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Adventures in Philanthropy: Who Gives, Who Gets

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Looking at the current philanthropy landscape.

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Editor's Note: The author is principal and founder of Arabella Philanthropic Investment Advisors and managing director of the Washington, DC office.

Charitable giving in the US fell last year by the largest margin in 5 decades, according to a widely cited annual study by the Giving USA Foundation. After reaching a record high of $314 billion in 2007, donations declined 5.7% in inflation-adjusted terms in 2008, the largest drop recorded since Giving USA began collecting data in 1956.

That sounds like very bad news, and several media outlets reported the story with a hefty dose of doom and gloom. Yet the decrease is not as drastic as it might sound. Nor are the study's findings wholly negative. As a percentage of GDP, giving actually remained remarkably steady from 2007 to 2008, declining only 0.1% to equal 2.2% of GDP last year. Total donations also exceeded $300 billion in current dollars for only the second time in history.

To get a better perspective on giving in the current economic downturn, let's take a slightly more detailed look at Giving USA's recent data -- and match that data up with some other recent takes on giving.

Who Gives?

First, it's worth noting that gifts from individuals account for roughly three-fourths of all donations. That's right, 75% of all US giving comes from regular people, not from foundations or companies. Foundations account for 13% of giving, and corporations for another 5% (the remaining 7% comes from charitable bequests).

According to the Giving USA report, giving from individuals decreased by 6.3% in inflation-adjusted terms in 2008. Foundation giving, meanwhile, declined only -- 0.8% -- despite a 30% drop in foundation assets. Not only did foundations continue to give. They also rose to meet the current economic challenge by establishing community relief funds, giving nonprofits more flexibility in spending grant dollars and focusing their grant making on groups in need.

Community foundations, in particular, provided much-needed support. They surpassed their independent and corporate foundation counterparts by actually increasing their grant making 2.7%, according to another recent report by the Foundation Center.

Giving USA reported an 8% decline in corporate giving for the year. Yet a survey conducted by the Committee Encouraging Corporate Philanthropy found that over half of the companies surveyed actually increased their cash and in-kind donations in 2008, despite declines in corporate profits reported by 68% of their respondents.

Who Gets?

So, where did that $300 billion in gifts go? Roughly 35% of the money -- more than $106 billion -- went to congregations and other religious organizations. And giving to those groups didn't go down last year: it increased by 1.6%, adjusting for inflation. Another 13% of the total -- nearly $41 billion -- went to education organizations, though those groups saw their giving fall by roughly 9% overall.

Perhaps most surprisingly, contributions to human services organizations declined by almost 16% in 2008, falling much faster than the average even as the need for these organizations' services increased. At the same time, donations to international affairs organizations grew marginally in current dollars, challenging the assumption that donors would focus their giving locally during a time of need. (Interestingly, the Hudson Institute estimates that US private giving for international causes now exceeds US government aid for the same purpose.)

In sum: While foundations worked to offset an overall decline in giving, that decline still hit certain nonprofit sectors hard -- and there are significant limits to what foundations alone can do. The coming year will likely bring more economic challenges for both nonprofits and philanthropists, who will need to work harder than ever to make sure that all of their gifts are put to good use.
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