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Wednesday, January 24, 2018

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Briefing on the economy and charitable giving The Center on Philanthropy at Indiana University
Press Release

December, 2008


Changes in giving are linked to changes in the overall economy. During good economic times, iving tends to grow robustly. However, when the economy grows at a moderate or slow rate, philanthropy continues, although at a slower rate of growth. In general, during economic downturns, giving tends to decline, after adjusting for inflation.

Based on several indicators, the U.S. economy in 2008 is growing slowly. In fact, during the third quarter of 2008, economic output contracted at an annual rate of 0.3 percent (Bureau of Economics Analysis, 2008). Certain segments of the economy, particularly those associated with giving such as stock market values and corporate profits, have declined to levels last seen in 2002 (Standard & Poor’s 500 Index) or 2005 (corporate profits). Indicators for a recession are, at this time, mixed.

Giving USA Foundation’s
Spotlight newsletter for Fall 2008 analyzed trends over the last 40 years. It shows that giving fell, adjusted for inflation, an average of 1 percent in recession years. In years with 8 months or more of recession, giving declined at an average rate of 2.7 percent per year (adjusted for inflation).

Most households continue to give during times of financial insecurity, although some give less compared to periods of economic prosperity and some donors become non-donors, especially those earning less than $50,000 per year. The Center on Philanthropy Panel Study for example, found that average household giving in 2002 declined by 6.3 percent, after adjusting for inflation, compared with average giving in 2000. Total giving from households does not drop as fast as average giving per donor household, because there are more households, and a higher percentage of households gave in recent years than did in 2000.

Some foundations have reported that they intend to maintain their giving in 2008. This is consistent with what they did in 2002. The Foundation Center found an inflation-adjusted drop in grantmaking of 4.4 percent from 2001 through 2003, during a period of recession and slow economic recovery which saw gradual increases in foundation assets as values on the stock market slowly rose and as more donors funded foundations.

Recent polls of donors indicate that some donors intend to continue giving, and some intend to give even more than usual. However, many charities are witnessing a slowdown in donations received in 2008 and are concerned for 2009.

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