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

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).

Source: Giving USA Foundation

For more information: http://givingusa.org/