Since 1956, the Giving USA Foundation has released a comprehensive annual report about charitable giving in the United States. According to the most recent report, Americans gave $290.89 billion to charities in 2010. This was a 2.1% increase from 2009, adjusted for inflation.

Unique observations of this year’s numbers include the fact that giving to education grew by 5.2% after a decrease of -5.6% in 2009. This is the first time in two years that we have seen an increase in this sector. We are only midway through 2011 and have already seen three pace- setting gifts to higher educational institutions in the Midwest: $100 million to The Ohio State University, $105 million to Ohio University and $225 million to the University of Pennsylvania. After several years of watching gifts to education decline, this is very welcome news for America’s educational institutions.

The real headline of giving in 2010, however, is that in this turbulent economic time, philanthropy directed by individuals – which includes individual donations, bequests and family foundations – has increased. Individual giving now represents 88% of total philanthropy in 2010.

Increasingly, planned and deferred giving are helping individuals meet the needs of their trusted philanthropic partners, with an increase of over 18% in estate giving this year. The message for 2011 is clear: individual donors are resilient and passionate about the organizations they care about. The individual continues to be the engine of American philanthropy.

This information is valuable for advisors in numerous ways. As we sit on nonprofit boards, the focus of these organizations’ futures must be tapping into individual giving. This means boards must have a willingness to initiate and sustain meaningful relationships with friends of the organization. It is no longer simply about asking for the gift: it is about cultivating and sustaining.

The organizations that will thrive in the future will have the ability to sustain meaningful personal relationships. Through personal relationships, you will not limit your organization to one-time gifts. Thinking about the needs of the prospective donors and the relationship will allow both the donors and the organization to benefit.

The organization may want the money delivered in cash, but it may be in the best interest of the donor to use other vehicles such as stock transfers and in-kind support to impact the organization’s mission. Is your organization positioned to accept these donations?

Financing strategies that allow a donor to make a long- or short-term gift have become as important to philanthropy as a pledge. Organizations must think about how they will make the funds available once the gifts or pledges are received. We used to simply take pledges to the bank and get them financed. It is not that simple today. In today’s environment, you must think about how your project is going to be financed from day one.

This comes back to communicating with the individual donor, which is the theme of a philanthropically sustainable program. The Hodge Group is doing some of the most cutting-edge work in philanthropic financing, which relates to programs of making donor pledges available today.

These vehicles run the gamut of traditional financing, tax exempt bonds, tax credits to get the project started, and more. How your vision will be financed and structured is a large determinant of how you will raise those individual dollars. Having that large finance plan for your $30 million program will impact your ability to raise the funds because donors will know that you can translate their gifts into actions sooner. Individuals do not want to wait five years to complete their pledge before they see the organization under construction. They want to know that their good faith and credit is making a difference as soon as possible. This is all part of the individualfocused program.

The report also showcased how philanthropy is spread over multiple sectors:  

  • Religion: 35%
  • Education: 14%
  • Foundations: 11%
  • Human Services: 9%

It is important to look at these numbers through the eyes of the recipients of philanthropy. Those gifts to the human service sector are changing lives every day. Those educational institutions are teaching literacy and skill sets needed to survive in the workforce. Even in the foundation sector, three-fifths of all contributions by independent foundations are from family foundations to further drive home the individualized focus of any fund-raising program. As the Giving Institute observed, grants from family foundations are in many respects a form of giving by individuals.

During 30 years of practice in philanthropy, the Hodge Group has always advised clients to focus on individual relationships. But in a time of social media, e-mails and electronic communications, there is a drift away from personal touch and the intimacy required for a major philanthropic transaction.

In the past six months, our company has been involved in six individual-driven transactions ranging between $1 million and $5 million. The hallmark of each of these gifts is that there has been a sustained, personal relationship between the organization and the donor.

However, at least two of the gifts were from donors who were new to the organizations that benefited. In each of those cases, it was the personal relations and manner with which the donors were treated by the organization that resulted in the gift.

The numbers in the Giving Institute’s report directly reflect the experiences we are having in the field – the majority of giving is from individuals and the best way to benefit from individual giving is to steward all of your relationships.

For more information on the Giving USA Foundation report on charitable giving, please contact the Hodge Group at www.info@hodge-group.com.

Written by guest author Russ Hodge of the Hodge Group. For more information, contact Dianna Kaczay at diannakaczay@hodge-group.com.