U.S. Charitable Giving Reaches $295.02 Billion in 2006

U.S. Charitable Giving Reaches $295.02 Billion in 2006

News story posted in Demographics on 26 June 2007| comments
audience: National Publication | last updated: 18 May 2011


U.S. charitable giving reached a new record in 2006, an estimated $295.02 billion, according to Giving USA 2007, the yearbook of philanthropy published by Giving USA Foundation (TM) and researched and written by the Center on Philanthropy at Indiana University.
Full Text:

Third straight year of growth fueled in part by 'mega-gifts,' foundations

GLENVIEW, Ill., June 25 /PRNewswire-USNewswire/ -- U.S. charitable giving reached a new record in 2006, an estimated $295.02 billion, according to Giving USA 2007, the yearbook of philanthropy published by Giving USA Foundation (TM) and researched and written by the Center on Philanthropy at Indiana University.

Donors gave an estimated $11.97 billion more than in 2005, a 4.2 percent increase (1.0 percent adjusted for inflation) over a revised estimate for 2005 of $283.05 billion. The 2005 estimate includes nearly $7.4 billion in extraordinary disaster relief giving. If disaster gifts are
excluded from the 2005 total, giving in 2006 rose 6.6 percent (3.2 percent after adjusting for inflation).

"It is impressive that giving continued to rise in 2006, especially following the unprecedented levels of disaster giving in 2005," said Richard T. Jolly, chair of Giving USA Foundation. "America's 1.4 million charitable and religious organizations provide a huge range of services that improve lives, from meeting immediate needs to funding medical research or creating endowments to assure the future of arts or educational institutions."

The record-setting gift amount includes $1.9 billion that Warren Buffett paid in 2006 as the first installment on his 20-year pledge of more than $30 billion to four foundations and also includes donations from hundreds of millions of Americans, as well as gifts from charitable bequests, foundations and corporations.

"While headlines focus on 'mega-gifts,' they represented 1.3 percent of the total, "said George C. Ruotolo Jr., CFRE, chair of Giving Institute: Leading Consultants to Non-Profits, parent organization of the Foundation. "About 65 percent of households with incomes lower than $100,000 give to charity. That is higher than the percentage who vote or read a Sunday newspaper.

Based on publicity surrounding the "mega-gifts" of 2006, some commentators predicted a rate of growth in giving akin to the double-digit increases seen in the late 1990s. Research shows that giving in 2006 was consistent with the historical relationships between wealth increases and giving.

"The stock market rose more than 10 percent adjusted for inflation in 2006," said Eugene R. Tempel, CFRE, executive director of the Center. "Going back to 1990, giving rose, on average, about one-third as fast as the stock market did, so 2006 is right on target. Giving rose 3.2 percent, adjusted for inflation, when the disaster gifts of 2005 are deleted," he added.

Giving by individuals is always the largest single source of donations, according to the report. It rose by 4.4 percent. (1.2 percent adjusted for inflation) to an estimated $222.89 billion and accounts for 75.6 percent of all estimated giving in 2006.

Charitable bequests are estimated in 2006 to be $22.91 billion, a 2.1 percent drop (-5.1 percent adjusted for inflation) from the revised value for 2005, which is based on IRS records and is now $23.40 billion. New IRS information about 2005 shows a very large change in giving by the wealthiest estates. Charitable bequests in 2006 are 7.8 percent of the estimated total.

Foundation grantmaking, as recorded by the Foundation Center and reported in Giving USA, rose 12.6 percent (9.1 percent adjusted for inflation) to $36.5 billion. The increase was because of growth in the number of foundations and because the stock market rose very rapidly in 2006. Foundations make grants based in part on the value of their assets, and when asset values rise quickly, grantmaking increases. Foundation giving accounts for 12.4 percent of total estimated charitable giving in 2006.

Donations by corporations and corporate foundations are estimated to be $12.72 billion in 2006. This is a decline of 7.6 percent (-10.5 percent adjusted for inflation). The decline reflects the extraordinary gifts in 2005 for disaster relief as well as a slow-down in the rate of growth for non- disaster-related corporate giving. Without the 2005 disaster relief gifts included, corporate giving is estimated to have increased 1.5 percent in 2006 (a drop of 1.7 percent when adjusted for inflation).

2006 estimates of giving by type of recipient

Charitable gifts benefit at least nine different types of charities, with religious congregations receiving an estimated 32.8 percent of the total. In 2006, the highest growth rate was in arts, culture and humanities organizations, which saw a change of 9.9 percent. This is the largest change in this subsector since 2000. Arts, culture, and humanities giving reached an estimated $12.51 billion in 2006. The new estimate is based on revised historical data from IRS Forms 990.

