Imagine yourself an investor being only able to follow the Dow-Jones Index on an annual or quarterly basis.  Not very helpful in today’s economic roller coaster.

Well, fundraisers currently face much the same problem because, until now, virtually all publicly available information used to measure charitable giving and fundraising performance appears far too infrequently.  Some like Giving USA on an annual basis.  Some like Target Analytics’ Index of National Fundraising Performance only on a quarterly basis.

That’s why Blackbaud’s new Index of Charitable Giving — a broad-based monthly Index of giving across sectors and all sizes of organizations—is so welcome.

Equally welcome is the good news revealed in the Index’s initial release.  Giving is up 12.1 percent for the 3 months ending April 2010 as compared to the same period in 2009. A significant portion of this increase is related to the outpouring of support to organizations helping with relief efforts in Haiti.

We can report to Agitator readers that ‘small’ organizations (less than $1 million in revenue) have come out of the recession sooner than “mid-size” organizations ($1 million – $10 million in revenue) or “large” ($10 million or more in revenue).

More about how organizations are emerging from the recession in a moment.  First, some background on the new Blackbaud Index of Charitable Giving that made its debut yesterday.

The Index is the collaborative brainchild of Paul Clolery, Editor-in-Chief of  The Non-Profit Times, and Chuck Longfield, Blackbaud’s Chief Scientist and the godfather of one of our perennial favorites – the Index of National Fundraising Performance.

In nothing short a Herculean effort Chuck and his team built a system to gather and report revenue from 1400 organizations on a monthly basis – a system capable of producing the Index shortly after the close of each month.

For those interested in the more detailed methodology behind the Index click here.  In brief, using all sources of revenue from fundraising activities –direct mail, telemarketing, face-to-face, email, online, mobile giving and major and deferred gifts—the Index arrives at its totals.

This total giving, which does not include the value of in-kind and stock gifts, nor gifts to private or community foundations – is then reported as a three-month moving average of year-over-year percent changes in revenue.  A helpful process in evening out distortions caused by extraordinary campaigns and other timing issues.

To make the Index even more useful, Blackbaud breaks it down into eight sectors – Arts, Culture, Humanities; Education; Environment and Animals; Health Care; Human Services; International Affairs; Public Society and Benefit; and Religion – categories also used in its long-established Index of National Fundraising Performance.

Chuck tells me that in the near future, in addition to this new Index of Charitable Giving, Blackbaud will also publish an Index of Online Giving. Another terrific addition to the fundraising dashboard.

As promised at the start of this post, the premier edition of Blackbaud’s Index of Charitable Giving carries some fascinating news.  In short, all sizes of non-profits are now emerging from the recession, but smaller organizations are recovering faster.

Small Is Beautiful

We’ve summarized the initial release of the Index in the chart below.

Although “small” organizations had the most significant declines between July 2008 and April 2009, they’ve been the first to come out of the recession.

Larger organizations had declines for all of 2009 and are also now pulling out of the recession, primarily led by relief organizations and Haiti-related giving.

It seems that mid-sized organizations didn’t take a significant hit until mid-2009, but the decline was more significant than the other groups, and they only began pulling out of the slump this spring.

The graph below, using weighted figures to account for the differences in size of organization, illustrates that that ‘small” organizations (the blue bars)  were the first to emerge, followed by the “large” organizations (green bars), with mid-size groups (red bars) lagging substantially.

Why the difference when it comes to size of organization?  Here’s what Tom and I think, but we sure welcome your thoughts as well.

• Small organizations are far less likely to have structural sources of income – monthly giving, endowment income, planned gifts—than larger organizations and therefore their income is more susceptible to the vagaries of the economy.

• As for the faster recovery by small organization we suspect that because “smaller” organizations tend to be ‘local’ in nature and therefore delivering on meeting tangible community needs like hunger, housing, and other human services, that donors focus more on them in tough times. Thus, giving to them increases and leads this group out of the recession.

• As a general rule “Large” organizations have a far broader and deeper range of income sources.  Monthly giving programs, well developed planned gift and endowment programs, as well as corporate and foundation grants. Because the Index reports virtually all sources of income, we would expect this group to be slower heading into the trough and a bit slower than small organizations coming out of it – a bigger boat to lift.

• The ‘puzzler’ for us is why ‘mid-sized’ organizations show the greatest proportional decline going into the recession and the slowest recovery.  If our explanations about the ‘small’ and ‘large’ group is on target, we’d expect the ‘mid-size’ groups to be, well, right in the middle.We suspect that the accelerated emergence of “large” groups from the recession is due to the inclusion in the Index of some  the big relief groups and Haiti-related giving to them.

As always we welcome your insights and urge you to share with us whether your experience as a ‘small’, ‘mid-size’ or ‘large’ organization is reflected in the new Index.

As for Chuck Longfield and Blackbaud … you deserve a raise!

Roger