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The Struggling Economy Spells Doom and Gloom for Charities

Daniel Gross, business columnist for Newsweek and Slate, turned his eyes towards the latest victim of the economic downturn in his most recent column, cheerfully titled “The Coming Charity Crisis.” His tone is appropriate. Thanks to the sluggish market, fundraisers from splashy celebrity galas to Salvation Army clothing collection bins and the charities they support are all feeling the pinch of declining donations. And while large impressive multi-million dollar gifts usually get most of the press, Gross points out that mega-gifts make up only 1.3% of all donations. The bread and butter of nonprofits in America is smaller donations from individuals who support the cause, accounting for 75% of all donations in 2006. So as wages flag, and gas prices dig in, and the health of the upper-middle-class consumer starts to show fatigue, we can expect donations and nonprofit budgets to take a big hit.

The mysterious guru over at the Don’t Tell The Donor blog has taken a rickety time-machine in to the future and agrees. But you don’t need a time machine to predict this decline—the writing has been on the wall for some time. Giving USA Foundation and the Center on Philanthropy at Indiana University reported individual and corporate giving actually declined in 2007 when adjusted for inflation. Target Analytics reported yesterday that revenues had declined in the first quarter for 60% of the nonprofits in their study.

At Materials Matter, we can confirm that with our own anecdotal evidence. Not only are donations down, but our ability to afford to pick up and deliver in-kind donations has dramatically decreased with diesel soaring to new price-heights. Around here we call it the “new math.” When a donor calls in with some extra windows and doors, or some leftover hardware from a construction project, we have to calculate pretty quickly how much it will cost us to pick it up in our fuel-inefficient truck using the donation’s current whereabouts, the size of the donation, and whether it’s on route to or from another pick-up. Then we have to decide whether the value of that donation will be worth the cost of transportation. It’s put a huge dent in our “always say yes to a donation” philosophy.

Corporate giving has also declined, and we are currently surviving on a lean staff and the revenue from our social enterprise store. As predicted, a home improvement outlet that offers 50-80% off retail on cabinets, flooring and everything else is not a bad business to be running when the housing bubble bursts and the economy slows down. Still, our Board of Directors is sweating. And it’s not from lack of air conditioning. Though that might be the next to go if gas prices continue to rise.

What to make of this new, gloomy philanthropic landscape? The experts agree on one thing: it will take some time for the economy to recover. This isn’t a normal recession, but the unraveling of a massive credit bubble, and a $300 stimulus check won’t help the 30 million people being foreclosed on. (If you haven’t heard it yet, by the way, you should give an hour to listening to the This American Life special on the credit crisis called The Big Pool Of Money.) Charity giving will most likely slump this year and the next. To stay afloat, we all have to nurture our social enterprises and return to the time honored strategy of asking friends, face-to-face, to support the causes we care about most.


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My time machine is NOT rickety... it is a stainless steel, start-of-the-art, high powered device.

Just because it is a a small metal chair rigged to flux capacitor which only requires 1.21 gigawatts of electrical power - does NOT mean it's rickety.

So sad, just so sad that this is what it is coming to. Thank god for Bill Gates and Warren Buffet providing billions for charity. One of our real strong points was always coming up help for the needy, regardless of where they lived, what their religious beliefs are or their political views. But who is going to come to our rescue with the financial disaster presently going on with no sign of slow down any time soon. The answer is NOBODY, we are on our own.

So sad, just so sad that this is what it is coming to. Thank god for Bill Gates and Warren Buffet providing billions for charity. One of our real strong points was always coming up help for the needy, regardless of where they lived, what their religious beliefs are or their political views. But who is going to come to our rescue with the financial disaster presently going on with no sign of slow down any time soon. The answer is NOBODY, we are on our own.

I agree with Bill that we should thanked to Bill Gates and Warren Buffet for giving so much charity to help others.

Don't you think that Bill Gates and Warren Buffet collect peoples money to build his own kingdom?

Thank for Bill Gates and Warren Buffet, and also other peoples who make a large of charity to help others.

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It's true that we've all been hurt by this manufactured crisis. It sickens me to think that the US government is run by Wall Street. We all need breaks here and there.

If the big stimulus package (trillions) were given to the people that work and are citizens in this country, it would be about $400k+ per person. Talk about stimulating the economy...We have all been hurt, hopefully we can find someone to solve this out of control government spending.

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Well I know it's tough times for charity foundations, but regular people are having a difficult time getting these days as well. I know that I am in that same situation, but personally I always contribute whatever I can to charities even if it is not as much as I used to. They need our support.

ust wished to say that I read your blog really regularly and I’m at all times amazed at a few of the stuff consumers post below. But keep up the beneficial function, it’s usually helpful.

It's nice to see that at least a few people in this world have the same views as me. If we all would just let the unimportant things alone and concentrate on treating each other with love and respect, The world would be so much better. Please visit my blog. It's open to everyone and there's no registration required. I'd love to hear from you all.

Sorry to hear about this. But you are right about the home improvement stores. We run a flooring company in San Diego and last year had to lay off many of our flooring contractors to cut our losses. It's tough to do. All we can do is value what we have the people have and live close to God.

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