I don’t know about you, but the amount of mail I’ve received lately from various charities has been mind blowing. “Please renew” and “Anything you can give” pepper the correspondence with some coming even immediately after I gave whatever amount was necessary to keep my name on the supporters list. After all, I too have less money and thus have to figure out where it should go.

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Historical evidence from the Giving USA Foundation, which has been collecting data on philanthropic giving since 1967, shows that philanthropy has traditionally been affected by economic conditions, but that donations do not tend to decline by as much as market contractions. Overall charitable giving has not decreased in real terms during previous recessions over the last four decades, but after adjusting for inflation giving does decline, and the longer and deeper the recession, the greater the fall in donations. So with no end in sight to the current economic climate, how do we alter our giving habits?

After doing some research, it seems the best adjustment we can make is to give to places that are supporting elements of the economy hardest hit by the ongoing recession/depression. According to The Center for High Impact Philanthropy at the University of Pennsylvania, the economic downturn has heightened the need for giving in the housing, health and nutrition sectors. High rates of foreclosures and unemployment have caused people to lose out on the most basic human needs. Case in point: as people lose their jobs, they lose their health insurance.

It is estimated that for every one percentage increase in the national unemployment rate, 1.1 million more Americans will become uninsured and join the ranks of the 46 million Americans already without health coverage. As for nutrition, in March 2009, the USDA confirmed that participation in the Supplemental Nutrition Assistance Program (SNAP) (i.e., food stamps) had reached a historical high: in December 2008, about 32 million Americans received SNAP benefits, 4.5 million more than in Dec. 2007.

Obviously, there’s a problem here. This is compounded by the fact that giving by some of the largest corporate foundations is down as the foundations’ parent companies take cover from the global financial crisis. The US Foundation Center estimates that US foundation assets declined by 21.9% in 2008, far less than the 37% to 47% decreases in the world’s stock markets, but still a substantial blow that represents the loss of almost $150 billion of philanthropic resources.

Wells Fargo has shifted its focus to provide more grants in smaller amounts to meet the 20% surge in funding requests, Reuters reported.

What can you do? First off, keep giving, since there are advantages.

Next, like your stock portfolio that I’m sure has already gotten a lot of attention, start to evaluate your giving portfolio. Instead of giving all your money to one, far away institution, find a diverse set of local organizations, such as your local community health center, or if housing is your cause, programs that help those at risk of foreclosure. Maybe you can give half of what you’re already donating per year to a local charity that focuses on housing or nutrition. These organizations, without the national or global reach of larger institutions, are desperate for funds and would likely make even half of what you usually give go very far. Then, as things shift in the economy, the burden on these local charities will lessen and it will be time for you to start giving to charities with national reaches aiming to tackle broader problems.

Now I’m not saying to completely deny charities that are near and dear to your heart, I’m simply suggesting that you view your giving portfolio the same way you would your equities portfolio: during hard times, things need to change. Investors change into defensive plays during bad economic patches, putting money into consumer staple producers like Procter & Gamble. Ultimately, what you want is to be able to be consistent in your giving habits.

More thinking on this topic is in the pipeline. UPenn is working on a philanthropic investment guide that outlines specific ways philanthropists can help during these tough times.

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