Does Consumer Confidence Matter?
Both the Conference Board, a major US business research outfit, and the University of Michigan for decades have produced indices measuring the ‘confidence’ of US consumers.
It’s been claimed that these have some predictive capability vis-a-vis the outcomes of national elections in the US.
I’m wondering if anyone has ever tracked charitable giving against either of these indices.
Both were released recently, with the Conference Board index experiencing its biggest gain in eight years. The UM index also jumped in November.
Meanwhile, the National Retail Federation reported that US shoppers spent a record $52.4 billion during the Thanksgiving weekend, 16% up over a year earlier.
All of which might suggest that US nonprofits will close the year strongly.
Here’s hoping confidence matters!
Tom
3 responses to “Does Consumer Confidence Matter?”
Behavioral Science Q & A
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Tom,
The Atlas of Giving has researched what economic and demographic factors are relevant to charitable giving outcomes by sector, source, and state and total US giving. We have successfully defined exactly what factors affect giving in the US.
Consumer sentiment (from U of Michigan) has no statistically significant relationship to any giving sector or source.
Consumer confidence as published by the The Conference Board is not a factor in aggregate US giving or giving sources but does have a correlation to giving to one sector. Learn more at http://www.atlasofgiving.com
Rob Mitchell
CEO Atlas of Giving
Tom,
Typically, bench markers will use CCIs to draw conclusions as to why giving is down; charitable giving revenue growth rises during periods for strong economic growth and slows during periods of weakness. However, non-profit giving trends do not always mirror these trends especially when considering specific sectors of non-profits. Sometimes I have found that we can correlate GDP with giving trends, which weights factors such as unemployment, education, income, retailing, etc. GDP along with CCI can portray a better view.
That said, I do not think that overall revenue growth can be the measurement of success in isolation. As mentioned, many non-profits are experiencing revenue growth and many are not. For many that are, the number of donors has declined but frequency of giving is increasing or amount given has increased — revenue growth. I think that declining number of donor trends is not to be taken for granted. We can construe this trend in two ways:
1. number of people giving is declining
2. and/or, the number of people giving to multiple organizations is declining.
If the both are realities we are presently facing, despite the perception of revenue outlooks getting better as is a trend in Q3 and Q4 for many, we could be getting a false read. CCI could be adding to a false outlook in that fewer people have chosen to increase giving which leads to more are giving less if at all. The segment giving less or not at all could become stagnant to giving in the future creating an entirely different problem — independent of CCI.
Best,
Chris McKinley
Tom,
Campbell Rinker has measured donor confidence by means of a poll of active donors across non-profit sectors every other month since February 2008. We base our trends on donors’ past and future giving, their expectations for positive economic trends in the near term, their assessment of the the country’s outlook and a few other factors.
Using our February 2008 results as a benchmark of 100, we have seen this index hover around 90 since October 2008. The Index experienced the biggest two-month decline on record from June-August 2011 when it dipped below 90 for the first time in a couple of years. The first year of results suggested that for every three percentage point drop in donor confidence, the industry might expect to see a 1% decline in individual gifts across all sectors.
You may download any of these reports for free by visiting our website – http://www.campbellrinker.com/reports/DCR.html. Our report based on the December 2011 poll will be available this week.