Americans Gave Nearly 250 Billion Dollars In 2004

July 1, 2005       Matthew Sinclair      

Though 2004 ended with a series of waves that devastated southern Asia and Indonesia, giving to tsunami relief was barely a ripple in the tidal wave of support for philanthropic efforts during the year.

An estimated $248.52 billion was given toward philanthropic efforts in 2004, a 5 percent increase compared to the revised estimate for 2003 of $236.73. Adjusted for inflation, the 2.7 percent increase was the first positive growth after inflation since 2000, according to the Giving USA Foundation (formerly known as the AAFRC Trust for Philanthropy).

Other highlights of this year’s Giving USA report include:

  • Individual giving by the living continues to be the most significant element of the total picture, estimated at $187.92 billion, representing 75.6 percent of total giving;
  • Bequests were estimated at $19.8 billion, an increase of 9.2 percent (6.4 after inflation) compared to the revised estimate of $18.13 billion. Notably, bequests in last year’s report were originally estimated at more than $20 billion;
  • Giving by foundations and by business/corporations/corporate foundations both grew by the same percentage, 7.3 percent (4.5 after inflation). Foundations granted out an estimated $28.8 billion (11.6 percent of all contributions). Businesses, corporations, and corporate foundations gave $12 billion in cash and in-kind donations. According to figures from The Foundation Center in New York City, corporate foundation grantmaking increased by an estimated $134 million (3.9 percent);
  • Religion grew to $88.3 billion (up 4.4 percent, 1.7 percent after inflation) and is 35.5 percent of all donations;
  • Education remained second largest, estimated at $33.84 billion, rising by 5.4 percent (2.7 after inflation) following three years of declines. It is 13.6 percent of all giving;
  • Foundations received $24 billion, an 11 percent increase (8.2 after inflation). According to a recent report from The Foundation Center, gifts to foundations were $21.62 billion, which was a 12.8 percent increase compared to its previous year data;
  • Health organizations saw an increase to $21.95 billion, which was 5.1 percent growth (2.3 percent after inflation). Such giving was 8.8 percent of the total;
  • Human service organizations experienced their third consecutive inflation-adjusted decline, falling 1.1 percent after inflation. They received $19.17 billion and represent 7.7 percent of all giving;
  • Public-society benefit groups, which include the United Way system, raised $12.96 billion in 2004 for 6.8 percent growth (4.1 after inflation).

After several years of mediocre giving, this year’s report was “a really solid result,” said Hank Goldstein, chair of the Giving USA Foundation. Given the relationship between the economy and giving, the level of philanthropic growth made sense. “The economy and giving are related – with a better economy, you see a better result (in giving.).” He cautioned that you also have to look at which part of the economy is growing. The stock market, for example, “hasn’t been great.”

Patrick Rooney, director of research at the Indiana University Center on Philanthropy in Indianapolis, which conducts the survey for the Giving USA Foundation, called the results “the first meaningful increase since 2000.”

The surprise in the year may be the sources of growth. While individual giving consistently remains the single most significant source of all giving, other sources outpaced its rise. Bequests showed a wide swing from the previous year, increasing 6.4 percent compared to the previous year. This comes off a large (15.2 percent) decrease in bequest giving the previous year.

Last year Giving USA estimated bequests at more than $20 billion, which was later revised down to $18.13 billion. The Joan Kroc estate was not part of last year’s bequest figures, nor was her $1.5 billion gift to Salvation Army included in this year’s survey.

Rooney explained that the survey can only use the best and most recent information available to it, which comes from the Internal Revenue Service. “We’ve talked about what is the tradeoff if you wait two years (for) a more final result,” he said. “The sector wants an earlier warning system or estimate of what’s going on. … Bequest estimates are the most sensitive to large changes in large estates.”

“Bequest data is the softest and most ephemeral data,” Goldstein said, explaining that the IRS’s only metric is those who have filed estate returns. “I’ve always thought that bequest giving is underreported, but I can’t show it.”

Rooney added that in addition to IRS data, bequest information comes from the nonprofits that complete the Giving USA survey. “There’s any number of ways we might not capture that information,” he said. “The biggest factor is the lumpiness (of enormous gifts).”

Gene Tempel, executive director of the Center on Philanthropy, said that while individual giving grew at a “fairly nice rate,” he was most pleased with the increases in the other areas. Looking at a 40-year analysis the center has done, he said “these areas have outgrown (the pace of) individual giving.”

With regard to foundation growth, which is related to the stock markets, “they are probably also trying to make more long-term commitments,” he said. “(Plus) more living donors are making gift-making through foundations than ever before.” If they are not forming formal foundations, many wealthy individuals are taking similar approaches, developing guidelines for those who seek funding, Tempel added.

