Charitable giving jumps despite slow recovery

June 20, 2011

With a depressed housing market, an unemployment rate hovering around nine percent and stocks struggling, you would think it difficult to convince people to give to those in need.  But a Giving USA Foundation report released today shows total charitable contributions — for individuals, corporations and foundations — rose 3.8 percent in 2010 to an estimated $291 billion.

Charitable bequests were up a whopping 18.8 percent last year, rising to $22.83 billion, while  individual giving rose 2.7 percent to $211.77 billion.

Religious organizations reaped the most dollar, representing 35 percent of contributions, while education rose 5.2 percent to $41.67 billion after two years of decline.

The uptick in giving speaks to the altruistic nature of Americans, says Eileen Heisman, president and CEO of National Philanthropic Trust — one of the fastest growing charities and the largest grant makers in the U.S.  She spoke to Reuters about trends in charitable giving and why we need to open our wallets now more than ever.

How has the charitable giving space evolved post-crisis?

If you look at the stats on philanthropy, giving patterns didn’t mirror the market.  I think the worst dip was around three percent, which is not anywhere near the drop in the stock market. There was a segment of wealth and super wealth that still had enough funds to give large gifts, especially with the natural disasters that have happened. Americans have this incredible philanthropic impulse that doesn’t seem to be going away any time soon. With the partial recovery that we’ve experienced, we’ve seen a real increase in our funds the last couple of years.

Has the explosion of social media made it easier for people to give back?

The charitable sector has been very slow to embrace the Internet as the main vehicle for giving. But it’s gotten people to see and understand philanthropic opportunities like never before; it democratizes the philanthropic process. Charities are just figuring out how to use these vehicles.

Is texting $10 going to ever replace a $100,000 check that someone writes to a charity? No, but there is a way you can engage donors online so they may eventually make a $100,000 gift when they inherit money or sell a business. There is a way you can feed young donors so when they mature, you can position yourself to use that relationship in a different way. It started with Haiti, really, so it’s not old enough to be refined, but it feels like we’re galloping out to the gold rush. I think the younger generation coming up, who do a lot of mission-driven work, will be the refiners of this and it’s going to be very exciting.

Has there been a shift towards more grassroots organizations or community-focused groups or do large charities continue to dominate?

Private philanthropy is not a redistribution of the wealth, it’s people making very personal decisions about where their philanthropic dollars should go. I call it social capital. You get wealth going to what people know, are familiar with and are asked to give to. If [grassroots] organizations had access to wealthy donors the way large university endowments do, could they make the case for funds? Yes, but that access point gets very difficult. Private philanthropy is not about building equity.

How can charitable organizations ensure they’re evolving with society’s changing needs?

A lot of it is leadership at the board and CEO level.  The March of Dimes was originally for polio and now it’s for early childhood and pre-natal diseases. United Way only used to be about corporate donations but they now have more open fund-raising schemes.  It requires nimbleness of leadership. Boards need the foresight and the person they hire has to have the bravery to say to the board that things are changing and we have to change with them. It’s a very human-driven thing. Some charities figure it out and others that don’t sometimes die on the vine or become dinosaurs in the industry.

Any advice for donors new to charitable giving?

Before you buy a house you need to look at comparables and do your homework, getting into philanthropy is the same thing. Do you want to make small gifts? Do you want to make large gifts? Do you want to be involved in charities close to you or globally? Do you want to go to galas or just give to an organization’s operating budget because you know they’re doing a good job? GuideStar, Charity Navigator, Network for Good – there are a lot of places to get started.

I would spend six to seven months really educating yourself.  There are also a lot of charitable giving vehicles to research – private foundations, donor-advised funds, charitable remainder trusts. You can become a grantmaker in your lifetime or upon your death. They affect your taxes differently and can affect your income. Dip your toe in initially – even if you think you know something after six months or a year, you’ll realize that there is a lot to understand.

How has the financial services industry evolved to meet philanthropic objectives for their clients?

In the last 10 years, a lot of financial service companies have had their advisers trained on philanthropy and have established a lot of in-house tools that help their clients, especially on the private banking, high-net worth side. Some advisers have taken it more seriously and really embraced it as part of what they offer clients.

If you think you want to get involved through your adviser than you should get some knowledge about what they’ve done to educate themselves and how close they are to philanthropy. If they know a lot, it’s a good stating point. Well-seasoned advisers will also know where their knowledge base stops. A lot of the big entities like Bank of America, Morgan Stanley, and JPMorgan have experts in-house so if an adviser’s knowledge is limited than there is someone else in the institution that can help you.

(This interview has been edited for clarity and condensed)

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Thanks for the amazing article!

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