recent trends in funding

2013 Indiana Governor’s Conference on Service and Nonprofit Capacity Building

October 3, 2013 Indianapolis, IN

Kirsten Grønbjerg, Ph.D. Patrick Rooney, Ph.D.

Josette C. Rathbun, CFP, MBA Angela White, CFRE

Moderator – Katie Prine

Welcome to the 2013 Indiana Governor's Conference on Service and

Nonprofit Capacity Building!

October 3, 2013

IU LILLY FAMILY SCHOOL OF PHILANTHROPY Improving Philanthropy to Improve the World

Phi • lan • thro • py (n.)

“voluntary action for the public good”

~ Robert Payton


Introductions • Kirsten A. Grønbjerg, Efroymson Chair in

Philanthropy, Professor of Public and Environmental Affairs at Indiana University, Bloomington

• Patrick Rooney, Associate Dean for Academic

Affairs and Research at the IU Lilly Family School of Philanthropy

• Josette C. Rathbun, CFP, MBA, First Vice

President-Wealth Management at Merrill Lynch • Angela White, CFRE, Senior Consultant and

CEO at Johnson, Grossnickle, and Associates


Nonprofit Employment, Revenues and Funding Streams

Kirsten A. Grønbjerg Efroymson Chair in Philanthropy

Professor of Philanthropic Studies Professor of Nonprofit Management

School of Public & Environmental Affairs Indiana University Bloomington

Overview

• Trends in the Indiana nonprofit sector • Importance of philanthropic funding • Current state of giving


Indiana Nonprofit Sector: Trends

www.indiana.edu/~nonprof


http://www.indiana.edu/~nonprof

The overall pie – our estimate for IN

• Indiana Nonprofit Sector project estimate (2011) - 250,000 paid employees - $9.5 billion in payroll (excl. fringes)

- $26 billion revenues (rough estimate) Assumes payroll (excl. fringes) ~ 37% of revenues (US estimate)

• Nonprofit payroll has grown, even adjusted for inflation - Up by 61% since 1995; by 9% since 2008

• More than the growth in nonprofit paid employees - Up by 34% since 1995; by 5% since 2008


NP employment is more recession proof • Annual % changes in paid employees: 1995-2011

-9%

-7%

-5%

-3%

-1%

1%

3%

5%

7%

9%

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

Nonprofit Government For-Profit



…. so is nonprofit payroll • Annual % changes in payroll (infl. adj.): 1995-2011

-9%

-7%

-5%

-3%

-1%

1%

3%

5%

7%

9%

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

Nonprofit Government For-Profit



But in key industries NPs are loosing ground – in share of total employment

0%10%20%30%40%50%60%70%80%90%

100%

1995-2000

2001-2006

2007-2011

1995-2000

2001-2006

2007-2011

1995-2000

2001-2006

2007-2011

1995-2000

2001-2006

2007-2011

% N

onpr

ofit

Empl

oyee

s

Social Assistance Health Arts, Entertainment, & Recreation

Education



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995-2000

2001-2006

2007-2011

1995-2000

2001-2006

2007-2011

1995-2000

2001-2006

2007-2011

1995-2000

2001-2006

2007-2011

% N

onpr

ofit

Payr

oll

Social Assistance Health Arts, Entertainment,

& Recreation Education

…and in share of total payroll



-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

Social Assistance Health Arts, Entertainment, & Recreation

Education

…with real job losses in some industries



-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

1995

-199

619

96-1

997

1997

-199

819

98-1

999

1999

-200

020

00-2

001

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

Social Assistance Health Arts, Entertainment,

& Recreation Education

…and in payroll



So, a mixed message about the Indiana nonprofit sector

• Overall growth • Resilience during the two recessions • Some notable growths and areas of strengths

• Health • Education

• But also decline & growing competition, especially.. • Social assistance • Arts, entertainment and recreation

• And trends are worrisome


Importance of Philanthropic Funding


The overall pie – another take • Nonprofit Almanac 2012: estimate (2010 data)

- US: 366,000 “reporting public charities” • $1.5 trillion in total revenues • Excludes private foundations & 614,000 “non-reporting”

public charities - Indiana: 7,600 “reporting public charities”

• $28.9 billion in total revenues • Excludes private foundations & 15,600 “non-reporting”

public charities • Very close to our revenue estimate ($26 billion)

