“I have seen Americans making great and sincere sacrifices for the key common good and a hundred times I have noticed that, when needs be, they almost always gave each other faithful support.”—Alexis de Tocqueville (1835), Frenchman touring the young United States.
Philanthropy continues to grow, despite the political divide in Georgia and the nation. Recent numbers released for 2019 by Giving USA show that giving by individuals, foundations and corporations all increased when compared to 2018. In total, Americans gave away more than $449 billion dollars in 2019, an increase of $21 billion dollars from the previous year (+5%). This annual increase has been constant over decades, with only two notable exceptions – in 1987 after Black Friday, during the recession that followed the stock market crash in 2008-2009.
Where is all that money going?
The numbers show that giving to religious organizations (29%) remains the top priority of the American population, followed by support of education (14%). Contributions to human service (i.e., United Way, Salvation Army, Boys and Girls Clubs, etc.) ranks third at 12%, while giving to foundations ranks fourth, also at 12%, slightly ahead of health-related causes at 9% and public interest organizations at 8%. Arts and cultural organizations receive 5% of all philanthropy, while animal protection/environmental causes received 3%.
Foundations, ranking fourth, are non-profit entities, most often established to receive contributions from high net-wealth individuals. Most foundations elect board members to review and award funds (“grants”) to other non-profit organizations whose missions closely align with the goals of the foundation benefactor(s).
In Georgia, the most notable and largest of those foundations include: Woodruff, Goizueta, Marcus, Blank, Campbell, and Tull — recognizable names to those familiar with the history of Atlanta.
Where is the money coming from?
It may be a surprise to many that giving from individuals makes up nearly 69% of all contributed dollars ($309.66 billion), and was up by more than 4.7% in 2019, when compared to 2018. So, Tocqueville’s quote in 1835 still rings true today, that Americans are, by their very nature, a generous people.
Giving by foundations ranks second at $75.69 billion (slightly less than 17%). It bears pointing out that approximately half of foundations are created and funded by individuals, and the grantmaking is made by individuals, so foundation giving is, in fact, a subset of individual giving. Furthermore, gifts from bequests (estate giving, popularly referred to as Planned Giving), also originates from individuals and comprises nearly 10% of all giving ($43.21 billion). Therefore, assuming about half of the foundations are actually funded by individuals or families, roughly 95% of all giving in the United States comes from individuals, not corporations.
There is ongoing political debate about increasing the taxes on corporations. After all, it appears that corporations are not particularly charitable when you see their giving only constitutes 5% of all charity in the United States. It should be noted, however, that 5% of all giving amounts to $21.09 billion by for-profit corporations which is completely voluntary philanthropy.
Corporate revenues create wealth for hundreds of thousands of people, both in Georgia and across the country. Those people, in turn, give to the charities they value in their own communities, rather than conceding those decisions to a government in Washington D.C. If you’ve ever helped a Georgia-based charity apply for a federal grant, you’ll appreciate the power of keeping charitable dollars close to home, as opposed to an often-futile attempt to weave your way through the federal bureaucracy.
What was the effect on giving by the Trump Tax Cuts?
In 2017, many predicted that the Trump Tax Bill would kill philanthropy in the United States. They suggested that by doubling the standard deduction, Americans would lose their incentive to make tax-deductible contributions to their favorite charities, because they could no longer itemize their charitable gifts. The founders of our firm disagreed with the non-profit naysayers, for two simple reasons.
First, most people don’t make charitable gifts primarily for tax-related reasons; they make gifts to support organizations that are meaningful to them. Second, the tax cut put more money in the pockets of lower and middle-income families, and people tend to give more when they have more. That may be hard for some to admit, but the increase in giving from 2018 to 2019 bears powerful witness to the generosity of Americans. In fact, Americans have historically donated 1.9-2% of their disposable income annually. Giving overall has been about 2% of the Gross Domestic Product (GDP). And changes to tax laws haven’t altered the rate of philanthropy.
At Columns Fundraising, we believe that 2020 may prove to be another record year in philanthropy. With the pandemic and broad moves to bolster racial equity, Americans are again showing their compassion and philanthropy far beyond the breathless, breaking news on cable TV and social media sites. Tocqueville’s comment from 1840 is as relevant and appropriate today as it was then.
Wesley K. Wicker, Ed.D. is a principal and partner of Columns Fundraising, an Atlanta-based consulting firm with clients throughout Georgia and from coast to coast.
