Individuals' charitable giving down in '09, but upswing seen for future
By Felix Rivera (Catholic News Service)
WASHINGTON (CNS) -- Charitable giving dropped about 5 percent in 2009, representing a total decrease of $11.2 billion, according to a new study from the Boston College Center on Wealth and Philanthropy.
The two researchers heading up the study, Paul Schervish, 64, and John J. Havens, 69, gathered the data through a new system called the Individual Giving Model, or IGM, developed by the center.
The model, first tested in 2009, measures how the most recent level of economic resources affects the average level of household giving. Some of these resources include price and market indices, income, value of assets and net worth.
Still, Schervish and Havens have a positive outlook for giving this year, as the first two quarters have shown an increase in philanthropy.
"We are projecting forward: The economy is coming back, the value of housing is coming back, and we might see the stock market soar back to an all-time high," Havens said in a telephone interview with Catholic News Service.
The researchers' report on 2009 giving was published in the July/August issue of the magazine Advancing Philanthropy.
The Individual Giving Model allows for an estimate three months after the end of every quarter of the calendar year: March, June, September and December.
In February, the researchers reported that in its first trial, the model predicted giving in 2009 would be down between 4.8 percent and 5.7 percent. Their new report refined the data to show the nearly 5 percent decline for last year.
"We used all of the data to change the evaluation of people's net worth, which changes the amount that people will give," said Havens, senior research associate at the center. Havens used statistics from federal agencies such as the Federal Reserve Board and Bureau of Labor to come up with his own estimate.
The Internal Revenue Service, which Havens believes is the best source for numbers on charitable giving, can take up to two years to come up with statistics.
"Everything runs a little bit behind the data," Havens said.
After compiling all of the data for the calendar year, he uses the model to combine all four quarters to get an annual number.
"The model looks at income and network financial resources," Havens said. "People have to have money to give it away."
In fact, nearly half of charitable giving in the United States comes from households with a net worth of $1 million or more. "It all depends on how financially secure you feel," Havens said. "People like certainty." Even still, Havens noted that many households with assets worth $5 million to $10 million don't give away money.
Havens, who has worked with the center since the 1980s, pointed to several key factors that individuals make when deciding to give money to charities. "Assets" was on the top of his list.
"As assets go up, people spend more and vice versa," Havens said, calling it the "wealth effect."
Other components Havens said have an effect on charitable giving are income and stock market changes. The housing crash also has played a key role, as individuals with $100,000 or less in assets lost 82 percent of their net worth and those who were wealthy -- with $1 million or more -- lost 20 percent of their net worth, Havens said.
The study did not look at overall population growth quarter by quarter as its effect on giving is negligible, Havens said. He said he hopes that in the near future, he will be able to use other demographic data that his model provides, such as race, sex, age and other characteristics. The model also does not break down giving by religion.
Looking overseas, Havens is wary of a possible economic bust in Europe. "Markets are going up and down all the time over there," Havens said. "We may have unknown assets tied with Europe or Asia that could cause a problem for the United States if they go into a depression."
For at least one agency, Havens and Schervish's study illustrates what it has seen happen with donations.
In fiscal year 2009, Catholic Relief Services, the U.S. bishops' overseas relief and development agency, noticed a decrease in giving, from $170 million to $156 million.
"Even though the amount of money was lower, the number of gifts increased, showing us that people still cared," said Mark Melia, deputy vice president for charitable giving. The annual average gift per donor is about $100.
Because of the decrease, CRS had to make cuts all across the board. "Last year was really challenging for CRS and nonprofits all over the country," Melia said. "It would have been much worse if not for our donors, so we are counting our blessings."
This year a tremendous outpouring of donations has come in response to the needs of victims of Haiti's earthquake Jan. 12. By the end of May, CRS had received $140.8 million, $76.7 million of which came from dioceses across the country, Melia said. "We were able to respond immediately to Haiti and are very grateful for the donors."
He believes that Haiti giving is almost over and things will slow down again, as non-Haiti fundraising barely increased. "When people are able to give more, they will," he added.
Havens and Schervish did not focus on religious charitable giving in their new study, but Havens said, "In most Catholic areas, giving is down."
He noted that much of the charitable giving throughout the country goes to religious entities, such as the Catholic Church, although "giving to Catholic schools, hospitals and charities is technically not giving" to the whole church, Havens said.
As to whether there is a distinct difference between secular giving and religious giving, Havens has no answer. "Religious giving is a monster of its own," Havens said. "Not much is known about it."
He and Schervish have done research on religious giving. In "The Spiritual Secret of Wealth," a 2002 study published in "New Directions on Philanthropic Fundraising," they analyze three main components of religious giving by wealthy individuals: the spiritual secret of wealth, personal interest versus others' needs, and the awakening of empathy for those less fortunate.
Copyright (c) 2010 Catholic News Service/U.S. Conference of Catholic Bishops