Monday, January 26, 2009

Is There a Hierarchy of Giving?

As we continue down the road of the worst economic crisis since the Great Depression, questions remain about how this will impact individual giving of time and treasure (i.e. volunteerism and individual contributions) to charity. As I noted in my recent blog entry - Is Giving Recession Proof? - the evidence from previous recessions indicates that we give more than one would expect when our personal finances suffer. However, donations do decline and as one expert warned, "We are in uncharted waters". Therefore, what has happened in the past may not apply, given the scale and scope of our economic crisis. Furthermore, our new President has called all of us to volunteer as a duty of every citizen. So how do we prioritize our giving of time and treasure? Based on the data I have seen on the subject, I believe there is evidence of a hierarchy of giving for most people that follows the pattern - Spiritual first, Everything Else second.

In other words, giving begins with matters that affect the eternal destiny of an individual. Not surprisingly, I believe the greatest indicator of this type of giving relates to the religious category of charities. I suspect that, for those who believe in a higher power (either within themselves or in a deity); religious giving is the first priority. It is reflected in the fact that the largest share of individual contributions go to religious organizations. According to a study by the Center for Philanthropy at Indiana University, 61% of household giving in the US went to religious organizations ($1,703 per household, vs. $863 to secular organizations). This household giving totaled $92 billion in the year of the study (2002). Furthermore, according to Giving USA, frequency of attendance at a house of worship is seen as a key indicator of ongoing donations to charity. In addition, religious organizations receive the largest percentage of volunteers at 35%, according to the Nonprofit Almanac.

Here is how Everything Else fares by comparison. The second largest category of household giving is to the needy at 16%. All the other categories of charity see single digit percentages of household giving. The good news is in the area of volunteering. Two categories of charities get a sizable block of volunteers (the others are all single digit percentages) - educational or youth service at 26.4% and social or community service at 13%. The bad news about volunteering is that some research shows that it declines during times of economic troubles according to the non-profit group Independent Sector.

So what does all of this mean? I think it indicates that if people reduce the amount of money they give to charity due to financial hardship, the charities who will suffer the most are non-religious. As we have noted elsewhere (here and here as examples), we are already beginning to see evidence of this problem across the board. However, when it comes to giving time to volunteer, some non-religious charities may be well positioned to provide the opportunities for people to fulfill the duty to service that President Obama is asking for. Even though volunteerism may normally decline during times such as these, the call from our new President may bring us into "uncharted waters" in the direction of an increase.

As the President advocates for greater community service (here and here), the facts and figures noted above should be borne in mind. We are a religious nation and are most likely to respond to calls to volunteer within that context. Even with the social service, youth and educational programs that get a sizable percent of volunteers, I strongly suspect that for many, this giving of time also flows out of the same religious convictions noted above. The mandate to give to the poor is common in all of the major religions of the world. I think any program that is developed without this reality front and center is doomed to a tepid future as compared to what it could be. I pray that the President gets this right!

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