Despite feeling the pain of the economic slowdown in 2008, Americans continued to give generously to charities, though few as generously as Warren Buffett who has promised to donate 99% of his riches.
Most of Buffett's charitable giving has been earmarked to the Bill and Melinda Gates Foundation to which he gives an annual gift. This year’s donation soared 28%, to $1.6 billion, up from $1.25 billion last year, as Berkshire Hathaway shares shot up 35% over the last year. It is Buffett's largest donation since the 2008 financial crisis struck.
Yet according to a study by Indiana University’s Center on Philanthropy and GivingUSA Foundation released last month, Americans of all stripes continued to give albeit at lower numbers. The financial crisis cut into charitable giving in the U.S. by 3.6%, lowering total giving dollars to $303.75 billion last year - the first decline in giving since 1987.
Eileen Heisman, CEO of National Philanthropic Trust, believes disaster philanthropy, which encourages Americans to text their donations to causes such as Haiti’s earthquake relief effort, helped spur charitable dollars. “People certainly gave to 9-11 and that was well before you could text,” Heisman said in a recent telephone interview. “But the definition of instantaneous has changed– instantaneously used to be writing a check, then it was picking up the phone to donate via online banking, now it’s texting. It’s really accelerated how much people can respond. The act of taking a check book out is ancient history. Now you don’t even have to turn on your computer.”
The real challenge for charities, Heisman said, is that most causes aren’t in your face like a disaster. Text campaigns, she explained, aren’t really feasible for hospitals or universities or more traditional forms of annual giving. “For disaster giving texting is a quick viral marketing tool that allows lots of gifts in very small amounts, but it’s never going to be the backbone of giving.”
Nonetheless, individual giving remained flat in inflation-adjusted dollars, according to the study. “Even in a time of enormous economic upheaval, such as we saw in 2009, Americans continued to be generous to charitable causes,” said Giving USA Foundation Chair Edith H. Falk, in a press release. “While overall giving declined, many donors—including individuals and foundations—made special efforts in 2009 to respond to greater humanitarian needs.”
The report revealed that the types of charitable recipients that saw declines in giving tended to be those that are more likely to receive gifts through capital campaigns, contributions to endowments, and donations of art and property. These include education, grantmaking foundations, arts and culture organizations, and public-society benefit organizations, which include donor advised funds such as Fidelity Charitable Gift Fund or Schwab Charitable Fund, and Jewish endowments.
Meanwhile, giving to human services increased 2.3% to $27.08 billion, giving for health increased 3.8% to $22.46 billion, and giving to international aid (which includes relief, development and public policy activities) shot up an estimated 6.2% reaching $8.89 billion, boosted by giving to Haiti’s earthquake relief efforts.
Heisman is impressed with the generosity of Americans, even during these hard times. “People are willing to give over $300 billion –or about 2% of the GDP- despite the fact that economy had a huge downturn,” Heisman said. “While some assets and foundations were down 44%, you still have private American philanthropy keeping at a generous pace. People were out of jobs and needing services and Americans rose to the occasion. Americans are not spending as much in the consumer marketplace, but charitable giving is alive and well.”