Giving inches up; recovery from plunge slow

Charitable giving in the U.S. grew slightly in 2011, regaining some of its losses from the collapse of the economy in 2008 but posting a two-year pace that marks the second-slowest post-recession recovery since 1971, a new report says.

After adjusting for inflation, giving grew 0.9 percent to $298.42 billion from a revised estimate of $268.91 billion in 2010, says Giving USA, a report from the Giving USA Foundation and its research partner, the Center on Philanthropy at Indiana University.

In 2010 and 2011, giving grew by an average rate of 1.1 percent, compared to an average of 2.6 percent, after adjusted for inflation, in the two-year period after each recession over the past 40 years, the report says.

Individuals accounted for 88 percent of all giving, with living individuals accounting for 73 percent total giving, and bequests and family foundations accounting for 15 percent.

Giving by living individuals grew to $217.79 billion, an increase of 0.8 percent after adjusting for inflation.

Individual giving as a share of disposable personal income was flat at 1.9 percent in 2011, the same as 2009 and 2010, but far below the 2005 high of 2.4 percent.

Corporate giving totaled $14.55 billion, down 3.1 percent from 2010 after adjusting for inflation, and represented 5 percent of total giving.

Corporate pre-tax profits, traditionally a key factor in corporate donation levels, grew 4.2 percent, compared to 25 percent in 2010, the report says.

Between 1971 and 2011, giving by companies grew more slowly than the average inflation rate, with donations by U.S. companies growing 3.1 percent a year, on average, during the period, compared to inflation that averaged 4.4 percent a year for the period.

“Corporate generosity is real, and the nation’s charities would certainly feel its absence should the contributions go away,” Jim Yunker, chair of the Giving USA Foundation, says in a statement. “However, at a year-in, year-out 5 percent-sized slice of the giving pie, pragmatic nonprofits should consider additional potential funding sources when planning their appeals.”

The report calculates total giving by roughly 117 million households in the U.S., 12.4 million corporations that claim charitable donations, an estimated 99,000 estates, and about 76,000 foundations.

Those donations go to about 1.1million charities registered with the IRS, plus at least 222,000 religious organizations.

Gifts by bequests totaled an estimated $24.41 billion in 2011, up 8.8 percent from 2010 after adjusting for inflation, and represented 8 percent of total giving.

Giving by foundations totaled $41.67 billion, up 8.8 percent after adjusting for inflation, and represented 14 percent of total giving.

Religious groups received $95.88 million, down 4.7 percent when adjusted for inflation, and accounted for 32 percent of all giving, the most of any sector.

That represented the second straight year of lower giving to religious groups, the report says, citing declines in church membership and attendance, especially among mainline Protestant denominations, as well as the changing economic climate.

Those declines coincide with average population growth in the U.S. of 1 percent a year, on average, the report says.

“Any charity that is heavily dependent on its members for the majority of its annual budget needs to be cognizant of issues that could affect growth, commitment and donations,” Thomas W. Mesaros, chair of the Giving Institute, the group that formed the Giving USA Foundation, says in a statement.

Giving to human-services totaled $35.39 billion, down 0.6 percent after adjusting for inflation, and represented 12 percent of overall charitable donations.

Still, giving to human services was the third-highest ever, trailing only 2008 and 2010, the report says, adding that human-services giving typically is strong during times of perceived need.

“It is possible that pertinent messaging from these charities is still resonating with donors,” it says.

Giving to education totaled $38.87 billion, up 0.9 percent from 2010 after adjusting for inflation, and represented 13 percent of all charitable donations, while giving to health totaled $35.39 billion, down 0.4 percent after adjusting for inflation and representing 8 percent of overall giving.

Giving to foundations fell 8.9 percent in inflation-adjusted dollars to $25.83 billion and represented 9 percent of overall giving, while giving to “public-society-benefit” groups such as United Ways and the Combined Federal Campaign grew 0.9 percent in inflation-adjusted dollars to $21.37 billion and represented 7 percent of overall giving.

In comparison, the report says, the three largest donor-advised funds in the U.S. – Fidelity Charitable Gift Fund, Schwab Charitable Gift Fund, and Vanguard Charitable Gift Fund – realized average growth of 77 percent in contributions received between 2010 and 2012.

Giving to arts, culture and humanities grew 1 percent in inflation-adjusted dollars to $13.12 billion and represented 4 percent of all charitable giving, while giving to international affairs grew 4.4 percent in inflation-adjusted dollars and represented 8 percent of overall giving.

From 2001 to 2011, giving to international groups grew 167.1 percent when adjusted for inflation, representing the fastest growth of any sector for the period.

Since 1987, giving to international affairs grew at an annual average rate of 9.4 percent, compared to a 4.4 percent average annual rate of inflation.

Giving to environmental and animal groups grew 1.4 percent, adjusted for inflation, to $7.81 billion, or 3 percent of overall giving, with gifts of $1 million or more to support the ongoing cleanup from the 2010 oil spill in the Gulf of Mexico likely contributing to the increase.

And giving to individuals, mainly medications from operating foundations created by pharmaceutical makers, accounting for 1 percent of overall giving, and another $8.97 billion, or 3 percent, representing “unallocated” giving.

Foundation giving slips

Estimated giving by the more than 76,600 foundations in the U.S. totaled $46.9 billion in 2011, up from a peak of $46.8 billion before the economy plunged in 2008 but down slightly from 2010 after accounting for inflation new survey says.

Excluding giving the Bill & Melinda Gates Foundation, by far the biggest grantmaker in the U.S., 2011 giving would have been flat before accounting for inflation and down by roughly 3 percent after inflation.

