“Five years in, recovery still underwhelms compared with previous ones.” So says the headline for a recently released Pew Research Center survey. Tracking a host of key economic indicators – GDP, personal income, and the job growth and employment ratio – the survey found that “the current recovery is among the weakest on record, particularly given its duration.”
Considering that only 6 percent of Americans in April believed the economy is “recovering strongly,” and that only 6 percent of Americans would describe their financial shape as “excellent,” there is great reason to be concerned about what this “economic pessimism” portends for those in the nonprofit and philanthropic sectors. Conventional wisdom would suppose that in light of economic downturn, nonprofits and foundations would be operating at a loss.
However, despite the poor state of the U.S. economy, a pair of reports synopsized by Forbes this past week has discovered quite opposite trends.
The first report, “Giving USA 2014: The Annual Report on Philanthropy for the Year 2013,” by the Giving USA Foundation, was summarized by Tom Watson. The big trends? Total charitable giving rose 4.4 percent between 2012 and 2013 to $335.17 billion in contributions. Additionally, “The single largest contributor to the increase in total charitable giving in 2013, over 2012, was an increase of $9.69 billion in giving by individuals.” Looking at the historical figures, total giving has steadily increased (in both current dollars and inflation-adjusted dollars) for the past four years.
The second report, focusing on the “98 percenter foundations” (that is, the 86,000 philanthropic foundations with assets less than $50 million), found that these “smaller foundations [had] a good year.” The analysis – the Foundation Source’s 2014 edition of its Annual Report on Private Foundations summarized by Kasia Moreno – discovered that small foundation endowments grew 14.1 percent and that charitable distributions averaged 7.3 percent of assets. Though aggregate giving was slightly down, the report found that other financial indicators suggested it was not a problem, merely admitting 2013 was a “rebuilding year.” (Note: in this second report, giving is the giving of foundations, which is different than the first report that looked at giving to foundations.)
So how are philanthropic organizations continuing to thrive through the “lagging recovery”?
Unfortunately, due to the lack of broad financial disclosure with regard to foundations, the jury is still out.
Some suggest that wealth inequality may be contributing; since the wealthy are doing fine in this economy, it would be logical to presume they will continue to give at or above their normal amounts
Yet, others have found that “Billionaires’ wealth is skyrocketing. Their philanthropy is not.” And when looking at income, others find that the poor give greater percentages of their income to charity. But, is income really the best measure? Probably not.
So maybe it’s not wealth disparity.
Perhaps it’s American exceptionalism. As quoted in Forbes, Nathalie Sauvanet, head of individual philanthropy BNP Paribas Wealth Management said, “It’s the optimism of the American dream, the belief that even if they make a mistake and lose money, they will succeed again and get even wealthier.” But dissolving American communities have led Americans to be disengaged from philanthropy, right?
Well, I don’t know. . . . Maybe the country is just becoming more religious and Republican.
Though we cannot quite explain why philanthropy continues on a path to prosperity despite unpromising economic measures just yet, rest assured – even when the going gets tough, Americans get giving.