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The Stock Market and Charitable Giving

October 20, 2008

A week or so ago, Pattie Johnson, the director of the Foundation Center's Atlanta field office, forwarded me a series of interesting charts put together by Alexander Haas Martin & Partners, one of the premier fundraising consulting firms in the metro Atlanta area. Using data collected by the folks at the Center on Philanthropy at Indiana University, the charts attempt to answer the question: "How will the problems in the stock market impact total charitable (as opposed to foundation) giving?"

The first chart (below) maps total giving in the U.S. from 1967-2007 against the Dow Jones Industrial Average, a widely followed proxy for stock market performance, over the same period.

(click on chart for larger image)

Giving_vs_dow_page_1_600px_4 

And this chart shows giving mapped against the S&P 500, another widely followed proxy for the market:

(click on chart for larger image)

Giving_vs_sp_page_1_600px_2

As David King, managing partner at AMMP notes, the charts show that when the markets are going up, total charitable giving grows right along with it -- which makes sense. However, they also show that when the stock market declines, giving does NOT follow it; indeed, it continues to grow or holds steady.

Granted, no two economic downturns are alike, and the current one could turn out to be far more serious and prolonged than those of the recent past (2000-02, 1990-91, 1980-82). Unfortunately, we won't know how bad it will be -- or was -- until we're already well on the road to recovery. In the meantime, this should give some comfort to people who are expecting the sky to fall. Yes, we've seen wealth destruction on an epic scale over the last twelve months, but we also saw wealth creation on an even grander scale over the last five-plus years. Let's hope a good portion of that wealth continues to flow to worthy nonprofits and charities.

To download additional charts comparing both the Dow and S&P 500 to giving to arts/culture, education, religion, human services, health, and the environment, click here for the Dow and here for the S&P.

-- Mitch Nauffts

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Interesting and even if 2008/2009 are so special, hopeful charts...

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