The New Landscape of Philanthropic Giving (Pt. I--Giving Continues to Grow)

Philanthropy is changing in dramatic ways. From the surge of high-profile giving by the very wealthy…to the increasing recognition of giving by women, racial and ethnic communities, youth and other nontraditional donors…to the ever growing role of the Internet in giving, new opportunities and challenges abound for organizations that seek to serve and grow philanthropy.

Giving continues to grow 
[Originally published March, 2005]

Continue to part II (Diverse Donors...)

U.S. charitable giving continues to increase, although the rate of growth has slowed from the early part of the decade. In 2003, overall giving rose to $241 billion, an increase of .6 percent over 2002 [1]. Bequests grew significantly in ‘03 (up 10 percent from the prior year) as did giving to international organizations (up 12 percent); foundation giving, however, fell 4.7 percent in 2003.

Individuals remain the majority of donors, by far. In 2003, more than 74 percent of all giving came from living individuals. Charitable bequests from individuals accounted for another 10 percent. In contrast, foundations contributed just over 11 percent of the total, and corporations about 6 percent [2].

Highly visible philanthropic giving by the very wealthy grows apace. There are greater numbers of “mega wealthy” Americans than ever before: more than 400 households with net worth exceeding $750 million, and 300+ billionaires [3]. Business Week’s November 29, 2004 edition tracked 50 philanthropists, each of whom has given or pledged at least $115 million in the last five years, with combined total lifetime gifts and pledges of $65 billion. Compared to donors generally, these philanthropists, like other high wealth individuals today, are more likely to be self-made, most commonly through entrepreneurial interests, small-business ownership, investments, or earned income. They are more likely to maintain a high level of control over their giving and give much of their wealth during their lives. Of these high wealth individuals, 75 percent have at least one wealth management advisor [4].

New foundation growth is booming. Between 1990 and 2002, the number of foundations in the U.S. doubled, growing from 32,401 to 64,843. Assets trebled, from $142 billion to $435 billion. Giving by foundations has also grown, more than tripling from $8.7 billion in 1990 to $30.4 billion in 2002. New foundation creators often start small: in five years, between 1998 and 2002, 14,000 new foundations were created with assets of less than $1 million [6].

Giving occurs across a wide economic spectrum. Eighty-nine percent of American households give philanthropically. The average gift is $1,620 annually [7]. People with less wealth have traditionally given more of their incomes, proportionately, to charity. In the year 2000, for example, the U.S. Census reported that households with incomes between $20,000 and $29,000 contributed 3.9 percent of their income (as measured in cash and in-kind contributions) to charity, as compared to an average of 2.7 percent for households with incomes of more than $100,000.

Rates of giving and ability to give vary dramatically from state to state. According to the 2006 study "Geography and Generosity:  Boston and Beyond"  by John Havens and Paul Schervish at the Center on Wealth and Philanthropy at Boston College, the states with the most charitable giving are New York, District of Columbia, Utah, California, and Connecticut. By the same measure, the states with the least charitable giving are Iowa, South Dakota, Vermont, West Virginia, and North Dakota. This study takes into consideration the different tax burdens, cost of living, as well as religious tradition and other elements in order to meaningfully compare the giving of residents of one state to another. In straight output (not relative to means) states with the highest average contributions recorded on tax returns are Utah, District of Columbia, Maryland, New York and Georgia [9]. According to the IRS, more than half of the country’s top wealth holders live in just seven states:  California, New York, Florida, Texas, Illinois, Pennsylvania, and New Jersey.

Religious involvement influences giving. Giving to religion — to congregations and denominations — accounted for $86 billion in 2003 [10]. Households that give to both religious congregations and secular organizations give more than three times as much to charity as households that give only to secular causes [11]. Fourteen of the top 20 counties in the United States for giving are in Utah and Idaho, states with large percentages of Mormons, whose church has a strong emphasis on tithing. In those counties, people gave between 19 and 27 percent of discretionary income to charity [12].

Originally published, March

Continue to part II (Diverse Donors...)

[1] American Association of Fundraising Counsel/Giving USA, 2004 (figures adjusted for inflation)
[2] American Association of Fundraising Counsel/Giving USA, 2004 (figures adjusted for inflation)
[3] Forbes Magazine, September 2004
[4] The Philanthropic Initiative, Inc. (TPI) Advancing Philanthropy: Tapping the Potential of Legal and Financial Advisors
[5] The Foundation Center: http://fdncenter.orq/
[6] The Foundation Center: http://fdncenter.org/
[7] Independent Sector: http://www.independentsector.org
[8] Catalogue for Philanthropy, The Generosity Index
[9] Urban Institute, National Center for Charitable Statistics
[10] American Association of Fundraising Counsel/Giving USA 2004
[11] Independent Sector, Faith and Philanthropy
[12] Chronicle of Philanthropy, May 1, 2003 v 15, # 14