Giving Estimated At 260 Billion Dollars For 2005

July 1, 2006       Paul Clolery      

Americans opened their wallets, as well as corporate and foundation treasuries, to give an estimated $260.28 billion during 2005, a 6.1 percent increase from adjusted 2004 projections of $245 billion. After inflation, the increase is 2.7 percent, slightly less than the 3.5 percent hike in gross domestic product for the year.

While that’s a $15 billion increase, half of it is tied to giving to three major natural disasters, according to estimates by researchers for Giving USA, the annual compilation of American giving.

Major natural disasters in the U.S. and abroad between December, 2004 and October, 2005 generated at least $7.37 billion in contributions, 2.8 percent of total estimated giving during 2005. Of the disaster giving, individuals contributed an estimated $5.83 billion, or 79 percent. Corporations gave an estimated $1.38 billion, or 19 percent of disaster relief gifts. The balance of disaster relief giving, an estimated $160 million based on records from the Foundation Center, was paid by foundations.

If you take out giving to disasters, individual giving would be just $193.24 billion, an increase of 3.3 percent compared to the revised estimate of $187.11 billion for 2004, a decline of 0.1 percent compared with 2004 after adjustment for inflation. This assumes that none of the disaster relief contributions would have been made to other charities had there been no disasters.

Individual giving, including the estimate for disaster relief contributions, was 76.5 percent of the total estimated giving for 2005, according to Giving USA.

“Disaster relief certainly played a role in 2005,” said Richard T. Jolly, chair of the Giving USA Foundation. “The results show us that a robust economy results in robust giving.”

Earlier editions of Giving USA, which is published by the Giving USA Foundation and researched and written by the Center on Philanthropy at Indiana University, reported that the philanthropic response after the attacks of September 11, 2001, reached $2.8 billion, based on data from a December, 2004 Foundation Center report. “The contributions in 2005 to aid survivors of U.S. Gulf Coast hurricanes Katrina, Rita and Wilma quickly surpassed the prior records for disaster relief giving, topping $5 billion by year’s end. And we expect contributions for rebuilding will continue, perhaps for a decade or more,” said George C. Ruotolo, Jr., CFRE. Ruotolo is acting chair of the Giving Institute: Leading Consultants to Non-profits, the parent organization of Giving USA Foundation, and chairman and CEO of Ruotolo Associates.

Giving USA reports giving from four sources: individual (living) donors, bequests by deceased individuals, disbursements by foundations and giving by corporations. Individual giving is always the largest single source of donations. It increased by 6.4 percent, 2.9 percent adjusted for inflation, to an estimated $199.07 billion. Using the household as the economic level at which giving decisions are made, average charitable giving per household during 2005 is estimated to be 2.2 percent of average household disposable (after-tax) income, exactly at the 40-year average of 2.2 percent, according to the researchers.

Gifts to religious organizations increased to an estimated $93.18 billion, 5.9 percent, 2.5 percent adjusted for inflation, compared to the revised estimate of $87.95 billion for 2004. Gifts to religious organizations during 2005 include an estimated $431 million for disaster relief. Without disaster money, the estimate is $92.75 billion for 2005, a change of 5.5 percent, just 2 percent adjusted for inflation.

Not accounted for are in-kind donations and thousands of volunteer hours contributed through congregations directly to regions affected and survivors of the natural disasters. Giving to religious organizations during 2005, according to Giving USA, is estimated to be 35.8 percent of total giving in 2005.

Among the non-living, charitable bequests are estimated to have decreased 5.5 percent during 2005, largely due to a steep decline in the number of deaths during 2004 and an expectation that the number of deaths for 2005 remained low. The bequests category, estimated at $17.44 billion, was 6.7 percent of giving for 2005. Foundation grant-making, which is reported by the Foundation Center, increased 5.6 percent, 2.1 percent when adjusted for inflation, to $30 billion. The Foundation Center, which reported this information in April, 2006, said the increase was due to growth in the number of foundations and because of stock market gains during 2004 that held steady in 2005. Foundation giving is 11.5 percent of total estimated charitable giving in 2005.

Corporate donations grew by an unprecedented 22.5 percent, 18.5 percent adjusted for inflation, to reach an estimated $13.77 billion.  At 5.3 percent of the total estimate for charitable gifts, corporations accounted for a slightly larger slice of the pie than the average of 5 percent given by corporations in the past 40 years.

“The high level of corporate giving is explained in part by two years of very strong growth in gross domestic product and by growth in corporate profits before taxes. It also shows companies’ exceptional response to disasters worldwide in 2005,” said Ruotolo.

More than half of American charities experienced gains during 2005. “Giving USA found that 59 percent of organizations reported an increase in charitable receipts in 2005. This is even before adding contributions for disaster relief,” said Eugene R. Tempel, executive director of the Center on Philanthropy at Indiana University. “The year 2005 saw the highest percentage of charitable organizations reporting growth since 2000 and the lowest percentage of charities reporting a drop in giving.”  The subsector for arts, culture, the humanities and the subsector for health saw inflation-adjusted giving decline during 2005. Both subsectors historically experience variations in giving with changes in economic conditions, the number of capital campaigns under way and with other causes. Giving to the arts, in particular, has shown dramatic swings, often connected with major donations or estate gifts. Giving for health care has shown inflation-adjusted declines or slow rates of growth since 2000, with the exception of 2003, according to Giving USA.

Giving grew by more than 10 percent in the subsectors, including human services, environment and wildlife organizations, and international affairs. Human services charities reported a whopping 15 percent increase (11.3 percent adjusted for inflation) before adding donations for disaster relief.  This reverses a prior three-year decline in gifts when inflation is taken into account. With disaster relief giving added, giving to human services jumped by more than 32 percent, to $25.36 billion.

Environmental organizations and groups working for animal welfare saw giving increase 16.4 percent, 12.6 percent adjusted for inflation. Growth in charitable receipts was reported by environment and animals organizations of all sizes, before adding on any disaster-related gifts. With disaster relief giving included, this subsector reached $8.86 billion in contributions received.

International affairs organizations not directly engaged in disaster relief work saw their contributions decline. The net effect without disaster giving was a drop of 1.9 percent, a decline of 5.1 percent when adjusted for inflation. With disaster relief giving included, this subsector reported growth of 19.4 percent (15.6 percent adjusted for inflation) and gifts of $6.39 billion.   Methodology Giving USA’s annual estimates are based on original surveys of organizations and econometric studies using tax data, government estimates for economic indicators, and information from other research institutions. Sources of data used in the estimates include the Internal Revenue Service, U.S. Department of the Treasury, Bureau of Economic Analysis, Foundation Center, Independent Sector, Council for Aid to Education, National Center for Charitable Statistics at the Urban Institute and National Council of Churches of Christ.

Giving USA estimates the percentage of change in giving to subsectors (health, arts, education, religion, etc.). Except for giving to religious organizations and giving to foundations, these estimates are calculated by the Center on Philanthropy at Indiana University based on a survey conducted by Walker Information Group. Rates of change for 2005 are based on responses from 803 organizations. 

Inflation-adjusted rates of change are based on estimates that are calculated using a Bureau of Labor Statistics (BLS) inflation converter, which rounds to two decimal points. When comparing the inflation-adjusted rates of change to rates of change in current dollars, the difference between the two is not a constant 3.5 percentage points, the rate of inflation used in the BLS converter for 2005. This is because of rounding and is not due to the use of a different measure of inflation or an error in calculation.