Charitable Giving: the Barometer of a Growing Economy

| December 6, 2013

give, gain and growCharitable giving is growing at a healthy pace, a sign that Americans are a little more confident about the economy and their own finances. Individuals, corporations and foundations donated $316.2 billion to charitable causes in 2012, a 3.5 percent increase over 2011, according to the annual Giving USA study, which is conducted by the Giving USA Foundation and Indiana University Lilly Family School of Philanthropy.

A Partial Recovery

As encouraging as those numbers are, charitable giving was still below the level it reached before the 2008 financial crisis — $344.5 billion in 2007 — and is not likely to get back there for six or seven years at its current growth rate, said Patrick M. Rooney, Associate Dean for Academic Affairs and Research at the Indiana University Lilly Family School of Philanthropy.

“Individual giving rose 1.9 percent after inflation, perhaps reflecting the fact that the average household is still struggling in some areas,” Rooney said in the university’s report on the study, which has been conducted every year since 1955.

Another dark cloud hovering over charitable giving is that the Obama administration and some members of Congress want to limit or eliminate the federal tax deduction for it.

The Chronicle of Philanthropy, quoting “non-profit advocates,” stated that limiting the charitable giving tax deduction to 28 percent, as the White House has again proposed, would reduce giving by as much as $9 billion per year.

Sources of Charitable Contributions

Individuals gave $228.9 billion in 2012 — more than all other philanthropic entities combined. Private foundations gave the second largest amount in 2012. Foundations donated $45.7 billion last year, a 4.4 percent increase over 2011.

The next most generous group comprised the recently departed who had bequeathed money to charities in their wills. Although such bequests fell by 7 percent in 2012, they still added up to $23.4 billion.

Then came corporations, whose charitable giving rose 12.2 percent last year to $18.2 billion. That amount included donations by the corporations and their foundations. They gave cash, in-kind donations and grants. The large annual increase in corporate giving is due in large part to corporations giving about $131 million to not-for-profit organizations working on Hurricane Sandy relief.

“Corporations represent a vital portion of our country’s total charitable giving,” said Gregg Carlson, chairman of the Giving USA Foundation. “And while their donations increased last year, corporate philanthropy represents only 6 percent of total giving.”

Recipients of the Generosity

Among beneficiaries of all this generosity, the most blessed, if you will, were religious entities, according to the Giving USA study. They took in about $101.5 billion in 2012, slightly less than in 2011.

Educational institutions received $41.3 billion in contributions last year, an increase of 7 percent over 2011. The majority of these donations went to colleges and universities.

Human services giving, such as for disaster relief, amounted to $40.4 billion last year, a 3.8 percent increase over 2011. Total contributions for Hurricane Sandy relief were $223 million.

And giving to foundations amounted to $30.6 billion. That was down by 4.6 percent from 2011. “Estimated contributions to foundations can change dramatically from year to year, depending upon very large gifts received from the wealthiest donors in America,” stated the Giving USA study.

“The $316 billion in total giving reflected by our 2012 data continues the positive twin trajectory of dollars coupled with hope,” Carlson said. “I would say the outlook is positive for those who believe in and understand the power of American philanthropy.”

A Closer Look at Demographics

Blackbaud, a software and service provider for not-for-profit organizations, commissioned a recent survey to identify charitable trends for various age groups. The survey discovered that Baby Boomers are the most generous.

People between 49 and 67 years old account for 43 percent of charitable giving and each one gives about $1,200 per year, the survey found. It said 63 percent of Baby Boomers donated clothing and other goods to charities, 52 percent gave to local social service providers and 46 percent gave to places of worship.

Americans age 68 and older give about $1,370 per year — more per capita than Baby Boomers do. However, their total annual contributions are less than that of the Baby Boomers, because there are fewer of them. About 72 percent of “Matures,” as Blackbaud refers to them, donate goods, 55 percent to local social service providers and 50 percent to places of worship. Older people are more likely than others to donate their time. About 42 percent of them volunteer.

Generation X, consisting of people between ages 33 and 48, give an average of $732 per year. Forty percent of them donate to places of worship, 39 percent to health charities and 37 percent to social service agencies. Fifty-six percent of Generation Xers give goods to charity.

Finally, the survey looked at Generation Y. This cohort, consisting of people between ages 18 and 32, gave an average of $481 per year to 3.3 charities. They prefer charities oriented toward children and healthcare. They also demand the most accountability from nonprofits. Sixty percent of Gen Y want to see the direct impact of their donations.

Technology Trends

Not surprisingly, Gen Yers are the most likely of all age groups to give via a mobile phone and share information about their preferred charities on social media, according to the Blackbaud survey. They were also the most apt to view online videos about charities and follow beneficiaries on social media. Gen Xers were close behind in these trends, however.

The Blackbaud survey also looked at whether different age groups use mobile phones as their primary phone. Almost all Gen Yers do (98 percent), compared with 86 percent of Gen Xers, 60 percent of Baby Boomers and 30 percent of Matures.

Here are a couple more tech findings from the survey:


Who Banks Online?

Who Is on Facebook?

Gen Y

80 percent

90 percent

Gen X

78 percent

77 percent

Baby Boomers

72 percent

71 percent


60 percent

59 percent

Tips for Charities

Here are a couple considerations from Blackbaud for not-for-profits hoping to most effectively reach today’s donors:

Direct mail isn’t dead. For example, 52 percent of Matures and 40 percent of Baby Boomers gave in response to a direct mail solicitation. It is not the vehicle of choice for younger givers, however. So not-for-profit organizations need to cultivate other channels, such as Internet video and Facebook. While you might expect that 97 percent of 18-to-32 year olds watch YouTube videos, you may be surprised to find that 58 percent of those age 68 and older do, too.

Take a multi-channel approach. Targeting different generations through the Internet, social media, direct mail and other channels will maximize potential gifts.


Category: Finances

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Email | Website | Mary Gregory is a Partner with the accounting firm of Weil, Akman, Baylin & Coleman, P.A. in Timonium, Maryland. She is a CPA with concentrations in business and taxation. She was a partner in Jones Hall Advisors until merging her firm in 2013. She is a founding member of the Christian Professional Network.