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Will BP Oil Spill Affect Charitable Giving?

June 24, 2010

Large_spill It's clear to those who have been following events closely (and who hasn't?) that the BP/Deepwater Horizon oil spill will devastate significant portions of the Gulf ecosystem -- and cost tens of thousands of people their livelihoods -- for years, if not generations, to come. The 165 million gallons of crude that have already poured from the wellhead are a fraction of the total that will have spilled by the time one of the relief wells currently being drilled is able to intercept the damaged well and stop the flow of oil. (And many experts only give the relief-well operation a 60 percent chance of success.)

Given the potential loss of fauna, marine and coastal habitat, and economic activity from what is already the worst environmental disaster in U.S. history, one can understand why the spill's impact on charitable giving isn't top of mind for most people. But the folks at Philanthromax, a small nonprofit management company with a roster of products that "provide analysis, evaluation, program design, and accountability-based management," think otherwise.

Based on a new forecasting tool it has developed, the company estimates that nonprofits in the U.S. received charitable contributions of $133.82 billion between January and May 2010 -- an increase of 9.2 percent over the same period in 2009. That's the good news.

The not-so-good news is that as the oil continues to wash up on beaches and barrier islands from Louisiana to Florida -- and perhaps is carried by the Loop Current to states on the Eastern seaboard -- the negative impact on economic activity in the affected states will result in a $200 million to $300 million reduction in charitable contributions in 2010 -- and as much as a $600 million reduction in 2011.

That's not a lot when you consider that, for the last three years, charitable giving in the U.S. topped $300 billion. But if one assumes (as I do) that the reduced giving will be concentrated in the states most affected by the spill -- states whose social safety-nets were already thin and inadequate -- then you're talking about a bad situation becoming worse.

Even before Katrina and the Deepwater disaster, the Gulf region was this country's red-headed stepchild: ignored when it wasn't exploited, celebrated for its entertainments and scolded for its lack of seriousness, treated one minute as a national treasure and the next as a national joke.

So what, if any, is our obligation here? Is this BP's problem? Or is it time for the private sector to create a billion-dollar Gulf Coast Development Fund whose dual mandate would be to generate new jobs in the region to replace the ones lost to this disaster and, longer term, help build the foundation of a more sustainable, less oil industry-dependent regional economy for the twenty-first century?

Would love to hear your thoughts...

-- Mitch Nauffts 

Comments

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Unfortunately, I think your estimated drop in contributions due to the oil geyser (I refuse to call it a spill. A spill is when your child knocks over their milk.) will be well short of the impact. The economic impact from this event will finish off this economy. I hope I'm wrong.

Thanks for the comment, Ron. Couldn't agree more that the word "spill" is a wholly inadequate description of what is happening in the Gulf. I don't think we'll know the true dimensions/costs of the disaster for years to come, but I sure hope you're wrong about its impact on the economy. For all our sakes.

In reading your article, I am truly disheartened. In Alaska a state supported by oil and companies associated there-in we have already begun feeling the impact. Oil companies are already laying off their employee's and not just here in the US but World wide! The normal annual charitable giving seems to be, in my opinion, diminishing and the rumors are scary at best.
This fiscal impact will not solely destroy the Gulf, but will reach out and destroy so many others as well. Just as the Exxon Valdez destroyed families, companies, and lives, so too I am certain will this horrific disaster. When we thought the economy was going to bounce back, we are now observing a catastrophic event that will be felt World wide.

Thanks for the instructive article. It's given me food for throught for my own blog article on the Gulf Crisis. Cheers.

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