Is a Bad Economy Good for Charity?

A new study suggests that when the economy goes south (when GDP shrinks by 2%), consumers increase their charitable expenditures. So does this mean that a bad economy is good for the nonprofit sector?

Not quite. When an economy shrinks, so do budgets, especially corporate ones. In many a recession, companies tighten their wallets, particularly when it comes to spending like direct donations or other gifts to nonprofits. So while this study indicates that individual households may spend less on luxury items during an economic downturn and divert that amount to a nonprofit organization, that shift in spending may be a small drop in the bucket compared to other, overall giving trends when the GDP shrinks.

The upside of this study is that it’s good to see our collective giving attitude shine through a bleak economic forecast. While not true for 100% of the population, it looks like we’re willing to help our neighbors when things aren’t good.

This is especially important for each of us to remember when things are bad. If things are still okay for you (like if you haven’t lost your job or your company or industry are still succeeding in tough times), then being generous is one of the best things you can do to help keep things moving. Sure, recessions indicate what is happening to a national or global economy. But, you can still be prudent while rightly assessing your personal state of affairs.

Of course, we should never root for a recession, even if studies show lots of us are willing to help others make do during hard times. In other words, feel good that we’re willing to help each other out, but a growing economy is still better for nonprofits than a shrinking one.

What do you think?

Do you agree with this study? Is this a good sign that shows the positive power of our world today?