Economic optimism coupled with a fear of potential changes to the federal tax deduction for charitable contributions helped to boost charitable giving in the United States by 3.5 percent last year, despite another flat year of giving to the largest recipient: religion.
Giving was an estimated $316.23 billion for 2012, up 1.5 percent when adjusted for inflation, from a revised estimate of $305.45 billion in 2011 — the third consecutive year that giving increased after a 15-percent drop in 2008-09. Giving remained at about 2 percent of Gross Domestic Product (GDP), according to the 58th consecutive edition of Giving USA, released today by The Giving USA Foundation™ and its research partner, the Indiana University Lilly Family School of Philanthropy.
Look for expanded coverage of the Giving USA report in the July 1 print edition of The NonProfit Times.
“Overall U.S. charitable giving is on a slow uphill climb — with some bright areas and some that are not as bright,” said Eugene R. Tempel, Ph.D., founding dean of the Lilly Family School of Philanthropy. If giving continues at the rate seen in 2012, he said, it will take between six and seven years for total giving to reach the pre-recession high of $344.48 billion reached in 2007 (in inflation-adjusted dollars).
Giving by individuals was up 3.9 percent (1.9 percent inflation-adjusted), to $228.93 billion, outpacing overall growth. In some cases, individuals might have made their charitable contributions before the end of calendar year 2012 as Congress and the president considered options that might cut back on tax deductions.
“Philanthropic giving fares best in a known environment, and has been dependent, in part on certain factors holding true over the decades, including the charitable tax deduction,” said David King, CFRE, chair of the Giving Institute. “The uncertainty among donors created by policy makers’ examination of the charitable deduction likely influenced giving in two very different ways in 2012. Some donors may have ‘prepaid’ gifts they had intended to make in 2013 to ensure they received a tax benefit, while others may have chosen not to donate out of concern that deductions for very large gifts would not carry over in 2013 and beyond,” he said.
Religion and foundations were the only subsectors to see a decrease in contributions last year. Every other subsector was up, with only international affairs not keeping pace with the overall 3.5-percent growth in giving:
- Arts, culture and humanities, +7.8 percent (5.7 percent adjusted for inflation), $14.44 billion
- Education, +7 percent (4.9 percent), $41.33 billion
- Environment/animal, 6.8 percent (4.7 percent), $8.3 billion
- Public-society benefit, +5.4 percent (3.3 percent), $21.63 billion
- Health, +4.9 percent (2.8 percent), $28.12 billion
- Human services, +3.8 percent (1.8 percent), $40.4 billion
- International affairs, +2.5 percent (0.4 percent), $19.11 billion
- Religion, -0.2 percent (-2.2 percent), $101.54 billion
- Foundations, -4.6 percent (-6.5 percent), $30.58 billion
Giving to individuals was down 6.8 percent to $3.96 billion, the bulk of which are in-kind gifts of medications to patients in need, through pharmaceutical companies’ operating foundations Unallocated giving, which includes itemized deductions carried over from previous years and gifts to government entities, totaled $6.82 billion last year.
The philanthropic response to Hurricane Sandy, which struck the eastern seaboard on Oct. 30, 2012, drove charitable contributions of some $223 million to human services organizations and $54 million to public-society benefit organizations.
Corporate giving saw the highest jump, up 12.2 percent (or 9.9 percent when adjusted for inflation), to $18.15 billion, driven by strong gains in corporations’ pre-tax profits as well as contributions of $131 million toward Hurricane Sandy relief. Companies that give tend to have a philanthropic budget, which usually is based on last year’s profitability, according to Patrick Rooney, Ph.D., associate dean for academic affairs and research at Indiana University’s Lilly Family School of Philanthropy.
Corporate giving has grown rapidly from $13.3 billion in 2008 to $18.5 billion last year, Rooney said, but it’s still a relatively small share of the pie, inching up from 5 to 6 percent of the total last year. Giving by taxpayers who itemize their gifts represented 81 percent of the total donated by individuals last year.
Foundations make up the second largest source of charitable dollars, behind individuals, totaling $45.75 billion last year, about 15 percent of all giving, Giving was up 4.4 percent, or 2.3 percent when inflation is accounted for, led by community foundations, which grew 9.1 percent. Operating and independent foundations increased grant making by 3.5 and 3.9 percent, respectively.
Bequest giving fluctuates the most of any source and was down 7 percent (8.9 percent inflation-adjusted), to $23.41 billion. Itemizing estates contributed 78 percent of the total, some $18.3 billion. “Bequest giving tends to be volatile from year to year, as it is highly influenced by very large gifts from estates that closed during the year,” according to Giving USA.
Giving USA’s preliminary estimates are based on econometric models and use historical data from Forms 990 submitted to the Internal Revenue Service (IRS). Data sources include the Bureau of Economic Analysis, Foundation Center, Committee Encouraging Corporate Philanthropy, Council for Aid to Education, and the National Center for Charitable Statistics at the Urban Institute, among others.
The 2012 preliminary estimates released today will be revised annually two more times once IRS data are compiled. Revised estimates for 2011 are 2.4 percent higher than the initial $298.42 billion estimated a year ago, showing an increase in giving of 4.2 percent from 2010 to 2011. Individual giving was up 3.3 percent between 2010 and 2011.
Final revisions tend to change less dramatically. Only corporate giving was revised upward by more than 1 percent, at 3.47 percent, among the four main sources of giving in the final figures for 2010, released with this year’s report. Final estimates for 2010 came in at $293.04 billion, 2.1 percent higher than the revised estimates of $286.91 billion last year, and initial estimates in 2011 of $290.89 billion.