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From the President's Office, December 2005

Dear Friend:

As we enter the final month of the year, there is much to be grateful for as we reflect on the amazing generosity of Americans and the remarkable impact of the nonprofit sector on our daily lives.

There's no doubt that this has been an extraordinary year. The tsunamis, Hurricane Katrina, Hurricane Rita, the Guatemalan mud slides, Kashmir earthquake, Hurricane Wilma, and now earthquakes in China and Iran this past weekend have presented enormous challenges. Again and again, Americans have given generously to help those affected by these tragic events.

It is no wonder that people both inside and outside the sector are asking, "How much more can people give? How much more will they want to give?" These questions were on our minds as we collected data for the fourth annual GuideStar nonprofit economic survey.

The results indicate that charitable organizations held their own during the first three-quarters of the year. (See "So Far, So Good" and "We Believe That the Katrina Effect Was Real" for more information.) Although this is good news, we are aware that the next few weeks are critical for many organizations. Contributions received between Thanksgiving and New Year's Day often spell the difference between ending the year in the black or starting the New Year in the financial hole.

Four years ago, people gave generously to 9/11 relief and recovery efforts. At the end of the year, however, the Giving USA Foundation determined that 9/11 giving made up less than 1 percent of total charitable giving in 2001. It appears that donors contributed to 9/11 charities in addition to, rather than instead of, their regular giving.

We hope the same thing will happen this year. Nearly 80 percent of GuideStar survey participants, however, said that they expected end-of-year contributions to be less than or about the same as at the end of 2004. News reports indicate that charities all over the nation are already feeling what one survey participant termed the "Katrina effect." Perhaps the media publicity about the Katrina effect and donor fatigue will help reverse this trend.

Best wishes to all of you as 2005 draws to a close. Thank you very much for your enthusiastic support and interest in GuideStar. It motivates us to do more and better in the future. Congratulations to everyone in the sector for meeting the many challenges that have been handed to us this year.

Happy holidays,

Bob Ottenhoff
President and CEO

"We Believe That the Katrina Effect Was Real": Comments from GuideStar Nonprofit Economic Survey Participants

The numbers look good—49 percent of participants in GuideStar's latest nonprofit economic survey reported that contributions to their organizations increased during the first nine months of this year compared to the first nine months of 2004. Another 26 percent said contributions stayed about the same, and only 22 percent reported a decrease.

Even more encouraging, these figures are remarkably similar to last year's results, indicating that the financial situation truly has improved for many nonprofits since our first nonprofit economic survey in 2002, when 48 percent of respondents reported contributions had declined. (More information on this year's survey)

What, however, lies behind the 2005 numbers? Do increased contributions indicate that a charity is on solid financial footing, or merelythat it is no longer teetering on the edge of bankruptcy? What about organizations that just held their own or experienced a decline?

We went to participants' comments to find the answers.

So Far, So Good: Results of the 2005 GuideStar Nonprofit Economic Survey

Nonprofits held their own during the first nine months of 2005, according to GuideStar's fourth annual nonprofit economic survey, but they are concerned.

The survey asked charitable organizations to compare contribution levels from January to September 2005 with those from the same period last year. Despite widespread giving to disaster relief, this year's responses were remarkably similar to those for 2004:

Charitable Deductions for Non-Itemizers: November Question of the Month Results

The Senate Finance Committee estimates that 74 percent of U.S. taxpayers do not itemize on their federal income tax and therefore cannot take charitable deductions. Because legislation to rectify this situation was introduced in both chambers of Congress this fall, the November Question of the Month asked, "Do you support allowing taxpayers who do not itemize on their federal income tax to take charitable deductions?" Newsletter readers responded overwhelmingly: "Yes." (For an update on Senate action on this proposal, see "Senate Approves Charitable Giving Legislation.")

Senate Approves Charitable Giving Legislation

On November 18, 2005, the Senate passed tax legislation with a number of charitable giving incentives and reforms that would greatly affect the nonprofit sector. The legislation may now head to a House-Senate conference committee to determine which charitable provisions could ultimately be signed into law.