Giving in 2012 likely will grow between 1 percent and 3 percent, although with inflation averaging just under 3 percent, giving likely will stay flat at best, based on real purchasing, says Foundation Growth and Giving Estimates, from the Foundation Center.

The survey, based on responses from 1,077 large and mid-size foundations, also suggests foundation giving in 2013 likely will show consistent yet modest growth.

“Foundations would like to ramp up giving, but that is unlikely to happen absent consistent economic growth,” Bradford K. Smith, president of the Foundation Center, says in a statement.

Charitable contributions by independent and family foundations, which represent the vast majority of U.S. foundations, grew less than 2 percent to $33.1 billion before inflation, the survey says.

Giving by corporate foundations grew 6 percent to $5.2 billion before inflation, the biggest increase among all foundations, while giving by community foundations fell slightly to $4.2 billion before inflation.

Over a third of foundations responding to the survey indicated their giving fell last year.

While foundation regained over 9 percent of their asset value in 2010, big swings in the capital markets in 2011 left them with estimated assets totaling $646.1 billion, up 0.3 percent and well below the record-high of $682.2 billion in 2007.

Some foundations continued to “recalibrate” their giving after increasing their “payout rate” during the economic crisis, or the amount they distribute for charitable purpose as a share of their assets.

That increase in the payout rate helped foundations maintain their level of giving, or limit reductions in their giving, despite big declines in their assets, the survey says.

While assets of those foundations have regained some of their 2008 losses, it says, “returning to more typical payout levels [5 percent for private foundations] means that overall grant dollars awarded by these foundations may remain fairly flat.”

As a result of poor performance of the capital markets in 2011, and the “unsteady nature of the economic recovery,” the survey says, foundation giving is “unlikely to gain much momentum this year.”

Still, 44 percent of respondents expect to increase their giving in 2012, while 18 percent expect to increase their giving.

Foundations that give $10 million or more, accounting for nearly 60 percent of total foundation giving, are most likely with anticipate increased giving, with 54 percent expecting to give more this year, including 53 percent of corporate foundations, 45 percent of community foundations, and 42 percent of independent foundations.

Nearly two in five foundations expect to reduce their giving in 2012, compared to between roughly a quarter to a roughly a third of funders that might expect to reduce their giving in more prosperous times, the survey says.

In 2013, 54 percent of foundations expect to keep their giving steady, 19 percent expect to give more and 9 percent expect to give less, with another 14 percent not clear what they will do.

“The uncertain nature of the current economic and political environment both in the United States and globally suggests a cautious approach to forecasting foundation growth over the next couple of years,” the survey says.

But if the economy performs more consistently this year, it says, foundations “may be in a position to raise their 2012 and 2013 giving beyond what they expected at the start of the year.”

Political values tied to charitable giving

Americans are more likely to give to a charity that reflects the values of their political affiliation, a new research paper says.

Donations to a specific charity by Republicans and Democrats are strongly affected by their perceptions of its alignment with each party’s respective “moral foundations,” Vikas Mittal, co-author of the paper and a marketing professor at Rice University, says in a statement.

Republicans’ moral foundations are rooted in respect for authority and traditions, loyalty and purity, he says, while those of Democrats are rooted in equality and protection from harm.

“The political divide not only impacts political actions, but everyday actions such as donating to charity,” he says.

The paper, which will appear in the International Journal of Research in Marketing: Special Issue on Consumer Identities, is based on three studies.

Two of them consisted of nationally-representative samples of adults, while a third was based on a randomized experiment with students who were asked why liberals or conservatives would give more or less to a specific charity.

In that experiment, researchers gave participants a description of the same charity, Rebuilding Together.

But they tweaked small parts of the description to suggest the charity either was supporting American traditions and loyalty or ensuring equality.

Among participants who indicated morals are highly important, Republicans were nearly three times as likely as Democrats to give when the charity was described as supporting working American families, following traditions and supporting their communities.

Democrats, on other hand, were twice as likely as Republicans to give when the charity was described as ensuring the protection of a home to every individual.

The researchers said their findings were supported in two additional studies that focused on children’s charities, including one for children’s advocacy that seeks to break the cycle of child abuse through prevention, education, advocacy and funding. The charity was described as in sync either with Republican values of purity and loyalty, or Democratic values of equality and protection from harm.

Focusing on participants who value morals highly, the researchers found that when the charity description emphasized protection from harm, Democrats were much more likely than Republicans to give, and when the charity description emphasized purity and loyalty to community, Republicans were more likely than Democrats to give.

“We found that while both Republicans and Democrats tend to equally value justice and caring for the vulnerable, Republicans place a much higher value on issues of purity and respect for authority,” Karen Page Winterich, study co-author and assistant professor of marketing at Pennsylvania State University, says in a statement.

“Given these differences,” she says, “Republicans are more inclined to donate to a charity when these values of purity and respect are met, whereas Democrats are more inclined to donate when the emphasis is purely on equality or protection rather than respect or purity.”

Yinlong Zhang, study co-author and associate professor of marketing at the University of Texas at San Antonio, says that, in addition to focusing on their main mission, charities “must also clarify how their mission is aligned with the moral foundations of a donor’s political identity.”

A simple “repositioning of the charity’s description so that it aligns with a person’s political identity can increase donation intentions two- or threefold,” he says.

“Of course, this raises important questions for charities in terms of their communication strategy,” he says. “But assuming this divide does not exist can only hurt their chances of maximizing donations from liberals and conservatives.”