- Very different methodology - Different year (2010 vs. 2011) - Both are incomplete


Philanthropy is a fairly small slice (US)

Private fees & sales, 50% Gov't fees, 24%

Gov't grants, 8%

Private contributions,

13%

Investment, 3% Other income, 2%

Source: Roeger, Blackwood & Pettijohn. Nonprofit Almanac, 2012 (2010 data)


..but slice varies by nonprofit field…

72% 57% 56%

41% 34% 30% 28% 27% 26% 8%

50%

1% 20%

38%

5% 1% 1%

25% 5% 4%

1%

24%

9% 8%

1%

17%

12% 14%

23%

19% 3%

19%

8% 11% 11%

2%

29% 45% 49%

20%

41% 61% 69%

13% 6% 2% 2% 6% 5% 3% 2% 5% 4% 2% 3% 1% 1% 2% 3% 3% 3% 2% 3% 2% 1% 2%

0%10%20%30%40%50%60%70%80%90%

100%

Perc

ent o

f Tot

al R

even

ues

by S

ourc

e Other income

Investment

PrivatecontributionsGov't grants

Gov't fees

Private fees &sales

Roeger, Blackwood & Pettijohn. Nonprofit Almanac, 2012 (2010 data) with unpublished supplementary details for education, health, and PSB


Current State of Philanthropy


Reminder… private gifts are just 13%

Private fees & sales, 50%

Gov't fees, 24%

Gov't grants, 8% Investment, 3%

Other income, 2%

Private gifts, 13%

Source: Roeger, Blackwood & Pettijohn. Nonprofit Almanac, 2012 (2010 data)


But private philanthropy is large: $316.2 billion in 2012

One-third goes to religion Almost half (45%) goes to: Education: 13% Human services: 13% Foundations: 10% Health: 9%

The rest: about a quarter (23%) Most goes to large charities Top 400 receive ~25% of total Large capital campaigns

(universities)

Religion, $101.5 , 32%

Education, $41.3 , 13% Human

services, $40.4 , 13%

Gifts to foundations, $30.6 , 10%

Health, $28.1 , 9%

Pub/soc benefit,

$21.6 , 7%

International, $19.1 , 6%

Arts, cult. Human,

$14.4 , 4%

Envir., animals, $8.3 , 3%

Unallocated, $6.8 , 2%

Gifts to indivduals, $4.0 , 1%

Source: Giving USA, 2013


A closer look at Philanthropy by source

Individuals, $228.9 , 72%

Bequest, $23.4 , 7%

Foundations$45.7 , 15%

Corporate $18.2 , 6%

Total : $316.2 billion

Source: Giving USA 2013 (2012 data)

….and no good data on how philanthropic profiles vary by nonprofit field….

Most (79%) come from individuals - Living: 72% - Bequests: 7%

Only 21% from institutional donors - Foundations: 15% - Corporations: 6%


...although likely to vary greatly…

97 87

77 77

59 50

36

1 4

13 9 29

17

16

2

9 9 14 12

33 49

0%10%20%30%40%50%60%70%80%90%

100%

Perc

ent o

f agg

rega

te g

ifts

Corporations

Foundations

Households

Dated (2003), but for Indiana;

(combines bequests & current household

giving)

Source: Center on Philanthropy, Indiana Gives, 2003


The Role of Universities in The Growth of The Nonprofit Sector

Patrick Rooney Associate Dean for Academic Affairs and Research

Lilly Family School of Philanthropy at Indiana University

Creating the Indiana University Lilly Family School of Philanthropy

• In September 2012, Indiana Commission for Higher Education approved proposal to create School of Philanthropy.

• Inauguration took place in April 2013. Believed to be the world’s first school dedicated to the study and teaching of philanthropy.


Goals of the Lilly Family School

• Attract more top students to choose careers in philanthropy. • Prepare current and aspiring philanthropy and nonprofit

professionals with the knowledge to be thoughtful and innovative leaders.

• Educate new generations of scholars in a field whose importance is growing rapidly in all aspects of society.

• Draw on expansive network of faculty and programs focused on philanthropy and nonprofits.

• Expand and enhance actionable research for the sector. • Raise awareness and visibility of philanthropy and nonprofit sector. • Improve philanthropy to help you improve the world.


