(The following article was taken fromThe State of Church Giving through 1990 by John and Sylvia Ronsvalle, ©copyright empty tomb, inc., Champaign, IL, 1992.)

1. Definition of Recession Years

2. Changes in the Coincident Index

3. Per Member Giving, in Constant Dollars, in Recession Years

4. Trends in Recession Year Giving

5. Factors in 1970 Giving

6. Influence of Religion in American Life

7. Church Giving in 1990

8. Benevolences in later Recession Years

9. Conclusions

Definition of Recession Years: For the purposes of this study, defining what is referred to as a recession year was a necessary first step. In the period of 1968 through 1990, there have been five business cycle reference dates. In the following description, the term "peak indicates the end of business cycle expansion and the beginning of recession" and "trough indicates the end of business cycle recession and the beginning of expansion." The National Bureau of Economic Research, Inc. (NBER) is the nonprofit economic research organization which designates peaks and troughs, and thus defines when recessions begin and end.1

The first recession began after a peak in December of 1969, and recovery followed the trough in November of 1970. The second began after an upper turning point in November of 1973, and the lower turning point was in March of 1975. The third began after the cyclical high point in January of 1980, and ended after a low point in July of the same year. The fourth recession began after a peak in July of 1981, and recovery followed the trough in November of 1982. The latest recession began after an upper turning point in July of 1990, and a low turning point had not yet been determined at the time of the publication of this study.2

The denominational giving data on which the present analysis is based on calendar years. Thus, it was necessary to identify calendar years which were able to be referred to as "recession years," in order to consider what effect recessions may have on church giving patterns.

As part of analyzing the economic business cycle, three sets of national statistics are combined into composite indexes. The combined statistical measurements have been found to be useful in forecasting and analyzing economic developments. The "leading indicators" tend to change before an economic development occurs. The "coincident indicators" occur roughly at the same time as economic expansion or contraction. And the "lagging indicators" tend to follow economic turning points.

Table 10 outlines the national economic statistical categories which each of these indexes include.

Table 10: Components of the Three Composite Indexes3

The gross national product (GNP) is a single, widely-known statistic which is also important for analyzing recessions. "A recession generally is defined as at least two consecutive declines in the GNP, the nation's total output of goods and services."4 The Bureau of Economic Analysis revised its trends based on the GNP as indicated below:

     For the current indexes, the target trend is the average of the trends of the four components of the
     coincident index; for the revised indexes, the target trend is the trend of real gross national product
     (GNP). This change has little effect on the indexes, because the trend of real GNP is almost the
     same as the average trend of the coincident index components. . . . The change is made because
     economists consider the trend of real GNP to be the more appropriate measure of the growth in
     aggregate economic activity.5

Therefore, a recession year might be defined in terms of changes in the GNP. For purposes of understanding how church giving responds to recessions, however, it was deemed convenient to have a more detailed measure. The question could be posed that-if there is, in fact, a relationship between church giving and recession-is church giving a leading, coincident or lagging factor? If giving is affected by changes in the economy, does giving change before, at the same time as, or after major changes in the economy have occurred?

To test the commonly-held view that there is a strong relationship between recession and negative church giving patterns, one would compare changes in church giving to the composite index with which it had the strongest statistical relationship. By making the strongest case possible for a relationship between church giving patterns and economic patterns, one could then evaluate such an attempt and decide if this strongest-case scenario really did point to a relationship between church giving patterns and recession, or if even the best case was not supportive of this aspect of popular wisdom. Therefore, carrying out a statistical correlation between church giving data and each of the three composite indexes would suggest which of the three indexes should be used in considering whether there is a one-for-one pattern between downturns in the economy and downturns in church giving.

Of the three recession indexes-leading, coincident and lagging-it was the coincident index which displayed the highest correlation with the annual percent change in Total Contributions Per Member in constant dollars for the composite of denominations studied between 1968 and 1990.6 Since the coincident index also has a strong relationship with the GNP, it was determined that a comparison of church giving patterns with changes in the coincident index would be used to examine the generally held view that church giving goes down in recession years.

Therefore, change in the coincident index was used to define the term "recession year" for the purposes of this analysis. A recession year was defined as a calendar year within the 1968 through 1990 period in which the coincident index declined from the previous year.

Figure 8: U.S. Business Cycle Peaks and Troughs, and
Changes in the Composite Index of Coincident Indicators,
1968 through the First Quarter of 1991.

Figure 8 charts the composite index of coincident indicators as well as business cycle peaks and troughs in the period under consideration.

It should be noted that, although the coincident index declined in 1975, that year was the second year of a two-year recession. There were a total of six years in which the coincident index dropped from 1968 through 1990, but 1975 was the only year in the period under consideration that demonstrated a coincident index drop for a second year in a row. The year 1975 will be interesting to compare with the year 1991, which saw a drop in the coincident index for the second year in a row. In the present study, however, the analysis was limited to church giving patterns in the first year of a recession.

