As we enter the giving season for 2019, we reflect on the giving trends of the past few years and decades and how they inform our work to best serve our current and prospective donors. We believe this information may also help you, our professional advisor partners, serve your clients and help them achieve their charitable goals as part of their overall financial and life planning.
It was another record year of giving in the United States in 2018, with more than $427 billion in gifts to charity from individuals, foundations, estates, and corporations representing a small increase over 2017 (0.7%)¹, but an increase nonetheless.
Giving in general has remained at roughly 2% of GDP¹ a figure that has been virtually unchanged for decades. What is changing is who is giving and how they are giving. Since 2000, there has been a decrease in the number of individuals who give, even as the total amount given by individuals continues to increase.²
In 2018, the largest source of charitable giving was individuals at $292 billion, or 68% of total giving; followed by foundations ($76 billion/18%), bequests ($40 billion/9%), and corporations ($20 billion/5%).¹ However, the overall share of giving directly from individuals has been decreasing over the past four decades. Meanwhile the share of giving from foundations has grown almost in sync. A key point to keep in mind here is that foundations include private foundations and Donor Advised Funds and are first established through a gift from an individual or corporation.
Considering the combination of individual donors and foundations, the primary source of giving, by a lot, is individuals. Ninety percent of individuals with an income of over $200,000 and/or net worth of $1 million are giving³ and the trends tell us they are getting more sophisticated in the way they do it. In the last five years, the number of Donor Advised Funds (DAFs) has more than doubled, rising 60% in just one year from 2016 to 2017.⁴ Annual contributions to DAFs were $29.23 billion or 10% of total giving from individuals in 2017.⁴ For every $1 million in contributions to DAFs, roughly $870,000 is granted out in the same year, representing a portion of the growth above in foundation giving.⁴
Another trend worth noting is a 74% increase in individuals making gifts through a Qualified Charitable Distribution from their Individual Retirement Account (IRA QCD).⁵ This trend is a reflection of both the impact of the Tax Reform and Jobs Act signed in December 2017 and an aging baby-boomer population.
If the Community Foundation can be a resource to you or your clients in helping them achieve their charitable goals by organizing their giving through a DAF at the Community Foundation of Holland/Zeeland or by discussing the benefits of a DAF, IRA QCD or other charitable tool, we are more than happy to connect with you or join your conversation with your client.
We are always happy to provide guidance to you and your clients. Please don’t hesitate to contact Colleen Hill, VP of Development and Donor Services at firstname.lastname@example.org.
2 Philanthropy Panel Study (PPS), University of Michigan’s Panel Study of Income Dynamics (PSID)