About the Lilly Family School

• Currently 12 core faculty + 40 affiliate faculty in 20+ fields

Strategic partnerships with SPEA ‘s Nonprofit Management programs at both IUPUI and IUB, as well as Liberal Arts

• Core program areas

Academic Programs

The Fund Raising School (TFRS)

Lake Institute on Faith & Giving

Women’s Philanthropy Institute

Research


Giving USA

• Estimates for:

o Sources of giving;

o Amounts received by type of organization

• Published by the Giving USA Foundation™

• Made possible by contributions from many

• Started in 1956 by the American Association of Fundraising Counsel, now Giving Institute: Leading Consultants to Nonprofits

• Most comprehensive annual report about U.S. charitable giving


Total Giving in billions of dollars (1972-2012)

Source: Giving USA 2013.


Total charitable giving graphed with the S&P500, 1972-2012



Sources and Uses of Giving in 2012

Total: $316.23 billion Source: Giving USA 2013.


Total giving as a percentage of GDP 2002-2012 (in inflation-adjusted dollars, 2012=$100)



Center on Philanthropy Panel Study

• Conducted in conjunction with the University of Michigan’s Panel Study of Income Dynamics

• Largest and longest running panel study in the world. Started tracking 5,000 households in ‘68

• Philanthropy module added in 2002

• Now interview ~8,000 households

• Expensive research: ~$1,000,000 for the first wave; $700,000 for current wave. Excludes analysis.


Donor Incidence over Time, 2000-2008

66.8 68.5 66.9 65.3 65.4

46.5 46.5 46.3 43.1 42.3

55.9 57.5 56.3 55.7 56.5

2000 2002 2004 2006 2008

Total Religious Secular

Source: Center on Philanthropy Panel Study.


Giving Amount over Time, 2000-2008

1,583 1,564 1,617 1,546 1,518

970 979 992 942 873

613 585 625 606 645

2000 2002 2004 2006 2008

Average Total GivingAverage Giving to Religious PurposesAverage Giving to Secular Purposes



Mean Income and Wealth by Persistence of Giving

Type of donor (mean)

Persistent (3-yr)

Repeat (2-yr)

Occasional (1-yr)

Non-Donors

Income $89,441 $71,155 $43,205 $29,229

Wealth (excluding home equity) $344,188 $217,031 $116,625 $43,111

Percentage 56% 29% 15%

Type of donor Persistent (3-yr)

Repeat (2-yr)

Occasional (1-yr)

Non-Donors

Mean Median Mean Median Mean Median -

Total $2,659 $1,260 $1,022 $400 $406 $150 -



Examples of Research Based on COPPS:

Predictors of Giving • The intergenerational transmission of

generosity

• Women Give 2010, 2012

• Stability of Donors

• Giving by Various Sources of Income and Wealth

• Without COPPS such research would not be possible!

Source: Picture taken from http://hopkins.typepad.com/.a/ 6a00d83451db8d69e2011168646150970c-popup


The Study of High Net Worth Philanthropy

• Sponsored by Bank of America

• Published in 2006, 2008, 2010, 2012

• Leading resource on high net-worth households.

• Scientific random sample (in 2012, n= 701)

• Prior research based on client lists

• Includes any household with an annual income of more than $200,000 and/or net worth of more than $1,000,000 (excluding the value of their home). All respondents had to have their primary residence in the U.S.


The Study of High Net Worth Philanthropy

• Commitment to Nonprofits

o In 2011, 95% of HNW donors gave to a charity

o In 2011, the average amount given by HNW households was $52,770 (a decrease of 7% from 2009)

• Focus on major gifts

Disproportionately high share of all individual giving in the U.S. comes from HNW individuals

o Top 1% gave 37% of all itemized contribution deductions in 2009

o Top 0.1% gave 18%


Percentage of High Net Worth Households That Gave to Each Recipient Category in

2011^

Notes: ̂ Combined organizations include UW, UJA, and CC. “Giving Vehicle” represents gifts to private foundations, charitable trusts, and donor-advised funds. *2009 and 2011 results are statistically different (2009 data not shown).


Average Amounts Given by HNW Households in 2009 and 2011, by

Charitable Category^

Notes: ^Values adjusted to 2011 dollars for the year 2009. This table does not show outlier data. *2009 and 2011 results are statistically different. Source: The 2012 Study of High Net Worth Philanthropy.


