The setbacks that our societies have suffered over the past two years have had a heavy impact on the lives of our fellow citizens, despite all the support measures deployed by public authorities.
The Covid crisis, the war in Ukraine, which beyond the atrocities is generating an energy crisis and, consequently inflation and erosion of purchasing power, has not for the time being impacted the generosity of the French that resisted and even showed a slight growth. However, the latest survey by the Fondation des Apprentis d’Auteuil and the latest barometer by France Générosité alert us to a number of concerns:
- Sharp decline in the number of new donors”The year 2021 marks the continuation of the slowdown that began in 2011. In 10 years, there has been a 9% drop in new donors “1
- Drop in the average donation of the largest donors, who generally compensate for the drop in the lowest income.”(274€) down by 31% compared to 2020 (385€) “2
These concerns are legitimate, as this succession of crises has not yet had the expected calamitous effects: hyperinflation, deterioration in purchasing power and a stock market crash. The consequences are particularly noticeable for pensioners, the traditional major donors.
Clouds are gathering over all economic actors: companies, households, and particularly associations and foundations, which are seeing an increase in the price of paper and stamps. Considering that mail still accounts for two thirds of the economic model for donations to charitable causes, it becomes clear how the impact of these increases can degrade this model and how collection costs can explode. This increase in collection costs long predates the recent crises mentioned above.
The steady growth in French people’s generosity is partly due to ever more intense efforts to: win over new donors, replace those who defect or die, win over and/or transform one-off donors into regular donors.
This increase in spending is partly eating into the growth in gross collections, which is the main indicator measured. It is likely that the trend in net collections from public generosity over the past 10 years has been flat. This situation is masked by the share of resources coming from institutional funds and legacies. But this situation cannot continue without affecting the management equilibrium of these organisations, which weigh the aid provided to beneficiaries against the costs of communication, fundraising and structure.
While the elasticity of the population’s generosity seems quite resilient, a few indicators need to be monitored very carefully and in particular the attrition of the hard-won direct debits by these organisations.
«In 2021, 40% of donations received by associations and foundations are made by direct debit (compared to 34% in 2012)”3.
This changeover of payment methods represents a real step forward in the resource structure of these major causes. This model ensures them: regularity, loyalty and stability of their cash flow. If donors were to arbitrate or put an end to these deductions, this would have a serious and lasting impact on their finances, as their strategic choices and budgetary balances are based on this method of payment. The other concern relates to middle and large donors, who have contributed to the dynamics of French generosity since 2003 (see the law of August 2003, known as the Aillagon law).
Indeed, as households with lower incomes reduced the amount of their donations, or even stopped giving, great philanthropy, encouraged by tax deductions and in particular that linked to the solidarity tax on wealth (ISF), then the tax on real estate wealth (IFI), compensated for this decline. As a reminder, in 2018, the last year of the ISF, 14,000 donors gave more than 270 million euros, representing 10% of the amount of manual donations, for barely less than 0.5% of taxpayers who declared having made a donation. A withdrawal of a few thousand of this category of donors would have a significant impact on resources, particularly for foundations.
So what recommendations can be made given all these parameters and unknowns?
Before answering this question, let’s remember that the rise of philanthropy in France began in the mid-1970s, in the middle of the oil crisis, the beginning of a crisis that would put hundreds of thousands of French people out of work and would see double-digit inflation rise. And yet direct marketing campaigns, by mailing, were proudly achieving return rates of 10%. Organisations such as the Fondation de France, ARC, MSF and Unicef recorded double-digit growth rates.
It is true that savings passbook rates fluctuated between 7 and 8 per cent and 6-month term savings bonds fluctuated between 12 and 17 per cent annual interest. Those in the know will understand.
This growth will not cease and will allow a robust philanthropic sector to develop. None of the crises that have occurred since then – the stock market crash of 1897, the bursting of the first internet bubble, credit crunch, the Greek debt crisis, Covid, etc. – have been able to dampen the vigour of French generosity.
For example, US generosity has increased sixfold in 40 years, from $84 billion to over $470 billion. The same has happened in France, which has gone from €1 billion to €8.5 billion. And this same phenomenon has been observed in all Western countries. But the crisis we are facing, which is likely to get worse, is of a different nature and the philanthropic sector’s responses must be equal to this challenge and involve an absolute return to fundamentals:
- the cause,
- the message,
- the file… the file… the file and the relationship with its donors.
Loyalty has never been so crucial, and maintaining conversational communication with donors has often been a point of weakness in the general economy of giving. Anthropological studies of giving, in all kinds of societies and at all times, highlight the obligation to “make society”, to give, receive and return. Associations and foundations would be well advised to appreciate the full power of this.
Donations to charitable organisations are an essential component of civil society’s intervention in the general interest. It is a subtle alchemy based on admiration, trust and concern for the common good. In times of multiple crises, this alchemy must be skilfully maintained at the risk of seeing donors turn away from what represents the best of ourselves.
Président of Force For Good
Antoine Vaccaro holds a doctorate in organisational science – Management of non-market economies, Paris-Dauphine, 1985.
After a professional career in large non-governmental organisations and communication groups: Fondation de France, Médecins du Monde, TBWA; he chairs the CerPhi (Centre for Study and Research on Philanthropy) Force For Good and the Fund-raising Lab. He holds various volunteer positions within associations and foundations and is also co-founder of several professional organisations promoting private funding of general interest causes: Association Française des fundraisers, Comité de la charte de déontologie des organismes faisant appel à la générosité publique, Euconsult, La chaire de Philanthropie de l’Essec, 2011.
He has published various books and articles on philanthropy and fund-raising.