Funding ministry isn't easy, and that's especially true when inflation and the costs of your ministries increase. Still, there are ways to help your church navigate tough economic times. Recently, our CEO, Joe Park, had the privilege to discuss in a webinar church funding during inflationary times with Leo Sabo, President, of the Christian Stewardship Network.
In the webinar, you'll hear Joe and Leo discuss the current economic landscape and its impact on giving. We'll mention some of those here. We'll also share unique generosity development ideas that can help you grow a thriving culture. Before we get started, if you don't already subscribe to our free on-demand generosity resource library Giving365, I encourage you to sign up today.
Economic Context for Churches
As discussed in the webinar, it is critical that church leaders be able to address questions about the impact of the economy on ministry funding. Many church leaders are letting fears about economic uncertainty drive them to a place of paralysis and scarcity, which inevitably leads to conversations about scaling back ministry and cutting budgets as if growing giving was out of the question. A recent Horizons blog post: Three Ways Inflation is Already Impacting Your Ministry Funding addresses this issue more fully, but here are a few data points from the webinar.
- Since 2009, it's been the best of economic times. We've enjoyed and gotten used to historically low interest rates, inflation, and unemployment rates.
- The stock market surged by over 450 percent and is still at what was a record high in 2021.
- Charitable giving also increased from $330 billion to $484 billion.
In broad terms, it's been the best of times, but, as we know, nothing stays the same. Times change and it is critical the church and faith-based nonprofits also adapt our approach to growing giving as well. You can read more about key areas to address in our blog The Future of Church Fundraising.
In Good and Bad Times, US Giving Remains Remarkably Constant
The percentage of giving by American households since World War II has remained remarkably consistent at about 2% of Gross Domestic Product and Disposable Income. Historically speaking, giving is as likely to increase in a recession as decrease. Regardless of the direction giving moves, it does not change by a significantly larger percentage, so fears of a drastic drop in the amount of giving by American households are historically unfounded.
When there is a change in giving to a church or faith-based nonprofit, it is far more likely to be a shifting of giving to or away from the organization rather than a significant increase or decrease in giving by its donor households.
An important understanding in creating a culture of giving is that the percentage of household giving, on average, does not change much. Increases in giving to a church or faith-based nonprofit occur most suddenly by shifting giving toward or away from the organization. The second most frequent reason for an increase in ministry funding occurs through movement along your giving pathway from a first-time giver, to a recurring percentage giver, to a tither or beyond. The slowest change in giving occurs through changes in household income where donors give the same percentage, but their income increases or decreases.
Who is Giving is Changing
One of the most significant changes that is impacting long-term giving trends is the significant shift in both income and wealth from the bottom 90% to the upper 10%.
- Since 1989, 20% of the wealth in our country has shifted from households in the bottom 90% to the upper 10%.
- Aided by changes in estate taxes, reductions in income tax rates, and a surging stock market, over the last 10 years, almost all of the gain in wealth and income has been to the upper 1%.
- Excluding the upper 1%, the remaining upper 19% has the same percentage of wealth as it had in 1989. So, it can accurately be stated that since 1989, the bottom 80% of households have lost 20% of their share of the nation's wealth to the 1% of households.
This trend is having a huge impact on church and faith-based nonprofit fundraising. The number of households giving over $500 per year is falling, but that giving is being made up by giving from the upper 1%, which is roughly defined by those with an annual household income over $500,000. This group now controls 16 times the wealth of the bottom 50% (up from 6% in 1990) and 21% of all income in 2021. This upper 1% of donors are increasingly shifting to needs-based giving as a result of weak church discipleship and the impact of an ever-increasing number of nonprofits making specific asks for specific funding needs. The impact has been that the church today receives half of the percentage of total giving it did just a little over 30 years ago.
The church must shift from church-centric to donor-centric communications, eliminate one-size-fits-all messaging to telling stories of impact in engaging and measurable ways, embrace the importance of a clear theology of generosity and financial leader and high-capacity development, and learn to say thank you to those who commit the most time, talent, and financial resources to fund our ministry. A good tool to get you started in this direction is a great weekly offering talk. Check out our resources Seven Keys to Great Offering Talks and The Next Big Thing in Church Giving.
Growing Engagement in Your Discipleship Pathway is the Single Most Important Step You Can Take to Grow Giving
At Horizons, we like to say that generosity is a bi-product of discipleship/spiritual formation. As a church, we have most closely focused on worship attendance as the primary measure of success. This single measurement no longer serves us well. Growing Engagement in the Discipleship Pathway is far more effective. In its most common form, the discipleship pathway is a measure expressed as active participation in Worship, Community/Spiritual Formation (small groups or Sunday school), Serving, and Giving.
One large church client found that among their most active households, those who attended 1-2 times per month gave about 1% of their income to the church, and those who attended worship more than 2 times per month gave about 2%. But those who were active in a small group and/or actively serving gave about 3.5% of their income to the church.
The bottom line: if you want more ministry funding, grow your small group and serving participation.
Why Focusing on Generosity is Important
Focusing on generosity is significant because it goes to the heart of who we are as humans. In an increasingly individualistic society, the idea of generosity is a powerful reminder that we're all connected. The thing about fundraising is that it's a lot like sports. You can have all the best coaches, athletes, and training, but it doesn't mean anything if you don't do the work.
You can have all those things and still lose. Having the right equipment and the best practices in place doesn't mean you'll come out on top every time. Still, by creating a culture of generosity within your church, you create an environment of a community. And win or lose, your community is doing things together.
The idea of a culture of generosity allows you to develop the right tools and best practices for your church. Our team often speaks about a culture of generosity because it's truly the only path forward for church fundraising. If church members feel they're part of a community of giving, they will give. They will give of their time, talent, and, yes, treasure. Therefore, it's essential for church leaders to remind members often about the practice of generosity in their lives. (Discover 5 Simple Ways to Reorient Thinking About Generosity).
It can be as simple as paying attention to one's interactions with others. For example, do you try to help people when they need it? Do you listen closely to understand another person's needs, desires, and hopes for the future? Moreover, for church fundraisers, it's our job to listen to people and ask them questions about why they give. It's vital to know what they want from a church and what resonates with them about their participation in the community. By being generous in our approach, we cultivate a culture of generosity in our churches.
Start the Conversation Now
Growing giving is not easy, and it does not happen quickly. It is critical that you start the conversation about your 2023 ministry funding plan now, or before you know it, your leaders will be consumed with where to cut spending instead of growing generosity.
At Horizons, we offer you several tools.
For the D.I.Y. crowd, we fill Giving365 will all kinds of free resources.
For those who want help, we guide you through the process of developing and implementing a fully Integrated Funding Plan to address annual, capital, special, and planned giving in one single road map toward a thriving culture of generosity.
To learn more about generosity and church fundraising, explore Giving365.