When the above working definitions were applied to data for 1968 through 1990, five years met the criteria, although the coincident index actually declined in six years, including 1975, during the period 1968-1990. Therefore, church member giving was reviewed for the first-year recession years of 1970, 1974, 1980, 1982 and 1990.

Changes in the Coincident Index: The drop in the coincident index varied among the five first-year recession years. The largest first-year drop was 6.80% in 1982. The shallowest decline was in 1990, at 0.30%.

U.S. per capita disposable personal income is available from the Survey of Current Business in current dollars. To adjust this data for inflation, the Implicit Price Deflator for National Income was used. By applying the deflator, current dollars were converted to 1982 dollars, and were therefore able to be compared across years apart from the effects of inflation.

Table 11 lists U.S. per capita disposable (after-tax) income in constant 1982 dollars, the coincident index figure for each calendar year and the percent change in the coincident index from the previous year.

Table 11: U.S. Per Capita Disposable Personal Income in Constant 1982 Dollars, Compared with Changes in the Coincident Index, 1968-1990

Per Member Giving, in Constant Dollars, in Recession Years: In order to consider church giving and recession, the focus was on church member giving in constant 1982 dollars, rather than on giving as a percentage of income. For gauging the level of commitment church members bring to their religious involvement over multiyear periods, giving as a percentage of income provides a valuable measuring scale. In the present analysis, where the interest lies primarily on the effect of recession on church income, constant dollars may provide the most useful information.

Figure 9: First-Year Recession Years and Total Contributions Per Member,
1968-1990, in Constant 1982 Dollars

Figure 9 presents information regarding Total Contributions Per Member in constant 1982 dollars in first-year recession years for the period 1968 through 1990.

The year 1970 was unique among the five first-year recession years, in that giving to all three categories of per member Total Contributions, Congregational Finances and Benevolences declined in constant dollars. In contrast, in 1974 and 1980, giving to Total Contributions Per Member increased. Further, the additional dollars in 1974 and 1980 were divided between the subcategories of Congregational Finances and Benevolences, which both evidenced an increase from the previous year's level of support.

Although Total Contributions Per Member, in constant dollars, increased in 1982 as it did in 1974 and 1980, the additional dollars were directed only to Congregational Finances, while the subcategory of Benevolences posted a decline.

Finally, 1990 was the only first-year recession year in this period other than 1970 which posted a decline in Total Contributions Per Member in constant dollars. Unlike 1970, when both Congregational Finances and Benevolences shared the decrease in giving, in 1990 Congregational Finances increased more than Total Contributions declined, and thus Benevolences absorbed the loss in Total Contributions and subsidized the increase in Congregational Finances.

Table 12 presents data for giving in constant dollars in both the five first-year recession years, and the years immediately preceding.

Table 12: Church Member Giving in Constant 1982 Dollars, Comparing First-Year Recession Years with the Years Immediately Preceeding, 1968-1990

Trends in Recession Year Giving: Having reviewed the basic data, the next step is to consider whether any clear patterns in church giving are evident among the five first-year recession years in the present analysis.

The first of these recession years, 1970, saw a decline in all three categories of per member Total Contributions, Congregational Finances and Benevolences in constant 1982 dollars.

None of the other four recession years exhibited such a marked change in church giving when there was a downturn in the U.S. economy, even though the coincident index fell more sharply in 1980 and 1982 than it did in 1970. In fact, the steepest decline in the coincident index for the five first-year recession years under consideration occurred in the year 1982, when the coincident index dropped 6.80%. The year 1980 posted a decline of 3.25%, steeper than that of 1970¹s 2.03%. Yet, Total Contributions Per Member, in constant 1982 dollars, increased in both 1980 and 1982, again in contrast to a decline posted in 1970.

The decline in the coincident index in 1974 was 1.88%, less than that experienced in 1970. Again in contrast to 1970, in the first-year recession year 1974, Total Contributions Per Member in constant dollars increased.

Factors in 1970 Giving:Given the above data, one may reasonably conclude that there were likely additional factors, other than recession, affecting church giving in 1970, since neither the 1974, 1980 or 1982 recession years displayed decreases in giving to Total Contributions Per Member. One possibility is that the 1970 downturn in church giving occurred at the same time that dramatic national social dynamics were influencing the United States. Further, it may not be unreasonable to conjecture that there may have been a relationship between the way people perceived their churches responding to these events and the change in the level of giving.

