When it comes to giving, ultra-high net worth philanthropists and their mega-gifts grab the spotlight. Not long ago million-dollar gifts made the headlines. No longer. Now it’s multi-million- and billion-dollar gifts. In fact, two gifts larger than one billion dollars stole the Giving USA headlines a year ago, credited with pushing total charitable giving past the $400 billion mark for the first time.
However, when the Giving USA annual report for 2018 was released, there was no chronicling of shattered records of headline grabbing gifts cited—just the announcement of a mere 0.7% increase, expressed in current dollars. In fact, the Chronicle of Philanthropy highlighted a decline based on inflation-adjusted dollars and ran this headline: “Gifts to Charity Dropped 1.7 Percent Last Year”.
What a difference a year makes!
To be clear, total giving in 2018 ($427.71 billion) actually surpassed the record-breaking total of 2017 ($410 billion) when reported in current dollars. It’s the rate of change, however, that has people wondering what these numbers tell us about charitable giving in the United States.
Giving USA compares each year’s figures to the immediately prior year to calculate the year-over-year rate of increase. In 2017 it was 5% over 2016; in 2018 it was 0.7% over 2017.
Experts attempting to explain the 2018 results say, “it’s complicated.” In addition to the complexities of donor behavior, they point to several possible environmental influences that may have dampened the rate of growth in giving, such as early effects of tax law change, volatility in the stock market at year’s end, and uncertainty about the economy in general. In addition, there were two, billion-dollar-plus gifts in 2017 that weren’t repeated in 2018. Plus, there was significant charitable support for several natural disasters in 2017 that wasn’t the case in 2018.
We need more time to know whether 2018 is a bellwether year of some sort, presaging a slowdown, or whether it is just a blip in an otherwise longer-term upward trend.
Another negative statistic in the headlines this June was the decrease in individual giving as a percent of total giving. It dipped to 68% in 2018, falling below 70% for the first time since 1954. That said, giving by individuals remained the largest single source of charitable dollars in 2018 totaling $292 billion and exceeded the $286.65 billion reported for 2017.
It’s important to note that the percent of total charitable giving from individuals has been declining for several years. According to Giving USA, giving from individuals beginning in 1978-82 accounted, on average, for 83% of total giving; by 2001-2007 it had fallen to 76%; and by 2013-2017 it was 71%. In 2018 it was 68%.
Let’s take a look at two possible explanations for this.
1. Giving from foundations as a percent of total giving has been increasing while that of individual giving has been decreasing.
Foundations’ share of total giving increased from 5% in 1978 to 18% in 2018. This increase is related, in part, to growth in the number of independent foundations. The Foundation Source Annual Report on Private Foundations for 2018 indicates that 79% of the foundations it tracks have been in existence fewer than 15 years. Furthermore, according to Giving USA 2018, something like 71% of all foundation giving now comes from independent foundations. And nearly 40% of the charitable contributions given by the Chronicle of Philanthropy 50, the largest individual donors in the United States, was given to independent foundations. So, individual giving has also been driving an increase in foundation giving.
Further, Foundation Source tells us that, in addition to strong contributions from individuals, foundation asset balances have increased as a result of stock market performance while grant disbursements have remained stable, contributing factors in the growth of foundation giving totals.
When these two sources remain stable and the amount from foundations grows, it’s a statistical reality that the percent attributed to individual giving will decrease.
So, questions remain as to what these descriptive statistics mean. As the experts say, it is complicated. And it is complex because so many factors influence the human behavior of charitable giving. We will need a couple more years’ worth of data to know whether or not giving statistics in 2018 were pointing toward something significant.
There are, however, some concerning trends in individual giving behavior that are hidden beneath these macro-level data points. We’ll cover those in next week’s piece, Giving USA: Uncovering the Hidden Numbers.