Giving USA 2012 Released, Donations Up Slightly

Total philanthropic giving in 2011 was $298.42 billion, up from a revised estimate of $286.91 billion for 2010.

That’s the finding presented in Giving USA 2012, the report just released by The Giving USA Foundation and its research partner, the Indiana University Center on Philanthropy.

While the uptick of 4.0 percent in giving in current dollars is positive news, it represents an increase of just 0.9 percent in inflation-adjusted dollars. At this rate of growth, it will take more than a decade for giving to return to its pre-recession 2007 level, according to Patrick M. Rooney, Ph.D., Executive Director of the Center on Philanthropy. Rooney was in Philadelphia to present the major findings of the report. Rooney stated:

The estimates for giving in 2011 are encouraging, but they demonstrate that charities still face ongoing challenges. In the past two years, charitable giving has experienced its second slowest recovery following any recession since 1971.”

Giving in 2012 and 2013 is likely to experience the same slow growth as we saw in 2011. On the same day that Rooney was in Philadelphia, the U.S. Federal Reserve issued its multi-year forecast of change in Gross Domestic Product. The Fed projects GDP will continue to grow at a modest rate. For 2012, the projected GDP growth rate is 2.2 percent. For 2013, the Fed projects GDP growth of 2.5 percent. This is important news for all Americans, particularly those in the nonprofit sector.

In 2011, giving was 2 percent of GDP. Since giving has been tracked, philanthropy has always been about 2 percent of GDP. If this correlation rate continues, the nonprofit sector can expect continued slow growth in philanthropy in 2012 and 2013 as GDP is projected to grow only modestly.

Once again, the majority of philanthropic dollars came from Individuals, who accounted for 73 percent of total giving, the same percentage as the prior year. If Bequest and Family Foundation giving is included, the percentage would be 88 percent.

Individual giving as a percentage of disposable personal income remained at 1.9 percent in 2011, the same as in 2009 and 2010; this is far below the high of 2.4 percent achieved in 2005.

The report estimates estate giving at $24.41 billion in 2011, a 12.2 percent increase over 2010 (8.8 percent increase in inflation-adjusted dollars). Bequest giving represented 8 percent of total giving. Two-thirds of Americans with a will have included a charitable bequest provision, according to Robert I. Evans, Founder and Managing Director of EHL Consulting Group, who co-presented with Rooney. Fluctuations in bequest giving in recent years are primarily due to the major changes in real estate and stock portfolio values. Rooney also observed that the 300 wealthiest deceased individuals determine whether bequest giving goes up or down.

Survey Sounds Alarm Bell for Nonprofit Sector

Over 91 percent of businesses believe they are equally or better equipped than nonprofit organizations to deliver social change, according to a recent survey reported on by Chloe Stothart of Third Sector Online.

That means just nine percent of respondents thought it was somewhat more or much more effective for businesses to donate to charity to achieve social change!

What makes these statistics even more shocking is that all of the 142 survey respondents were businesses with a Corporate Social Responsibility budget. Imagine what the statistics might look like if a more representative sample of the business community were surveyed.

While the survey was conducted in the United Kingdom by YouGovStone for the Social Investment Consultancy, it should strike fear into the hearts of all nonprofit organizations worldwide.

In the United States, corporate giving in 2010 totaled $15.29 billion, five percent of all giving, according to Giving USA 2011. While a comparatively small slice of the overall giving pie, corporate giving is nevertheless significant. And, for some nonprofit organizations, corporate giving plays an even greater role.

Here’s why the nonprofit sector should be alarmed by the survey findings:

 

• There’s no such thing as “corporate philanthropy.” For a detailed explanation of what I mean by this, read my blog post on the subject. In short, corporations exist to enhance shareholder value, not to engage in purely philanthropic activities. That doesn’t mean businesses don’t give away money. It just means that when a business does give money, it is looking to enhance the company’s value for its shareholders. So, when businesses talk about engaging in efforts for “social change,” they are talking about efforts that will benefit the business and not necessarily society in general. Also, the business community may be overestimating its ability to facilitate social change while underestimating the ability of the charity sector.

 

• The survey results reveal an underlying mistrust of the nonprofit sector. The business community seems to have the attitude, “If you want something done right, do it yourself.” As long as this lack of confidence in the nonprofit sector exists, we can expect corporate giving will not realize its full potential. All donors, whether corporate, individual or foundation, want to know that their funds will be wisely and efficiently used.

 

Jake Hayman, chief executive of the Social Investment Consultancy, believes the survey is reflective of the attitudes held by the broader corporate community. He said that businesses were becoming far more interested in doing good through their own efforts rather than by donating to charity. Hayman says,

There’s been an evolution from wanting to sponsor or outsource the good you do to wanting to run it yourself based on your strengths”

There’s No Such Thing as Corporate Philanthropy!

Corporate Philanthropy does not, or at least should not exist.

While corporations may give to charitable causes, it is not or should not be out of an altruistic sense of corporate social responsibility. Instead, done properly, corporate giving is simply a marketing or research-and-development investment. Let me explain.

Several years ago, I moderated a panel of corporate giving officers for the Association of Fundraising Professionals Greater Philadelphia Chapter. One of the panelists was from a bank, at the time one of the nation’s largest credit card issuers. She told the group that there is no such thing as corporate philanthropy. I saw the mouths of about 100 people drop open. They were either surprised by this news or were shocked that a corporate giving officer would actually admit this. The giving officer from the bank went on to explain that corporations exist for only one reason: to enhance shareholder value. The bank contributed money only where a positive return on investment could somehow be expected.

Many people expect for-profit businesses to act with “Corporate Social Responsibility.” CSR is a term that came into use in the late 1960s. While there are many definitions for CSR, Wikipedia defines it as “a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms.” Today, many nonprofit professionals seem to think that one component of CSR should be corporate philanthropy; they think that corporations should “give back.” News media have even recently done reports on the role of corporate philanthropy.

However, that’s not why corporations exist. Again, they exist to make money for their shareholders, not to perform selfless acts of charity. As for “giving back,” corporations do this every time they pay taxes, provide jobs, pay employees well enough so they can also pay taxes and donate money. As for corporate giving, it needs to accomplish something not just for the charity, but also the corporation.

Marc Gunther, a senior writer for Fortune Magazine, wrote in 2008, “I’m not a big fan of corporate philanthropy. Too often, it’s a feel-good exercise, generating little value for a company’s shareholders. At its worst, it allows CEOs to use other people’s money to glorify themselves.”