Depending on the denomination, and in some cases the congregation, church leaders were responding in different ways to a variety of issues which confronted society at large. For example, the civil rights movement had been gaining momentum for the previous decade. In addition, dissension about the Vietnam War had been growing, culminating in the Kent State tragedy in the spring of 1970. Internationally, two decades of independence movements in various countries-among them nations which historically had been mission fields for the church in the U.S.-had led to confusion about the role of missions in the church. This confusion regarding missions was accompanied by the fact that women, who had traditionally been the ones to emphasize the importance of missions through their church organizations, were entering the job market and thus, in many cases, likely had less time for church activities.

Influence of Religion in American Life:Any or all of these factors may have contributed to a relevant Gallup Poll finding for 1970. In 1957, the following question was first asked: "At the present time, do you think religion as a whole is increasing its influence on American life or losing its influence?" In 1957, 69% of the respondents felt that religion was increasing in influence while only 14% felt it was losing. By 1970, only 14% of respondents felt that religion was increasing in influence, while 75% felt it was losing influence. Although 1969 had produced a similar response, 14% and 70%, respectively, by the time the question was asked again in 1974, the numbers had changed to 31% feeling religion was increasing in influence, while 56% felt it was losing influence.7

It is interesting to compare the church giving data in recession year 1974 with that of 1970 in light of the responses to this survey question. Giving to churches increased in constant dollars for the three categories of per member Total Contributions, Congregational Finances and Benevolences in 1974. This increase in giving was accompanied by more people responding to the Gallup survey question that they felt religion was gaining influence in American society. Thus, a 14% positive response to this question was accompanied by a downturn in giving in the recession year of 1970. In contrast, a 31% positive response three years later was accompanied by an increase in church giving in recession year 1974.

Those who felt religion was increasing in influence continued to represent a growing proportion of the respondents, up to 44% in 1976, followed by a decline to 35% in 1980, and then growing again to 49% in 1985.8 By 1990, the percentages had declined again to 33% among those who felt religion was increasing in influence, while 48% felt it was losing influence.9

Given the 1970 downturn in giving in all three church giving categories, in constant dollars, even though the coincident index did not fall as strongly in 1970 as it did in 1980 or 1982, it seems plausible to suggest that the negative giving levels which occurred in 1970 may have been as heavily influenced by other factors at least as much as by the recession which began that year.

Church Giving in 1990: Of the five first-year recession years in the 1968-1990 period, the decline in the coincident index was the shallowest in 1990, declining only 0.30% from 1989. Yet, for the first time since 1970, in the first year of a recession, Total Contributions Per Member declined in constant dollars.

However, there were not the obvious national social tensions prominent in 1990 of the scope so clearly evident in 1970. For example, one is hard-pressed to identify a single major national social development that dominated national attention to the degree that the Vietnam War and the civil rights movement did in 1970.

The uniqueness of the 1970 period is reflected in the following observation from the Princeton Religion Research Center:

     The high-water mark in perceptions of the impact of religion occured in 1957, when
     seven Americans in ten felt its impact was increasing. The low-point was in 1970, when
     most institutions in this country were in disarray and three persons in four thought
     religion was no exception and was losing its impact.10

The level of increase in constant dollars donated to Total Contributions Per Member was also different in 1990 than in the earlier years under consideration, as noted in the first section of this report. The annual constant dollar increase of $1.83 in Total Contributions Per Member between 1985 and 1990 was at a slower rate than the annual rate of increase of $2.88 from 1968 to 1985. The slowing trend was evident before the recession of 1990 came into effect, even during the years of relative economic expansion from 1985 through 1989.

Moreover, although the recession in 1990 was the shallowest as compared to the other four first-year recession years under consideration, giving to Total Contributions Per Member increased in constant dollars in three of the four other first-year recession years.

Given the above comparisons among the first-year recession years, it does not seem obvious that entering a recession necessarily forecasts a decline in per member church giving in constant dollars. Since there does not seem to be a clear pattern that equates the beginning of a recession with a decline in constant dollar church giving, when a decline does occur in Total Contributions Per Member, even though recession may be a contributing factor, the decline may be a response to other dynamics as well.

Benevolences in later Recession Years: In regard to the category of per member Benevolences giving, the 1982 and 1990 recessions display a pattern not seen in the three earlier first-year recession years. In both 1982 and 1990, per member giving in constant 1982 dollars to Congregational Finances increased at the expense of Benevolences.

In 1982, Total Contributions Per Member increased in constant dollars, but Congregational Finances increased an even greater dollar amount. While Total Contributions increased $3.31, per member giving to Congregational Finances increased by $5.36. Thus, per member gifts to Benevolences declined by $2.05, the difference between the increase to Congregational Finances and the additional money donated to Total Contributions.

As in 1982, per member giving to Benevolences also declined in 1990, while Congregational Finances increased that year. In 1990, the category of Benevolences absorbed not only a decrease in Total Contributions Per Member, but also subsidized an additional increase in Congregational Finances.