Giving to education rose an estimated 9.8 percent, to $40.98 billion, based on the Giving USA survey and data collected by the Council for Aid to Education. Gifts to education are 13.9 percent of total estimated giving in 2006.

Gifts to foundations showed the next-highest rate of growth, increasing an estimated 7.4 percent. This estimate is based on information from the Foundation Center about giving to foundations in 2005. For 2006, the Foundation Center and Giving USA estimate contributions made to foundations of $29.50 billion. About $3.5 billion of that amount is estimated fair-market value of medical supplies and medicines donated to a dozen operating foundations created by pharmaceutical firms and medical products manufacturers. Gifts to foundations are an estimated 10.0 percent of total estimated giving for 2006.

Two subsectors saw a decline in the amount received in 2006, in large part because the donations to those categories in 2005 included billions of dollars for disaster relief. Giving to human services dropped an estimated 9.2 percent (-12.0 percent adjusted for inflation), to $29.56 billion. Giving to organizations in the international affairs subsector fell an estimated 9.2 percent (-12.0 percent adjusted for inflation) in 2006, to $11.34 billion. In both cases, the 2006 estimate is based on historical data from IRS Forms 990.

Historical revision to estimates of giving by type of recipient

As announced in December 2006, Giving USA 2007 contains a revised historical series for giving by subsector for six of nine subsectors it reports on. For the first time in history, aggregate data from IRS Forms 990 filed by charities that raise funds are available to show the historical trends in gifts by subsector. These data cover 1989 through 2004 and were provided to the Foundation by the National Center for Charitable Statistics at the Urban Institute. Giving USA also conducted its annual survey of nonprofit organizations to estimate changes in giving in the most recent year.

Giving to religion and foundations are not changed by the NCCS data as those organizations are tracked in other ways. Giving to education changed very little, as Giving USA annually revises giving to education to incorporate survey findings from CAE.

It should also be noted that new 2004 giving data released by the IRS in late 2006 meant changes to the estimates for 2004 and 2005. The IRS report for 2004 exceeded Giving USA's estimate for individual giving; nearly all of the difference was in giving by households with incomes higher than $1 million. These very high wealth donors gave far more than had been predicted by the historical relationship between income and contributions. Giving USA revised its procedure for the estimates in 2006 to incorporate amounts in "mega-gifts" that were reported as paid to better estimate contributions from the wealthiest households.

Summary of Giving USA methods

Giving USA's annual estimates are based on original surveys of organizations and econometric studies using tax data, government estimates for economic indicators, and information from other research institutions. Sources of data used in the estimates include the Internal Revenue Service, U.S. Department of the Treasury, Bureau of Economic Analysis, Foundation Center, Independent Sector, Council for Aid to Education, National Center for Charitable Statistics at the Urban Institute and National Council of Churches of Christ.

Giving USA estimates the percentage rate of change in giving to subsectors (health, arts, education, religion, etc.). Except for giving to religion and giving to foundations, these estimates are developed by the Center on Philanthropy at Indiana University based on a survey conducted by the Center for Survey Research at Indiana University. Rates of change for 2006 are based on responses from 784 organizations of 4,765 that received surveys (16.5 percent useable response rate).

With disaster giving excluded, Giving USA found total growth of 5.2 percent when estimating the dollar amount of gifts received at organizations When estimating giving by adding together the results of the four sources of contributions, and excluding disaster giving, Giving USA found a growth in giving of 6.6 percent. The estimates for the sources of giving are developed separately from the estimate of the receipts by type of recipient. The fact that the two entirely different methods come within a few percentages point is one measure used by the Giving USA Advisory Council on Methodology to evaluate the results prior to their release.

A Note about Inflation Adjustments

Inflation-adjusted rates of change are based on estimates calculated using a Bureau of Labor Statistics inflation converter, which rounds to two decimal points. When comparing the inflation-adjusted rates of change to rates of change in current dollars, the difference between the two is not a constant 3.1 percentage points (the rate of inflation used in the BLS converter for 2006). This is a by-product of the rounding and is not due to the use of a different measure of inflation or an error in calculation.

The complete Giving USA 2007 report, with data covering giving in 2006, will be available in late June 2007. Giving USA Foundation also publishes a quarterly newsletter, Giving USA Spotlight. Both may be ordered by calling 847/375-4709 or by downloading an order form from givingusa.org. Giving USA 2007 (with data for 2006) is $75. Giving USA Presentation on CD is $135. Giving USA book and subscription to Spotlight is $130. Giving USA book, subscription to the Spotlight, and Presentation on CD is $210. Single issues of Giving USA Spotlight are $45. Costs do not include shipping and handling. All orders must be prepaid.
Contact: Sharon Bond of Giving USA Foundation, +1-847-375-4836, sbond@connect2amc.com.

SOURCE Giving USA Foundation

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