, Hispanic and Asian segments, according to Barna's report. The challenge for fundraisers is that these groups currently have mean per capita giving rates substantially less than that of Caucasians.

"The research pretty constantly has shown that they (non-white donors) don't give as much on a per donor basis. But, this study did not go into whether these folks are asked as frequently," said Barna. "As you probably well know, a lot of times the individuals who are hit up for funds are those who have given in the past. There may be some correlation there in terms of the fact that the smaller ethnic populations aren't asked as frequently."

According to Barna and his research, the challenges represented by these changes include:

* A chronological challenge with whites: Younger whites have distinctly different attitudes, values and behaviors than do their older counterparts;

* An acculturation challenge with Asians: They prefer to maintain segregated to retain their ethnic identity;

* Acculturation and educational challenges with Hispanics: Only 57 percent are high school graduates, just 11 percent are college graduates, compared with 88 percent and 28 percent, respectively, among whites;

* Economic and spiritual challenges with blacks: They trail all others in household income and have the highest poverty rate.

In addition to the changes in ethnic make-up of the United States, there are significant age and life-stage changes underway, according to Barna. The differences among generations reflect more than an aging process - it's a substantial cultural redefinition embodied in seminal shifts in messages, images, and worldviews requiring that everything be customized.

Survey respondents were then asked about their confidence in nonprofits. The question posed was, "Thinking about charitable and nonprofit organizations, in general, would you say that you have more confidence, less confidence or about the same amount of confidence in nonprofit organizations than you had two years ago?"

The decline was most precipitous (33 percent) among those age 57 and older, currently the most generous group of individual givers.

Although in the previous 12 to 18 months there have been several high-profile instances of breach of donor trust, these alone cannot explain the degree of downturn, said Barna.

Following this question, survey respondents were asked, "Sometimes people change which charities and nonprofit organizations they donate to. During the past two years have you stopped donating to any specific nonprofit organization(s) that you had been supporting on a regular basis?" Startlingly, the dropping of nonprofits previously supported happens widely though not universally:

* 14 percent of adults have dropped a nonprofit during the past two years;

* 18 percent of donors age 57 and older, 18 percent of those from households earning $60,000 or more, and 17 percent of self-described conservatives (vs. 7 percent liberals).

Barna said that although these percentages might not seem substantial, they represent a projected 25 million donors and is most pronounced among some of the most generous groups. Of the donors who snubbed a nonprofit:

* 45 percent dropped one;

* 33 percent dropped two;

* 12 percent dropped three; and

* 10 percent dropped four or more.

Dropping more than one nonprofit was most common among women (65 percent) and those age 57 and older (74 percent). The primary reason given for dropping a nonprofit was the perceived lack of trustworthiness of the organization. "We found that a majority of these donors (58 percent).had dropped one or more NPOs primarily Out of a diminished sense of trustworthiness. Undoubtedly, for many of those people there were other reasons going through their minds, as well. Overall, 42 percent of the donors who dropped an NPO said trust was not the primary issue motivating their change in behavior," said Barna.

The question of whether the donor gave the money to a different nonprofit, gave that money to the other charities they supported, or simply reduced giving was not asked. "In our experience," said Barna, "what we've traditionally found is they (donors) keep giving until one of those places gives them a reason to drop. They don't make up a reason. There's something that happens in that relationship with that organization that causes them to feel it's no longer such a good investment."

Epsilon's Freedman said that nonprofit leaders must take heed to these warnings from donors and get out and tell stories about effectiveness.

"I think we could do more as a sector to promote ourselves and the good work that we do," said Freedman. "I do think individual organizations can do more to reassure the public about how efficiently their funds are being used and the impact of their programs, quantifying the results of their efforts in terms of people helped, and the degree to which change is being effected by the sector."

She said that the activism has to start at the top of an organization. "I think the CEO can simply try to be more visible with donors, can be face-to-face with more donors and groups of donors. The person needs to be a leader themselves, in the public, rather than just internally and with their board," Freedman said.

Donating isn't about the money, according to Barna. "Part of that is helping people to feel that when they give money they are doing more than just giving money.... There's some kind of a personal benefit they get out of it whether it's simply emotional, psychological or even tangible, that they are also becoming part of the inside crowd, part of a team that's trying to solve whatever issue that that organization represents."

Ethnic    Expected  Pop.% in  Pop.% in  Mean per
segment    growth     2000      2010     capita
                                         giving

White       +2        69%       67%      $1,218
Black       +12%      12%       13%      $1,094
Hispanic    +40%      12%       15%      $528
Asian       +35%      4%        5%       $796