A Project of the American Enterprise Institute and the Federalist Society

Charitable giving in U.S. nears new high

AFX News Limited

June 19, 2006

The urgent needs created by three major natural disasters -- the tsunami in Asia, earthquake in Pakistan and hurricanes Rita, Katrina and Wilma -- drove American philanthropy to its highest level since the end of the technology boom, a new study showed.

The report released Monday by the Giving USA foundation estimates that in 2005 Americans gave $260.28 billion, a rise of 6.1 percent, which approaches the inflation-adjusted high of $260.53 billion that was reached in 2000.

About half of the overall increase of $15 billion went directly to aid victims of the disasters. The rest of the increase, meanwhile, may still be traced to the disasters since they may have raised public awareness of other charities.

'When there is a very significant need, when people are clearly aware of that need, they will respond,' the chairman of Giving USA, Richard Jolly, said. 'Were it not for the disasters, what we would have expected is more of a flat number. With the staggering need generated by the disasters, it's very in keeping with what has happened in the past -- the American public stepped forward and provided additional support.'

The three natural disasters generated about $7.37 billion, which was 2.8 percent of total giving. Of that amount, individuals contributed $5.83 billion, or 79 percent, while corporations added $1.38 billion, or 19 percent.

Excluding disaster relief, the report indicates that there still would have been a rise in gifts from both individuals and corporations. In the 41 years that Giving USA has tracked philanthropy, giving has increased with the wealth of the nation. Since 1965, total contributions have been between 1.7 percent and 2.3 percent of gross domestic product. The highest level was reached at the end of the technology boom in 2000. For 2005, it was estimated to be 2.1 percent of GDP.

Disaster relief may have 'crowded out' giving to other recipients of international aid. Without the $1.14 billion in relief contributions, giving to this sector fell to $5.25 billion, a decline of 1.9 percent, or an inflation-adjusted drop of 5.1 percent.

As is usual, individual giving was the largest source of donations, accounting for an estimated $199 billion, or 76.5 percent of the total. For 2005, it was estimated to rise by 6.4 percent, or 2.9 percent adjusted for inflation.

Total corporate giving grew by 22.5 percent to an estimated $13.77 billion, and accounted for about 5.3 percent of overall gifts. That is slightly higher than the 40-year average of 5 percent.

Another recent report, from the Foundation Center, also shows an expected rise in corporate giving. Earlier this month, the center released a report showing an increase in philanthropy by corporate foundations, a subsector that has doubled in size from 1987 to 2004. That study predicts that nearly 2,600 corporate foundations gave $3.6 billion in 2005, a rise of 5.8 percent. The study noted that the growth rate was slower than for other types of foundations.

The director of research at the Foundation Center, Steven Lawrence, said he expected a more modest increase in 2006 over last year. While a majority of those who responded to the survey predicted a rise, the number who expect a decrease had also gone up, an indication that the rate of growth is likely to slow.

One area of gifts that declined in 2005, according to the Giving USA report, were bequests. The report estimates that they fell by 5.5 percent, a drop that is mainly attributed to a decline in the number of deaths in 2004 and an expected decline for 2005.

For the first time since 1998, contributions slated for arts, culture and humanity groups fell. Jolly said the drop could be due to the fact that a few museums had completed major campaigns the year before so were less active in 2005, or that the decline in bequests translated to a decline in arts giving.

The chief executive of Zeum, a nonprofit children's museum in San Francisco, said the fundraising climate for arts organizations has indeed grown more difficult in recent years. CEO Adrienne Pon said that Zeum, founded in 1998, has seen its fortunes rise and fall with those of technology companies.

Apple Computer Inc. is one of its most prominent supporters and has donated state-of-the-art equipment to the center, where children can create animation, visual art and live performances.

'When we initially opened, we had tremendous support from dot-com era companies,' Pon said. 'That was in 1998. Then we started to see in 2000 to 2001, that dropped, and in the last year or two, we've seen a resurgence.'

Pon said the majority of Zeum's funding comes from foundations, such as the Seattle-based Marguerite Casey Foundation, and companies such as UPS.

The Giving USA report was researched and written at the Center on Philanthropy at Indiana University. It has been tracking philanthropic giving since 1965, and in that period, has seen a rise of 185 percent, most of which has been since 1996.

Copyright 2006 Associated Press.

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