The heaviest philanthropy explained in 8 graphs
Since the publication of our first issue of golden gift in 2016, we drew attention to the risks posed to the autonomy of the nonprofit sector – not to mention our democracy – by the increasing concentration of wealth and philanthropic power in fewer and fewer hands.
Our charities are experiencing a transition from widespread support for a wide range of donors to an increasing reliance on a small number of very wealthy people, a trend we call “heaviest philanthropy”. As this happens, a greater proportion of charitable dollars are diverted to wealth storage vehicles such as private foundations and donor-advised funds, rather than going to charities. charities that meet immediate needs. And a small group of mega-philanthropists wield increasingly disproportionate influence over the priorities and missions of nonprofits. For many charities, the COVID-19 pandemic and its associated economic shock have only served to accelerate this change.
The growing inequality of giving poses significant risks to the practice of fundraising and the health of the independent nonprofit sector. But the general public also has a financial stake in this, since wealthy donors enjoy significant tax savings from their charitable donations – savings that are subsidized by the American taxpayer up to 74 cents for every dollar donated. We deserve to know that the tax breaks we take out give us an equivalent return, funding charities actively working for the greater good.
We must also never lose sight of the fact that even the greatest mega-philanthropy is no substitute for fair fiscal policy. Charitable dollars don’t build roads and power grids, protect the security of our food and homes, or provide us with guaranteed incomes and medical care when we retire. And if we want to have a strong and stable society, charitable giving cannot eliminate everyone’s responsibility to pay their fair share to support it.
Below are 8 paintings that tell the story of the most image-heavy philanthropy.
Fewer Americans donate to charity
The latest research from the Lilly School of Philanthropy Panel Study on Philanthropy found that the percentage of US households giving to charity fell below 50% for the first time since the study began. twenty years ago.
The PPS, part of the Income Dynamics Panel Study at the University of Michigan, surveys the same set of more than 9,000 households every two years to learn more about their giving behavior. According to the survey, in 2008, 65% of households surveyed made donations to charity. By 2018, just ten years later, that figure had dropped to 50%. Declines in donor participation occurred consistently when controlling for all socio-demographic characteristics.
The decline in donors is closely linked to growing economic insecurity
As we wrote in the 2020 edition of golden gift, giving by ordinary Americans has been declining for 30 years, reflecting escalating wealth and income inequality in our society. As economic times get tougher for ordinary Americans, they can’t afford to give so much of their pocket money to charity. The Philanthropy Panel Study researchers acknowledged this in their latest analysis, writing that much of the decline in donation turnout they found could be explained by “a decline in income, wealth, and home values”.
In one of the only quantitative examinations of this relationship, Target Analytics plotted the number of donors in its 2015 Index of Charitable Direct Marketing Performance against the labor force participation rate in the United States, and found that both had a degree of correlation extremely close to +0.80. “While we don’t have enough data to say this is causal,” Target Analytics concluded, “these trends make intuitive sense; when people are not employed, they are likely to have less disposable income and will not be as willing to give to charity.
In our own analysis, we found that the decline in Target Analytics donors was also closely tied to another key indicator of economic security, homeownership; both had a near-perfect degree of correlation of 0.99 from 2005 to 2015. This is further evidence that adverse economic conditions undermine low- and middle-income donors’ sense of financial security, and therefore their ability and willingness to donate to charity. .