As you can imagine, giving to charities is really, in most cases, a very discretionary item. Though we are admonished to keep giving faithfully even during difficult times, unfortunately for many of us, when tough times hit, we either dramatically reduce the amount we give or we stop giving all together. And charities really feel it when we do.
So I was pleasantly surprised to recently learn that after a two-year drop, charitable giving in the U.S. was up in 2010. If this is not a leading indicator of economic confidence, I don’t know what is. According to the Giving USA Foundation, total contributions from individuals, corporations and foundations in 2010 were estimated at $290.9 billion, up from $280.3 billion in 2009. That represented growth of 3.8 percent in current dollars and 2.1 percent in inflation-adjusted dollars.
And after some serious declines in charitable giving due to the recession, this information was well received. Patrick Rooney, Indiana University’s executive director of the Center on Philanthropy, as quoted to the Associated Press said, “That’s good news following a combined drop of over 13 percent in 2008 and 2009.” The center conducted research for the report.
With the serious decline in giving over the past two years, it will take an estimated five or six years, at this growth rate, to return to the size of charitable giving seen before the recession. And keep this in mind, according to the Giving USA Foundation, the steep drop in giving seen in 2008 and 2009 “was the largest in four decades.” If you do the math, a 13% combined decline the past two years means that we gave over $316 billion to charities in 2007. That is approximately $26 billion dollars more than we gave in 2010. The difference alone is staggering.
Again, as we have discussed before, this data points to just how severe the last recession was. This recession was 70% longer than the historic length of an average recession, so it is understandable why charitable giving declined so much.
Corporate Giving Leads the Way
But even with the tepid growth of giving in 2010, I would imagine that after the past two years, most charities are enthused to see any growth at all. Most interestingly, the study showed that while individual giving (which accounts for 73% of all giving) grew slightly in 2010, corporate contributions increased by almost 11%. Of course, I would expect to see that given the amount of cash corporate players have been saving over the past two years.
With the steep cuts in state funding the past few years, it is not surprising that giving to education increased by 5.2%, one of the largest increases tracked. And showing the true generosity of the American, the earthquake in Haiti increased charitable contributions for international affairs by over 15%.
Once again, we can be encouraged by the fact that as thebegan to recover, our nation renewed its commitment to charitable giving. This is a testament to the character of the people living in this country. On a bigger scale, this also shows us that Americans are again feeling better about the economy now than they were in 2008 and 2009 when charitable giving literally crashed. Based on the overall positive economic news we have seen so far in 2011, I would hope that the amount of contributions would continue to increase. Hopefully charitable giving will also be bolstered by continued improvement in employment.
If you would like to order a copy of the Giving USA 2011 Report on Philanthropy or download their free executive summary, you can do so by clicking here.
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