Large Charity Gap Predicted for 2009

Transcription

1 Large Charity Gap Predicted for 2009 Business Panel Pinpoints Misgivings about the Accountability and Effectiveness of Charities as the Main Barriers to Giving Child/Youth Poverty Outdraws Other Social Needs as Reasons to Give BDO Dunwoody Weekly CEO/Business Leader Poll By COMPAS in Canadian Business For Publication December 4, 2008 COM P AS Inc. Public Opinion and Customer Research December 4, 2008

2 1.0 Introduction A large charity gap will emerge during the expected financial troubles of 2009, according to the CEOs and business leaders on the COMPAS business panel. Charitable needs are expected to rise by almost a fourth and donations to fall by just short of the same amount. Even more than a desire to keep income and assets to themselves, panelists attribute the hesitations of high net worth individuals to give more generously to misgivings about the accountability and effectiveness of charities. If charities were perceived as more accountable for how they spend their budgets and more effective in what they do, donations would rise. Child/youth poverty outdraws other social needs as reasons to give to charity. These are the key findings from this past week s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine under sponsorship of BDO Dunwoody LLP. 2.0 Big Charity Gap for 2009 As shown in table 2a, panelists anticipate a major charity gap in the coming year even the expected recession. Table 2a: Predicted Changes in Demand for Charitable Services and Donations in 2009 Mean Change Demand for charitable services next year +24% Donations to charities -22% 2

3 3.0 Perceptions of Charities Panelists were asked about impediments or barriers to generosity and about their personal views on charitable priorities. Self-interest is certainly a barrier to giving, as shown in table 3a. But accountability- and effectivenessrelated weaknesses are seen as even more serious. High net worth individuals are disinclined to give by concerns that charities are not as accountable or as effective as they ought to be. Table 3a: (Q2) As you know, some high net worth individuals do not give to charity as much as they could. Please score each of the following as a factor that discourages people in such circumstances from giving more generously, using a 7 point scale where 7 means it s a major barrier to giving more and 1, not a barrier at all. RANDOMIZE They don t believe that charities are as accountable as they ought to be They don t believe that charities are as effective as they ought to be They want to keep income and assets to themselves and their families They pay high taxes and believe that governments should solve social problems They perceive charities as not sufficiently respectful of the hard work that goes into success in business They worry that charities and social service providers cause more problems than they solve Mean DNK

4 As for their own priorities, panelists would priorize child poverty and the needs of poor youth for higher education over other charitable areas. Table 3b: (Q1) There s some talk about charitable giving these days. Suppose an acquaintance with substantial assets asked for your advice about how much to allocate from his/her estate among different kinds of non-profit purposes. Thinking of only money set aside for charities and non-profit purposes, what percent would you recommend be allocated RANDOMIZE Nov08 Nov07 For orphans and children in poverty 24 NA To college and university bursaries for children from poor families For health research in Canada For people with handicaps or major medical problems For health or education in the third world For business education in Canada or abroad For the advancement of women in Canada or abroad 7 5 To encourage the values of democracy and tolerance around the world 7 8 The following verbatims provide a nuanced sense of panel opinion: Too little of the money given to a lot of charities actually gets to the people or service it was meant for. Charitable causes are often spurred by well meaning people and then grow beyond their ability to support themselves. At that point there is often a request for government support. I believe this is one of the causes for a dramatically fragmented approach. I also think that what was once considered a temporary helping hand has become a way of life spawning an attitude of entitlement. It has become fashionable for politicians to align themselves with 'worthy 4

5 causes' rendering temporary help to a status of a right for perpetuity. The number of people legitimately requiring long term assistance is much smaller than the number who currently avail themselves. As business people we are constantly contacted by various charities. Many share their registers and it has now become a business in raising money. That adds to overhead and subtracts from the giving portion available. Charities have to get back to basics and use what they get, except for a small percentage, for their good works. I believe a major barrier to businesses donating to charities is that they (or the firms who solicit on their behalf ) sell the lists of prospects with which they have had success. The more I said yes, the more frequently the phone would ring, until it became an intolerable intrusion. It also became increasingly difficult to sort out the "wheat from the chaff" among all the requests for donations. Unfortunately, the solution was to say no to everyone and eventually the phone didn't ring as often. Another reason for not giving as much is the lack of stronger tax incentives to do so. I also believe what prohibits people from donating more to charities is that sometimes, a not insignificant amount of the contributions go towards administration and do not reach the intended purpose. During the completion of this survey I received 2 requests for charitable donations. Both from call centers employed by the charity. While securing volunteers has become difficult, charities have become a business and thus lost some of the trust that I as a donor once had. One of the major points that discourage people from supporting charities is the disproportionate administrative cost that is taken out of the donations. I think many people 5

6 feel (rightly or wrongly) that much of what they donate will not make it through to the people who actually need it. 4.0 Methodology The COMPAS web-survey of CEOs and leaders of small, medium, and large corporations was conducted November 24 26, Respondents constitute an essentially hand-picked panel with a higher numerical representation of small and medium-sized firms. Because of the small population of CEOs and business leaders from which the sample was drawn, the study can be considered more accurate than comparably sized general public studies. In studies of the general public, surveys of n=108 are deemed accurate to within approximate 9.5 percentage points 19 times out of 20. The principal and co-investigator on this study are Conrad Winn, Ph.D. and Tamara Gottlieb. 6