Small Donors Should Give Local for Big Impact
Shop, eat turkey, shop, shop local, shop online, and then give. After the consumerism of the Thanksgiving weekend concludes, Giving Tuesday encourages Americans to do good with their time and treasure.
As nonprofits vie for charitable dollars, there are two things donors should keep in mind: 1. Every donation counts, no matter how small; and 2. When it comes to the size of charitable organizations, bigger is not always better. Some individuals may assume that the size of an organization indicates effectiveness, but small, local nonprofits often punch above their weight and deliver a knock-out to societal problems that elude the government while strengthening the local community.
The majority of all charitable giving comes from individuals. In 2019, the American people donated $309.66 billion, 69 percent of the total record-breaking $449.64 billion given to nonprofits in the U.S. The vast majority of these individuals are not megadonors or particularly wealthy, but regular middle- and working-class Americans. Some 60 percent of U.S. households donate to charity in a given year, and average household giving is a few thousand dollars.
A big question looming over the charitable community this holiday season is whether giving levels by individuals will hold steady or fall because of the coronavirus pandemic. We might expect that layoffs, furloughs, and shuttered businesses have left many households with little to give. However, the results of a national poll conducted in October of nearly 29,000 individuals signal some hope for Giving Tuesday. Two out of three adults (69 percent) plan to give the same or more than they gave last year. Furthermore, small, local charities are the top choice for donors (37 percent) followed by vulnerable individuals and businesses (24 percent), frontline workers (22 percent), and big national or global charities (17 percent).
The pandemic has exposed our interdependencies: When local businesses fail, not only do residents lose a local watering hole or date-night venue, but a neighbor loses his job, a small business owner loses her livelihood, the community loses a supporter of youth sports leagues, and the municipality loses tax revenue. Papered windows and out-of-business signs signal the deterioration of a community, drive down property values, and can welcome vagrancy.
If businesses are one pillar in a community, local nonprofit organizations are another. Battered women shelters, churches, workforce training centers, animal rescue shelters, theaters, educational institutes, libraries, and community centers are just some of the local organizations that work to meet the varied needs and interests of residents at every income level. Over 1.5 million nonprofit organizations were registered with the Internal Revenue Service (IRS) in 2016 and contributed an estimated $1 trillion to the U.S. economy. One-third of them had less than $100,000 in expenses and two-thirds under $500,000 in expenses. Just 5.4 percent of all public charities had $10 million or more.
Americans have a deep trust and demonstrate a strong preference for private aid because it is efficient, cost-effective, nimble, innovative, and focused on addressing the root causes of problems. In a 2015 poll commissioned by The Philanthropy Roundtable, a majority of U.S. voters chose philanthropic aid over government aid as the top choice to solve social problems in America. When adding entrepreneurial companies into the mix, half of the voters still trusted nonprofits first to address the most pressing issues.
Charities are not bound up in red tape and bureaucracy like government agencies, although they can become bureaucratic. That is part of the attractiveness of giving locally to smaller organizations. They typically have lower overhead costs, meaning more of each donor dollar goes directly to serve people or causes.
Another aspect of small, local giving is that the impact can be fast, visible, and transformative for the community. Take, for example, the Chattanooga, Tennessee-based First Things First, a nonprofit that assembles congregations, private social-service groups, and public agencies to arm residents with the skills to strengthen their relationships and marriages. Their results: a 38-percent drop in divorce filings and a 77-percent decrease in teen pregnancies according to the state since the organization began in 1997. The founders believed that by investing in families, the bedrock of society, they could address problems such as generational poverty. That investment paid off, and other cities and states have since sought to replicate First Things First’s programs.
Large, national and global organizations cannot be discounted. From research hospitals to feeding organizations, they are working beside their smaller counterparts as allies, competitors, and sometimes even funders in the nonprofit ecosystem.
Amid the flood of fundraising appeals Americans will receive on Giving Tuesday and throughout the holiday season, they should consider where they think their dollars will make the biggest impact. They may not have to look across the world or across the country to find the answer, but instead, just around the corner.