Charitable Giving in Los Angeles Declines Considerably as Big Dollars Go Elsewhere

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Small-change

June 3, 2016; Los Angeles Times

UCLA has published an excellent new study in The Generosity Gap: Donating less in Post-Recession Los Angeles County, which finds that not only has local giving in Los Angeles declined dramatically since before the Great Recession, but high dollar donations have dropped in particular, and there’s an unusual problem in terms of local vs. national and international giving. The result is a counter-cyclical decline in the median revenues of local nonprofits.

This report is detailed enough to act as a road map for changing that landscape—if turns out to be possible. Other localities would do well to look at it as a model.

The report was commissioned by the L.A. based California Community Foundation and was released at the L.A. Center for Nonprofit Management’s 501(c)onference last week. It combines IRS data with a survey of 1,200 residents conducted by the study’s authors, J. Shawn Landres and Shakari Byerly, who wrote it with support from faculty and staff at the UCLA Luskin School of Public Affairs’ Center for Neighborhood Knowledge.

The decline it documents is fairly significant: L.A. County’s 10 million residents declared $7.16 billion in charitable deductions in 2006, compared with $6.03 billion in 2013. The irony is that donations have gone down as need has gone up, especially for those groups most hurt by the recession—families in poverty, at-risk youth, the elderly and the homeless. Among the report’s major findings:

  • L.A. County residents are donating $1 billion less to charitable causes than they did in 2006, and the more affluent, with greater capacity to give, are giving at a lower proportion of their household income.
  • Median revenues for L.A. County-based nonprofits continue to decline dramatically.
  • All demographic groups—whites, Latinos, Asian Americans, African Americans, and LGBT donors—give at similar rates to most causes. However, the proportion of their giving that goes primarily to locally focused organizations differs by group.
  • “Ending homelessness” is listed as donors’ highest priority for charitable contributions, although only one-third of contributions to basic needs organizations go to locally focused nonprofits. Homelessness continues to be mentioned as the region’s top problem according to recent public opinion polls—not surprising, as L.A. is often considered the “homeless capital of America.”
  • Locally focused charities fare better with planned giving programs, especially among donors under 40.

But in these days when giving varies so widely, it is generally important to look first to the category of mega-gifts. Indeed, the report says, “According to the Indiana University Lilly Family School of Philanthropy’s ‘Million Dollar List,’ which tracks publicly announced contributions of $1 million or more, the number of mega-gifts to Los Angeles organizations shrunk to near-disappearance between 2006 and 2013.” And this decline is not the only problem: Whereas in most regions those gifts are given locally, only $8 billion of $18 billion was donated locally over the period of 2000–2013.

The report also shows which segments of the nonprofit sector were receiving the locally focused dollars. For example, the majority of contributions to religious congregations went to locally focused organizations, while only a small percentage of contributions to civic and social advocacy nonprofits were locally focused, with most going to national and international organizations.

The causes given for the decline in giving vary, although at the heart of it is the Great Recession and the region’s structural economic decline since the early 1990s, along with increasing poverty, immigration and straining public institutions and infrastructure. Antonia Hernandez, the CEO of the California Community Foundation discusses in her introduction where the community needs to go from here:

A lack of knowledge and tools on how best and where to give may be a key factor. According to a poll commissioned by the University of Southern California Dornsife College of Letters, Arts and Sciences, the Los Angeles Times and the California Community Foundation, 80 percent of Los Angeles County residents are willing to increase their community involvement, but 40 percent say they don’t know what they can do to help or if it will make a difference.

A copy of the full report is available here.—Larry Kaplan