Charitable Giving and the Economy

Una O. Osili, Ph.D.

Director of Research

The Center on Philanthropy

March 22, 2010

AGB’s National Conference on Trusteeship

www.agb.org

ResourcesGiving USA 2009, a publication of Giving USA

Foundation, researched and written at the Center on Philanthropy

Giving USA Spotlight on giving during recessions and economic slowdown, released September 2008 and 2009 (www.givingusa.org)

IRS records for charitable givingStandard & Poor’s 500 stock indexEconomic indicators from the U.S. Bureau of

Economic Analysis Prior editions of Giving USAPhilanthropy Giving Index 2008 and 2009All analysis by the Center on Philanthropy at Indiana University

Total giving, 1968–2008

0

50

100

150

200

250

300

350

1968 1973 1978 1983 1988 1993 1998 2003 2008

$ in billions

Recessions in dark gray: 1969–70; 1973–75; 1980; 1981–82; 1990–91; 2001; 2007–2008

Who Gives: Sources? Americans gave $307.65 billion in philanthropy in 2008.

(Giving USA 2009)

With average growth, Americans are expected to give $4 trillion in philanthropy over the next 10 years. (Giving USA 2009)

65% of American households give and 30% of Americans volunteer. (Center on Philanthropy Panel Study)

Individuals$229.28

75%

Corporations$14.55% Foundations

$41.21 13%

Bequests$22.66

7%

* Dollars in billonsSource: Giving USA Foundation™ / Giving USA 2009

For What Uses?1. Religious/Faith-Based

($106.89 billion) 35%

2. Education($40.94 billion) 13%

3. Human Services($25.88 billion) 9%

4. Health($21.64 billion) 7%

5. Public-Society Benefit($23.88 billion) 8%

Environmentand Animals

$6.582%

Grants toIndividuals*

$3.71 1%

HumanServices$25.88

9%

InternationalAffairs$13.30

4%Arts, Culture,

and Humanities$12.79

4%Public-Society Benefit$23.88

8%

Unallocatedgiving$19.39

6%

Health $21.64

7%

Gifts toFoundations

$32.65 11%

Religion $106.89

35%Education$40.94 13%

Source: Giving USA 2009

*Foundation grants awarded to individuals

What has happened to date in the 2008 recession?

• Giving USA 2009 estimate for giving in 2008 was $307.65 billion -a decline of 2% from the previous year(-5.7% adjusted for inflation).

• One year decline for 2008 is close to one year decline for 1974.

BUT

• Cumulative change to date in this recession for major economic indicators are more severe than the 1973-1974 recession.

Changes in giving by source inflation-adjusted $

Source: Giving USA Foundation TM/Giving USA 2009

Changes in giving by recipient organization inflation-adjusted $

The highest increases 2007-2008:•Religion +1.6%•Public-society benefit +1.5%

The biggest decreases 2007-2008:•Human services -15.9%•Health -10.0%•Arts, culture & humanities - 9.9%

Source: Giving USA Foundation TM/Giving USA 2009

The Context – Key Economic Indicators

Years of depression

or recession

Highest rate of

unemployment in period

Highest to

lowest DJIA

Personal income

Dow Jones Industrials

Average

GDP Corporate profits

1929-33 37.6%(1933)

-85%(Feb 29: Jul 32)

-24%(29 – 33)

-55% -25% -101%

1973-75 9.0 %(May 75)

-50%(Jan 73; Dec 74)

0.6%(73-75)

-15% -1% -10%

2007- fall 2009

10.2% ( Sept 09)

-53%(Jul-07; Mar-09)

-3.8%(qtr 4 07 to

qtr 2 09)

-39%(from Dec 07 to Jun

09)

-2.2% (qtr 4 07 to qtr 1

09)

-21%(qtr 4 07 to qtr 1

09)

Itemized individual giving and the Dow, 1971-1983

Different impacts now on giving: Dow and IncomeFrom 1930 to 1963, •10 point increase in the Dow Jones Industrials Average (DJIA) was associated with a very small increase (approximately $1.85 million) in giving nationally•$1 billion increase in personal income nationally was associated with an $11.6 million increase in giving

From 1964 to 2006, •10 point increase in the DJIA was associated with $16 million more in giving nationally•$1 billion increase in personal income was associated with $15 million more in charitable giving

Percentage of surveyed charities reporting that gift receipts were up, down, or not changed compared with the prior year, per

GuideStar.org (2008)

2002 2003 2004 2005 2006 2007 2008

2839

50 49 50 5238

22

22

24 26 27 25

25

4835

23 22 19 1935

3 4 3 3 4 4 2

Don't knowDecreasedStayed about the sameIncreased

Summer

98

Dec-98

Summer

99

Dec-99

Summer

00

Dec-00

Summer

01

Dec-01

Summer

02

Dec-02

Summer

03

Dec-03

Summer

04

Dec-04

Summer

05

Dec-05

Summer

06

Dec-06

Summer

07

Dec-07

Summer

08

Dec-08

Summer

09

Dec-09

0

20

40

60

80

100

Philanthropic Giving Index Present Situation Index Expectations Index

PGI: Main Indexes Over Time

PGI: Current Impact of the U.S. Economy on Fundraising

Average 2003 Average 2004 Average 2005 Average 2006 Average 2007 Average 2008 Average 2009

71.2

36 3628.9

35.3

90.376.5

9.5

21.1 28.2

21.623.5

7.7

10.619.5

42.9 35.949.6

43.5

2.2

13

Negative None Positive

Percentage

Corporate Social ResponsibilityCurrent trends in corporate social responsibility:• Corporations are focused on aligning philanthropy with business

goals and core competencies• Want to “brand” their philanthropic practices• Interested in establishing partnerships with the nonprofits they work

with, and taking a more active role in decisions and activities.

Impact of the economy on companies’ philanthropy $s:• Remained constant: <50% of companies surveyed• Decreased: 25% of companies surveyed• Increased: 25% of companies surveyed

What can we expect?• Three to four years for individual giving to recover to pre-

recession levels once recession over.• Foundations: Much longer – following Foundation Center

results – for foundation giving to recover. Minimum of 3 years because of asset averaging over 20 quarters at many large foundations.

• Bequests more or less follow stock market, but typically with a two-year lag because large estates take time to settle.

• Corporate giving is changing– or more accurately, shifting to other forms: products, services, volunteer linkages, co-branding, etc.