Given that the church in the United States is a major social institution which has a tradition of doing good for others, it is noteworthy that in the last two recession years in the 1968-1990 period, Benevolences decreased while Congregational Finances increased. Yet the 1982 and 1990 finding about the decreasing support of Benevolences is consistent with the pattern that was sporadically evident as a trend throughout the 1968-1990 data. While 1982 and 1990 were the only two first-year recession years in which Congregational Finances increased in constant dollars even while Benevolences decreased, a similar distribution was also evident in the non-recession years of 1972, 1973, 1976, 1977, 1978 and 1987. As a result, from 1968 to 1990, per member giving to Benevolences was virtually at the same level at the end of the 23-year span as it was at the beginning, increasing only $0.05 in constant dollars, while Congregational Finances had increased $58.06 in constant dollars.

Conclusions: Based on the available data for the denominations considered in the period 1968 through 1990, there does not seem to be a pattern between church giving and first-year recession years.

For example, in 1970, church member giving was down in constant dollars in all three categories of per member Total Contributions, Congregational Finances and Benevolences. Yet, the fact that a similar marked downturn in all three categories, in constant dollars, was not evident in any of the other four first-year recession years being reviewed suggests there were possibly factors other than recession which contributed to the lowered level of giving in 1970.

In contrast to 1970, in the years 1974 and 1980, giving in constant dollars was up in all three categories.

This conclusion corresponds to a similar finding by the Bureau of Economic Analysis regarding the larger service sector of the economy, of which the church might, in some regards, be termed a part. In revising its indexes, the BEA received requests to include indicators related to the service activity and international activity in the leading index. The BEA found, however, that available data suggests that services were not responsive to business cycles in general. "Many service activities continue to grow during business cycle contractions as well as during expansions." One service indicator was added to the lagging index.11

If there is a pattern emerging from the available data for the first-year recession years, it may not be directly related to an economic contraction. In both 1982 and 1990, per member Benevolences contributions declined in constant dollars, while per member giving to Congregational Finances increased in constant dollars in those same years. The trend for Congregational Finances to increase and Benevolences to decrease was evident in both 1982 and 1990, even though Total Contributions increased in 1982 and decreased in 1990; and even though the decline in the coincident index was the shallowest in 1990 of any first-year recession year considered, and was the deepest in 1982.

The 1982 and 1990 decline in per member giving to Benevolences accompanied by an increase in gifts to Congregational Finances is not an obvious development, in light of the fact that the 1974 and 1980 first-year recession years did not exhibit a similar pattern. Such a decline in per member giving to Benevolences is, however, consistent with a trend which was developing during the entire period of 1968-1990, both when the economy was expanding and when it was in recession. The emerging pattern is that church member giving has been increasingly emphasizing Congregational Finances at the expense of Benevolences.

Additional research would be required in order to postulate what has produced this pattern in the distribution of Total Contributions Per Member between Congregational Finances and Benevolences. A later section of this report, titled "Church Giving and U.S. Social Health," explores church member giving and large societal trends that have occurred in the same general two-decade period which has been under consideration. That discussion suggests directions for further study which may also provide insight into the decline in per member giving to Benevolences.

1 "Composite Indexes of Leading, Coincident, and Lagging Indicators," Survey of Current Business, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC, 1987, 28. This article notes that "Business cycle peaks and troughs are designated by the National Bureau of Economic Research, Inc." A 1992 brochure from the NBER notes "The Economic Fluctuations Program concentrates on the U.S. economy as a whole, considering the aggregate behavior of employment, output, and prices with a general focus on the nature of business cycles. Program members also study the effects of monetary and fiscal policy on economic performance. One ongoing activity of this program is the Business Cycle Dating Committee which is the official arbiter of the beginning and end of recessions and expansions."
2 Survey of Current Business, June 1992, C-7.
3 Survey of Current Business, January 1989, 24 and March 1992, C-9 through C-12.
4 An Associated Press story appearing as "Most economists predict shorter-than-average recession," The Champaign-Urbana News-Gazette, February 26, 1991, B-5.
5 Survey of Current Business, January 1989, 26.
6 The correlation coefficients of the relation between the annual percentage change in Total Contributions Per Member and the annual percent change in the Composite Indexes of Cyclical Indicators over the 1968 to 1990 period were as follows: Leading, r = .25; Coincident, r = .49; Lagging, r = .38. Of the three sets of data, using a t test for correlation, the apparent linear relationship accounting for 24 percent of the variance between church giving and the Coincident Index, in contrast to the relation with the Leading and Lagging Indexes, was significant at the a = .05 level (two-tailed).
7 George Gallup, Jr., Executive Director, Religion in America 1990 (Princeton, NJ: The Princeton Religion Research Center, 1990), 60.
8 Ibid
9 Faxed proof copy, Religion in America 1992, 57.
10 Ibid.
11 "Business Cycle Indicators: Revised Composite Indexes," Survey of Current Business, January 1989, 27.