US Giving Down 3.6% in 2009; 2nd Year of a Drop

For the second year in a row charitable giving in the USA has declined.

That matters could have been worse - and indeed that many of us in the field expected far worse - may be of some consolation. Furthermore though there is nothing but the anecdotal to go by 2010 seems to be headed north though stock market conniptions remain a continuing worry - especially in New York City and immediate environs - that account for an estimated 25-30 % of the philanthropic "handle."

Giving USA Foundation(TM) and our research partner, the Center on Philanthropy at Indiana University, said that estimated total charitable contributions from American individuals, corporations and foundations fell to $303.75 billion in 2009, down from a revised total of $315.08 billion for 2008. The 2009 drop represents a fall of 3.6 percent in current dollars.

Giving USA has reported U.S. charitable contributions since 1956. The inflation-adjusted drop of 3.2 percent for 2009 is not as severe as the decline found in 1974, when inflation-adjusted giving fell by 5.5 percent. The year 1974 was also a very difficult year of recession.

The national results from Giving USA reflect all charitable giving to all charitable organizations in the United States. The national estimates do not show changes that any one organization or any one geographical region or city might have observed; they calculate total giving by more than 75 million households across the United States, more than 1 million companies, an estimated 120,000 estates, and about 77,000 foundations. The gifts go to more than1.2 million IRS-registered charities and an estimated additional 350,000 American religious congregations.

A free executive summary of the 2010 report is available at Givingusa2010.org. If you would like the full version in PDF post a comment.

SHOULD NONPROFITS BE TAXED?

The constricted budgets of state and local governments have brought an old idea back to the table: taxing nonprofits' revenues (some already pay property and sales taxes). What about it?

Leaving aside the legislative changes that would be required to amend the IRS code what effect would taxing nonprofits have? These are some of the counter arguments I've heard over the years:

• Services might have to be curtailed.
• Smaller organizations would suffer disproportionately.
• Taxation might discourage giving.
• The theory of "contract failure" holds that nonprofits arise to provide services the government would not.

Some arguments the other way are that there are too many 501-c-3s duplicating programs and services and taxation might shrink the field; another view is that a great many charities - especially in health care and the arts - despite being established as charities don't really provide charitable services. Hospitals especially are often criticized for giving far less unreimbursed free care than the theoretical worth of their tax exemptions.

I have long thought about the practicality and desirability of a tiered system of deductions for charitable contributions - basically the larger the organization the lower the deduction - a sliding scale. This might be effected through a tax credit rather than a deduction. I don't really know - but it does suggest a parallel: perhaps it is time to look anew at both deductions and exemptions. There are over 1.6 million charities - most of them small but nonetheless drive about 10% of the economy in employment.

The sector is highly fragmented; and I don't really trust all the data. For example: Giving USA under-counts corporate giving because it cannot collect data on cause related marketing the fastest area of company "giving:" is CRM really charity? And because smaller estates don't have to file returns there are undetected bequests. Maybe more on this June 9th when GUSA's data for 2009 giving is released publicly.

Also much has been made of the multi-trillion dollar charitable wealth transfer - the Schervish/Havens model. here I am a real agnostic and hope to engineer a debate on this in December when Giving Institute meets in New York. I read not long ago that $43 trillion of wealth evaporated in the recession. Where then is the "transfer" coming from?

Despite the hullabaloo taxation of nonprofits is probably a non-starter as is my idea for tiered charitable deductions. But one never knows. Everyone once thought the world was flat. Now only a few do. They're in the other party.