Jun 04, 2008

Lagging Donations to Burma and China: A Warning to Non-Profits?

by Tim Ogden

The combined death tolls of Cyclone Nargis and the Sichuan earthquake in China are approaching that of the 2004 Indian Ocean tsunami. Donations to the two disasters thus far however are markedly lower than donations to the tsunami relief effort. Roughly three weeks after the cyclone and earthquake, the Center on Philanthropy at Indiana University estimated that total donations from Americans totaled less than $60 million, while more than $200 million was given in the week after the tsunami.

Drawing valid conclusions about what the wildly disparate totals mean is difficult, but two main forces seem to be at play: where the disasters occurred and the American economic slowdown.

The first perspective emphasizes that the main story out of Burma has been the government’s refusal to allow outside aid groups to provide relief. Little wonder that fewer people have been sending in checks. Donations to China, conversely, may have been limited by what most reports have described as an admirably prompt and well-organized relief effort by the Chinese government. While huge numbers of people have been left homeless, many donors may be unclear as to how much their help is needed for immediate disaster relief, given the scope of the response from the government. Keep in mind that the prevailing narrative about China in the US press for the last decade has been that the Chinese are responsible for thousands of American job losses and sluggish fundraising doesn’t seem to be surprising. The apparently extraordinary response of the Chinese-American diaspora community to the earthquake lends credence to this thesis. Those with a personal connection to the disaster regions don’t seem to be letting economic concerns get in the way of their giving. If that’s the case then most domestic non-profits have little to worry about.

The second perspective emphasizes many Americans may not be dipping quite so deeply into their pockets as they did in 2004 because they are preoccupied by falling home prices, rising inflation, and the prospect of a recession. The slow donations may therefore be an early warning for non-profits that donations to all causes are about to hit a steep decline.  Supporting this take is news that the annual gala hedge fund charity auction for the Robin Hood Foundation raised far less money this year than last. This year’s take of $56.5 million was nearly a quarter less than last year’s haul of $71 million. Also of note is that at the recent Council on Foundation’s conference, a session on wealth advisors and their role in philanthropy addressed, in part, how in the current climate some advisors are helping wealthy clients renegotiate multi-year pledges that the clients no longer feel they can afford. If the wealthiest of the wealthy are cutting back on donations, it’s definitely bad news for non-profits across the board.

Of course, the poor state of data collection and reporting in the industry means that it will be well into 2009 before we begin to get any solid answers.