DETAIL FROM “RISE OR FALL” BY BRIAN ROMEIJN/WWW.PRECIOUSDECAY.COM

This feature comes from the fall 2018 edition of the Nonprofit Quarterly. It was first published online on September 13, 2018. In it, Dr. Patrick Rooney first revealed that small and mid-size donations were falling even as mega-donations made up a greater proportion of overall giving. This had major implications for nonprofits. If you are interested in how this trend is playing out, please join us today at 1:00 p.m. as we discuss with Dr. Rooney the results of this year’s Giving USA report.

Research on giving in the United States has now produced definitive empirical evidence to show a decline in the participation and amounts donated by “small” and “medium” (actually, median) donors and an increasing reliance on “large” donors. That lead sentence should make every reader stop and envision the future of philanthropy in our democracy. The data presented below will demonstrate that there are two seemingly unrelated trends that are both affecting the nature of how America gives. The growth in total giving and total giving by households is to be chronicled and celebrated; however, while I do not share the antipathy expressed by some toward large gifts from wealthy and high-income donors, I am concerned about the causes and the effects of the loss of gifts from lower- and middle-income households. This makes our philanthropic sector less vibrant as well as less reflective of our overall society, thereby diminishing our civil discourse and civil society generally. But there is one policy proposal that would likely attenuate the decline of the small donor: reinstate the universal charitable deduction for all households, regardless of whether or not they itemize deductions. This would provide incentives to all to give and reinforce our philanthropic values in the tax code—for one and all, regardless of income level. This measure was a part of the federal income tax code from 1982 through 1986, so it is hardly uncharted territory—and it is well past time that the sector gets firmly behind it.1

Philanthropic Trends

We know from Giving USA 2018 that both total giving and household giving have grown to record levels.2 For example, as Table 1 shows, total giving in 2017 was $410 billion, which is almost triple the amount that total giving was forty years ago, even in inflation-adjusted dollars (i.e., $142.4 billion in 1977).

Source: Author’s calculations using data from Giving USA 2018 (expressed in billions of 2017 dollars)

Similarly, total household giving last year was $286.65 billion, which is 2.4 times now what it was forty years ago, after adjusting for inflation ($119.5 billion in 1977). While household giving has grown at an impressive rate, its growth has not nearly kept pace with the growth in total giving, which manifests itself most clearly in the decline of household giving as a share of total giving over the last forty years: 84 percent versus 70 percent. More conspicuously, household giving has grown an impressive 140 percent over the last forty years, but the other sources of giving (corporations, bequests, and foundations) collectively have grown 439 percent over the last forty years, which reflects an increasingly important role for the “large” donors.

However, it is important to note that this increase in total giving and in total household giving is occurring in spite of the decline in the percentage of households that have donated at all between 2000 (the first year for which we have these data) and 2014 (the most recent year for which we have these data). As Table 2 shows, the share of households donating at all dropped from approximately two-thirds in the early 2000s to just over half in 2014. It is likely that the drop following the Great Recession is linked to the remaining hardships. If one loses one’s job or consumes one’s lifetime’s savings during a period of economic distress, then philanthropic giving likely will not be viable. The graph also delineates the decline in the shares of the population that donate to religious charities and to all secular charities combined. It should be noted that both types of philanthropic giving follow the same pattern as overall giving, but the giving to religion drops more precipitously.

Source: Philanthropy Panel Study (2001-2015), calculated by Xiao (Jimmy) Han

These numbers are based on the Indiana University Lilly Family School of Philanthropy’s Phil