Following a year of transitions, the nation’s charities found the donating public staying true to form, giving at record-breaking levels. Yet, like the nation’s economy, the growth of giving has slowed significantly.
Giving to nonprofits cracked through the $200 billion threshold, moving up $12.66 billion to an estimated at $203.45 billion for Year 2000, according to the Giving USA 2001.
Hold the celebration. The 6.6 percent increase compared to the revised 1999 figure of $190.79 billion was the slowest growth rate since 1995. Adjusted for inflation, the growth is just 3.2 percent. Falling slightly, charitable contributions represented 2 percent of the overall Gross Domestic Product in 2000. The past two years have shown giving at 2.1 percent of the GDP, which were 28-year highs. Giving as a percentage of personal income, however, remained stuck at 1.8 percent, a figure it has not surpassed since 1972.
Giving USA, published by the AAFRC Trust for Philanthropy, the research arm of the American Association of Fund-Raising Counsel, is an annual report tracking revenues from individuals, bequests, foundations, and corporations.
The research was headed up by the Indiana University Center on Philanthropy (COP) in Indianapolis. This is the first time that the COP, under contract to AAFRC, led the estimates. Melissa Brown of the center served as Giving USA’s managing editor this year.
George C. Ruotolo, chair of the AAFRC Trust for Philanthropy, said the transitionary nature of the United States in 2000 influenced the findings. “Philanthropy will continue through these changes and others to come,” he said, noting the shaky stock market, the decline of the dot-coms, and even the unprecedented presidential election.
Ruotolo admitted he was so anxious about what the giving numbers would show, he researched giving during recessions in the past 50 years. “Even in the most recessionary period in our country’s recent history, philanthropy has grown,” he said. “If you analyze those recessionary periods and compare them to nonrecessionary periods, the difference of average growth was 2 to 3 percent. … Looking at that history caused me a certain amount of concern.”
Ruotolo said the philanthropy among megagivers eases some of that concern. COP keeps a list of multimillion-dollar gifts, and such megagivers have continued to support American philanthropy through difficult economic times.
Who’s giving what
Individual donors, traditionally the largest source of gifts, gave charity $7.07 billion more than in 1999. Personal giving in 2000 is estimated at $152.07 billion, up almost 5 percent from a revised estimate of $145.00 billion. Bequests grew only at 2.6 percent, however, which was lower than usual.
Gifts by foundations have become an increasingly larger portion of the overall giving picture, with $24.5 billion, or 12 percent of giving. Loren Renz, vice president for research at the New York City-based Foundation Center, said three threads accounted for the 100 percent growth in foundation giving between 1996 and 2000. First was the growth of assets and endowments, then a continued growth rate of new foundations, and the largest level of gifts to foundations ever. “It’s allowed foundation giving to expand at a faster rate than individual or corporate giving,” Renz said. “It’s smaller than individual giving, of course, but we’re seeing they’re really a leader in the field in terms of growth.”
Corporate giving increased an estimated 12.1 percent. Its $10.86 billion in giving represented 1.2 percent of corporate pre-tax income, according to Brown. Corporations also support organizations through cause-related marketing, sponsorships, and other joint promotional activities that aren’t factored into giving.
Giving USA also does not report the sources of individual giving more deeply than above, so there is no way of saying from this data what specifically are the primary areas of slowdown, such as gifts of stock or cash.
Where the giving’s going
Religion remained the largest single recipient area, as Americans gave $74.31 billion. It represented a 4.3 percent increase ($3.06 billion). That estimate was based partially on data from the National Council of Churches of Christ in the U.S.A. for contributions made through 1999. With the increase in giving to foundations in recent years, however, giving to religion has become a smaller portion of the whole.
Part of that is the increased popularity of giving to foundations, according to Brown. “Gifts to foundations in 1995 were $8.46 billion,” she said, noting it was 6 percent of the whole back then and 15 percent now. “Between 1995 and 1999, if you make some assumptions about what it would have been (at the average rate over the previous 25 years) it’s 44 percent of the increased total in giving.”
Public/society benefit organizations showed the highest increase rate of the year, posting 5.9 percent growth. Brown speculated that further analysis of those findings might show that the popularity of donor-advised funds might account for that increase.
Giving to human service organizations increased to just less than $18 billion, increasing 3.6 percent, just above the rate of inflation. Brown noted that human service organizations apparently weathered the uncertain economy toward the end of the year, which surprised her, as they tend to be vulnerable to economic changes. “Even though there was all this turmoil at the end of the year, and bell ringers weren’t getting what they should in their buckets,” she said, “people continued to give to human services.”
Health organizations increased 4.9 percent to $18.82 billion. Giving to environment (up 5.7 percent) did not grow as fast as it had in recent years. Arts giving increased by 3.9 percent. And international giving, which at $2.71 billion is the smallest category, languished at 2.6 percent growth.
Gifts to education also grew by only 2.6 percent – which is notably slower than what the Council for Aid to Education reported recently. CAE’s figures were based on reports from higher education institutions for the fiscal year that ended June 30, 2000. Giving USA surveyed a broader spectrum of education institutions, going from nursery schools through universities and including libraries for the full year. Also, Giving USA’s sample size was smaller.
Brown said the center was able to gather twice as many usable surveys this year than the trust had in the past. The survey was sent out to more than 4,000 organizations, with 1,578 responses. Of those, 1,418 had information for both 1999 and 2000, with 1,365 responses used for the survey. Those that had information for both years but weren’t used had information that could have skewed the results.
Such results do not affect total giving, which is estimated through four sources, such as Internal Revenue Service data on individual giving and the Foundation Center’s findings on foundation giving. The surveys are used estimate growth within the subcategories.
Brown explained that organizations might be excluded if, for example, they had $25,000 in income in 1999 and then received a $20 million bequest in 2000. Such an event would not be representative of the general state of giving. Statistically speaking, those organizations that were more than two deviations from the mean were excluded. “It’s not fair statistically to include an organization that all by itself would account for 90 percent or 75 percent of all the change in one year.”
While the tumult of 2000 took many forms, from the roller coaster ride in the markets to the wild presidential election, Ruotolo said the real key to the slowdown in giving was a downturn in public confidence in the economy. “When that reverses, it certainly has some effect on the ability to give,” he said.