Views on Donor Patterns in Economic Recession:

Although it is always a priority for Interlock to keep abreast of trends in donor patterns, with the current economic crisis it becomes absolutely crucial. Furthermore, from our research we've determined that there doesn’t seem to be much consensus on the issue, so I have provided (mostly from the Chronicle of Philanthropy) a few contrasting views below:

I. Donation rates will be affected in current crisis

Patrick Rooney, the director of the Center of Philanthropy at Indiana University has stated that historical rates of donation have decreased only marginally in years of recession and that on average, giving declines only one percent. However, he then proceeded to iterate his uncertainty and unwillingness to apply this statistic to the current crisis.

II. Potential donors will be more cautious

Potential donors will be more cautious when it comes time to give to additional organizations as their personal portfolios decrease in value. In addition, philanthropy is very seasonal and donations generally peak during the holiday season. Foundations as well often prioritize their budgets based on outdated stock value projections and the immediate impact that a financial crisis will have on their funding capabilities is difficult to determine immediately.

III. Optimistic approach to economic crisis

The most optimistic prediction of the crisis comes from John. J. Havens, a researcher at Boston College's Center on Wealth and Philanthropy who posits that income levels are the true determinate of donation rates. Havens believes that the current crisis resembles the economic problems at the end of the 20th century in which net income decreased during the years 1999 to 2002 at a rate of 20%, while household donations did not start decreasing until 2000, and in the end, only decreased by 10%. His ultimate prediction was that the current drop in donations would be quick and superficial as long as net income did not decrease rapidly as a result of the crisis.

IV. Donations are affected by willingness to give more than they are by tax code

However, it is important to understand the view offered by Laura Hansen Dean, the Executive Director of gift planning at the University of Texas at Austin, who states that rather than taxes, the major factor in determining the future of charitable donations is the general state of concern that most citizens feel over the current state of the economy. "Ultimately people have to be comfortable with getting rid of their assets, and we are hearing from people that they are just not comfortable with the economy the way it is now."