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An Update on Charitable Giving

Giving USA Foundation recently released its annual report, which provides a snapshot of charitable giving in 2019 and offers insights into American philanthropy. As in previous years, the data provide a mix of good and bad news regarding the state of American civil society, which is a longstanding interest of the Social Capital Project.

The good news is that charitable giving last year rose overall, making 2019 giving the second highest to date in real terms (after 2017). Individuals, corporations, foundations, and bequests gave roughly $449 billion to charity in 2019, an increase from 2018 of 2.4 percent after adjusting for inflation.

While rising levels of donations would always be something to celebrate, they are even more so now, given widespread concerns among nonprofits in 2018 that the Tax Cuts and Jobs Act would result in a huge drop in giving. Many predicted that the Act’s changes to the standard deduction, and the resulting decline in people taking the charitable deduction, would cause donations to take a hit, but the data appear not to have vindicated those concerns. America has long been one of the most generous countries in the world, and a rise in giving suggests that our generosity will continue.

However, a closer look at the data reveals some disconcerting news, continuing the troubling trends discussed in the Project’s paper on charitable giving last year. First, foundations and corporations’ share of total giving continued to grow, while individual giving declined in relative importance. As Amir Pasic of the Lilly Family School of Philanthropy notes, “[I]n recent years we’ve seen a consistent and growing trend in giving by foundations comprising a larger share of total giving than it did 15 years ago.”

Although that trend temporarily stalled in 2019, with inflation-adjusted giving by foundations staying nearly constant, foundation giving still represented a record 17 percent of all giving for the second year in a row. Corporate giving, meanwhile, increased by an inflation-adjusted 11.4 percent, a far greater percent increase than any other category.

While foundations and corporations can support all kinds of important work—perhaps most notably at present, scientific research on the coronavirus—their donations are unlikely to strengthen communal ties in the way that individual donations can. Giving by large organizations, spread across the country rather than rooted in a particular community, does not foster a sense of belonging and shared commitment to a local cause in the same way that neighbors supporting a cherished institution can. The social capital created by neighbors supporting their local soup kitchen, for example, appears not to scale to larger organizations’ giving.

A second finding in the report is that giving to religious causes continued its long-term decline in relative importance. In 1978, religious giving accounted for nearly half of all charitable giving; in 2019, it was just over a quarter. Adjusted for inflation, giving to religion just barely increased last year, while donations to almost every other sector rose considerably. For example, giving to education; public-society benefit organizations; arts, culture, and humanities; and environment and animal organizations all rose by roughly 10 percent in real terms. Only one other sector, international affairs, saw less growth than religion. As other sectors receive growing contributions, religious contributions stall, amounting to a decline in its share of total giving.

Figure 1. Total Giving and Religious Giving over Time

Source: Giving USA. Constant 2019 dollars (inflation calculated using CPI-U).


Figure 2. Religious Giving as a Share of Total Giving

Source: Giving USA.


As the Social Capital Project has discussed previously, religion has long been an essential source of community in America. Although other causes and charities provide valuable services, even a cursory survey of American history suggests that few institutions can promote a sense of belonging and community attachment like religion can. A long-term decline in the relative importance of religious giving complements other evidence that, as Professor Ronald Inglehart recently put it, America is “giving up on God.” For example, the Social Capital Project found that from 1972 to 2018, the share of adults who reported attending religious services at least monthly fell from 57 to 42 percent, and the share of adults who reported never attending religious services tripled. A continuing decline in religion’s importance is likely to contribute to a further weakening of America’s social fabric.

Of course, charitable giving faces especially acute challenges at the moment, as the recession simultaneously increases many Americans’ reliance on nonprofits providing basic needs and reduces individuals’ ability to donate. Churches and other nonprofits have been struggling for months and are likely to continue to do so in the near future. With core institutions of civil society struggling to endure, it is even more important for policymakers and citizens to consider how to rebuild civil society’s institutions and remove obstacles to their flourishing.

Robert Bellafiore
Policy Advisor

 

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