Values, Motivations and Expectations

Source: The 2012 Study of High Net Worth Philanthropy.

• 33.4% of HNW donors involve children in grant-making decisions

• 45.5% of respondents from HNW households made their charitable giving decisions jointly with their partner

• 74% of wealthy individuals cited “making an impact” as a primary motivation for giving (an increase from 72.4% in 2009)


• Purposes: • To enhance knowledge about giving at scale. • To make that knowledge transparent and

widely accessible • A unique dataset providing an in-depth view of

HNW giving • A total of 67,373 qualifying gifts (of $1 million +) from 2000 to 2011 • Grants a unique perspective on trends in giving at the highest level by the wealthiest

Americans, successful corporations, foundations, and other grant-making nonprofits


Distribution of Total Dollars Given by Donor Type

Source: Million Dollar List 2013.


Average Gift Size by Subsector

0

5

10

15

20

25

30

Gift

siz

e in

mill

ions

IndividualsCorporate FoundationsFoundations

Source: Million Dollar List 2012.


Million-Dollar-Plus Gifts From All Sources (in Billions of Inflation-Adjusted 2011

Dollars)

Note: * The light blue for 2006 excludes the single gift of $33.47 billion (in 2011 dollars). Source: Indiana University School of Philanthropy. A Decade of Million-Dollar Gifts: A Closer Look at Major Gifts by Type of Recipient Organizations, 2000-2011.

*

Amou

nt

Years


Million-Dollar-Plus Gift by Donations Type, Number of Gifts and Gift Amount

(2000–2011)

Note: X-axis represents the number of gifts made by each type of donor. Bubble size represents the dollar amount of gifts from each type of donor. Source: Indiana University School of Philanthropy. A Decade of Million-Dollar Gifts…

Number of gifts

(Bill

ions

of I

nfla

tion-

Adju

sted

201

1 Do

llars

)


Recipients of Million-Dollar-Plus Gifts, by Number of Gifts and Gift

Amount (2000–2011)

Note: X-axis represents the number of gifts made by each type of donor. Bubble size represents the dollar amount of gifts from each type of donor. Source: Indiana University School of Philanthropy. A Decade of Million-Dollar Gifts…

(Bubble size represents the amount in Billions of Inflation-Adjusted 2011 Dollars)


Recipients of Million-Dollar-Plus Gifts, 2000–2011 (in Billions of Inflation-Adjusted 2011 dollars)

Source: Indiana University School of Philanthropy. A Decade of Million-Dollar Gifts: A Closer Look at Major Gifts by Type of Recipient Organizations, 2000-2011.


Number Of Million-Dollar-Plus Gifts From All Sources and S&P500,

2000–2011

Note: Gray bars represent quarters with at least one month of recession. Source: Indiana University School of Philanthropy. A Decade of Million-Dollar Gifts: A Closer Look at Major Gifts by Type of Recipient Organizations, 2000-2011.

Mega Gifts as a Share of Million Dollar List by Donor Type, 2000-2012

Donor Group

Total # of mega gifts

Total $ of mega gifts

% of total # of MDL gifts, by donor group

% of total $ of MDL gifts, by donor group

Corporate 72 13,100,000,000 1.14% 37.43%

Foundation 425 50,400,000,000 0.79% 22.11%

Individual 362 136,000,000,000 4.09% 72.73%

Total 859 199,000,000,000 - -

Source: Yannan "Lukia" Li analysis based on MDL 2012.


A Local Affair

• 32% of donors give to organizations within the same city that they call home

• 64% give to organizations within their state

• Only 1% of the gifts are made to foreign and overseas organizations


Resources • School of Philanthropy

www.philanthropy.iupui.edu

• Giving USA www.givingusareports.org

• The Million Dollar List www.milliondollarlist.org

• Other research including

Center on Philanthropy Panel Study

Bank of America Study on High Net Worth Philanthropy www.philanthropy.iupui.edu/research-by-category


http://www.philanthropy.iupui.edu/

http://www.givingusareports.org/

http://www.milliondollarlist.org/

http://www.philanthropy.iupui.edu/research-by-category

In a World of Numbers, What Makes People Give?