Corporate giving showed positive growth, suggesting that deleterious effects the management scandals of the early part of this decade had on giving may be behind the sector. “We’ve seen pretty substantial increases in corporate income and the overall economy, so I think that’s the big driver in the increase in corporate giving,” Rooney said.

“I think corporate is underreported,” Goldstein added, citing cause-related marketing, which isn’t tallied among charitable contributions.

Where it goes

After two years of double-digit growth in international affairs giving, it showed a decline after inflation. Despite its recent upswing, it remains the smallest portion of the giving pie. “We’re pretty xenophobic,” Goldstein said, adding that some of what could be described as international giving gets reported in other areas. For example, while gifts to Save the Children go toward international affairs, money through Jewish organizations that go to Israel for relief efforts fits in with religious.

One of the chief concerns over recent years has been the diminished slice of giving toward human service organizations. Rooney said that examining the past 40 years, government’s role in human service funding increased and perhaps that has resulted in decreasing philanthropy toward such causes. “This may be a continuation or exacerbation of that trend,” he said.

He added, however, that government funding toward human services has dropped recently. “These trends over time are harder to reverse. (When) people stop giving to an organization, they may not start doing it again when things get worse.”

Moreover, human services tends to be the hardest hit subsector during recessionary times. “It may be that some of the people who’ve given to human service organizations in the past may not feel the security to be as generous.”

“It is a concern that human services has not kept up with the growth in philanthropy in general, and they do even worse in bad years,” Tempel said. “They could be in trouble.”

Still, many donors consider their gifts to religious groups or federated campaigns as supportive of human service endeavors. “We count what the organization says is their primary mission,” Rooney said. So, while a donor might give to his church, synagogue or mosque to address poverty relief, “all those dollars are religious.”

Rooney disagreed with suggestions that the definitions are sloppy, “but they’re not necessarily how Joe or Suzie Citizen-Donor thinks about them.”

Fundraising during political campaigns can also be different than the average American views the process. With 2004 being the year of a divisive presidential campaign, “(we did) some research looking at whether presidential elections have any impact on giving,” Rooney said. “Giving over the (two-year) presidential campaign cycle was less than $4 billion … less than 1 percent over those two years.”

Intuitively, looking at the presidential campaign nationally makes sense, yet the 2004 election came down to handful of swing states. Examining the campaign on a much more local basis might reveal more impact than is apparent in the Giving USA analysis.

Brian Gallagher, president and CEO of United Way of America in Alexandria, Va., used to run the UW in Columbus, Ohio, and still keeps in touch with people there. “I think it’s fair to say, if you were trying to run a (fundraising) campaign in Columbus or Cleveland,” he said, “the field was a tad crowded. … There was so much political activity, the market to get your message out was so crowded, you couldn’t escape the conversation.”

The new report received mostly positive reactions fr om leaders in the sector. “That’s pretty strong, given not just that giving beat inflation, it clearly beat macroeconomic growth as well,” Gallagher said. “If there’s any positive news in the human services area, it’s that the rate of inflation-adjusted decline is decreasing.”

Irv Katz, president of the National Human Services Assembly, said he was concerned that health and human services represented less than 17 percent of the overall giving pie. The third consecutive year of inflation-adjusted declines “(suggests) a huge lack of awareness,” he said, “that people don’t understand that people in need are not alumni.”

Goldstein said the continued diminishment of human services contributions might reflect the increasingly transactional aspect of philanthropy, “where the donor is the beneficiary” such as in the arts and higher education.

Katz noted that while gifts to religious and educational groups are valuable, “they are often self-interest gifts” and in some ways self-aggrandizing. “It appears that America is losing its will to care for the stranger, the very message of religion, to care for one’s fellow man.”

Yet, he was pleased to hear the bequest estimate continues to be strong, which he said indicates the anticipated transfer of wealth has already begun. “It may reflect part of the transfer of wealth that more funds are getting into the hands of next generations … and they are as philanthropic as their forebears,” Katz said.

Suzie Upton, the executive vice president for development at the Dallas-based American Heart Association (AHA), said the Giving USA numbers reflected what her organization experienced in 2004, which she called “our best year ever.”

Upton was encouraged that Giving USA reported continued strength among individual givers, and added that for many organizations like hers such gifts were from “average” Americans rather than the super wealthy. She said that while big gifts tend to drive the figures at universities, “ours are mostly bread and butter gifts, small everyday gifts.”

Upton said AHA added benefits from focusing on fewer projects, “instead of doing 25 things and being all across the board.” For example, AHA launched a campaign called Go Red For Women, which centers on a message that heart disease is women’s biggest health threat. Such focus struck a chord with AHA’s donors and yielded a high level of return, she added.