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Charitable Giving a Thing of the Past?

By Sarah Reichardt     Jul 23, 2009 in Business
When the economy tanks, luxury goods and services often bear the biggest brunt of frugal consumers. Another casualty of hard economic times, though sometimes overlooked, is charitable giving.
In a press release issued June 9 by the GivingUSA Foundation, analysts reported that charitable giving in the U.S. fell to $307.65 billion in 2008. This represents a 5.7 percent decrease in spending compared to the $314 billion donated in 2007.
The shrinking donations, a five-decade record loss, resonated throughout all forms of charity, with two-thirds of organizations taking a hit.
Educational institutions, food banks, arts foundations and other organizations were victims, according to GivingUSA's 2008 report. The only subsectors with seeming immunity were those related to Religion, Public Benefit and International Affairs.
Foundations saw the greatest hit, with giving in 2008 down an estimated 19.2 percent.
The Heritage Foundation and other nonprofit institutions operated at significant losses, while the Bill & Melinda Gates Foundation witnessed a large decrease in giving.
Education, Human Services, Health and Cultural giving also fell 5.5 percent,12.7 percent, 6.5 percent and 6.4 percent respectively in 2008.
Del Martin, chairwoman of GivingUSA, commented that what was most surprising was the decline in gifts to organizations working to meet basic needs, like food banks and homeless shelters, which are seeing a big increase in demand for their services.
On a positive note, Religious contributions saw a 5.5 increase while Public Benefit and International giving increased by 5.4 percent and 0.6 percent respectively.
Although individual giving and charitable bequests fell by more than 2.7 percent on the whole, it was corporate giving that posted the greatest decline.
Corporations, which generally donate in proportion to corporate earnings, restricted giving by more than 4.5 percent in line with turmoil in the financials sector.
Ms. Martin noted that, “In the first half of the year, it was more or less business as usual for our clients, which is to say pretty good; then, as we got into the last quarter, we saw corporations begin rethinking their giving in greatly different ways.”
Despite the disheartening report, it should be noted that charitable giving for 2008, though less than the year prior, still surpassed giving for all previous years on record.
It remains to be seen how the sector will perform in the current year, given continued economic distress. “This year is not shaping up to be any better,” said Cyndi Court, executive vice president for marketing and development for the Boys & Girls Clubs of America.
Main factors influencing giving continue to be the housing sector, bank recovery and stock market performance.
With improved numbers and signals of crises receding, charitable giving will hopefully follow suit, placing the sector firmly back on its historically solid footing.
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