Josette C. Rathbun, CFP, MBA First Vice President – Wealth Management

Wealth Management Advisor The Rathbun Group

Merrill Lynch

Donor Motivation My Experiences in the World of

Philanthropy


Bank of America 2012 Study of High Net Worth Philanthropy


Primary Motivations of Large Gifts


Marianne Tobias and the Indianapolis Symphony

Orchestra


Eugene & Marilyn Glick


Marianne Glick

Glick Eye Institute


Gene and Marilyn Glick Cultural Trail


Sid and Lois Eskenazi


Eskenazi Health Foundation


Dan Elsener and Dr. Michael Evans – Marian College of

Osteopathic Medicine


IUPUI IMPACT Campaign • $1.39 billion over the course of the past

7 years • Lead to the creation of:

• Richard M. Fairbanks School of Public Health

• Eugene and Marilyn Glick Eye Institute

• Lilly Family School of Philanthropy. • Promoted academia as well:

• 64 RISE scholarships • 20 Endowed Chairs


Putting the Pieces Together: What does all of this mean for your work with donors?

Angela E. White, CFRE Senior Consultant and CEO

Johnson, Grossnickle and Associates

1. Examine the effectiveness of your current major gift program.

• How do you currently engage with your donors and prospects? • Do you have an emphasis on building personal relationships? • Do you have systematic approach to the discipline of

donor/prospect contact? • Are there written plans for the engagement of each top

donor/prospect with your organization? • Do you communicate the impact of charitable giving on the

implementation of your mission?


2. Understand that the engagement of major gift prospects takes time and the involvement of your senior leadership.

• Are you thinking long-term when creating engagement plans for your major gift prospects?

• Do your prospects build personal relationships with multiple people at your organization?

• Are you creating meaningful volunteer opportunities for major gift prospects and donors?

• Are you soliciting a major gift when the time is right for the prospect and the relationship and not solely according to your internal schedule or plans?


3. Know your prospect! • Do you know the charitable giving strategies of your major gift

prospects? • Are you engaging both the husband and wife or life partner in

your discussions? • Are you focused on the right giving vehicle? • Do you know the extent to which the major donor prospect wants

her/his children involved in any charitable giving? • Do you know the unique motivators and de-motivators of your

major gift prospects?


4. Match the right project with the right prospect and giving vehicle.

• Are you soliciting major gift commitments for the operational needs of your organization?

• Do you know the desired giving vehicles for each prospect and are you able to match those vehicles to your funding needs?

• Are you focused on the right giving vehicle? • Are you effectively communicating your philanthropic needs in a

way that will elicit a prompt and meaningful response? • Are you working with professional advisors and community

foundation leaders to educate them on your mission and needs?


5. Practice excellent donor stewardship. • Does your focus on your major gift prospects end when a gift is

made? • Are you continuing to grow the relationship beyond the signing of

a gift agreement or cashing of a check? • Are you preparing your current major gift donors for the next

area of interest and for increasing their charitable support of your organization?

• Do you know the issues that are important to your major gift donors and continue to make the connections between these issues and your mission?


Concluding Thoughts

• It is important to understand the trends and research findings regarding high net worth individuals. However, we must avoid the tendency to make generalizations about our prospects and use this research in place of getting to know each major gift prospect and donor.


Resources • Giving USA; 2012 Edition. This is the annual report on philanthropy,

covering 2011.

• The School of Philanthropy at Indiana University COPPS Study. COPPS is the most accurate resource for measuring giving and volunteering in the United States. COPPS follows a large number of the same families for long periods of time and gathers detailed information about their lives to identify emerging trends in philanthropy.

• Women Give 2010. This study utilizes the COPPS data from 2007 to research single-headed households and giving.

• The 2012 Bank of America Study of High Net Worth Philanthropy. This research is based on 700 respondents throughout the U.S. with household income greater than $200,000 and/or net worth (excluding value of residence) of $1M+.

• Indiana Nonprofit Sector. This is the most comprehensive source of information on Indiana nonprofits: www.indiana.edu/~nonprof


http://www.indiana.edu/~nonprof

Questions? Comments?


recent trends in funding

Education

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nonprofit employees90

nonprofit payrollannual

nonprofit payroll90

nonprofit paid employees

worldindiana nonprofit

nonprofit capacity building

indiana governors conference