Where has all the philanthropy gone? More and more to the biggest.
The Giving USA 2014 Annual Report shows that donor giving has just about returned to pre-recession levels. You can get a free copy of the short report. It has those tables about where philanthropy comes from (90% from individuals when you count bequests and family foundations) and where it goes (religion again the winner at 31%,though that’s a decrease over the last two decades).
But what the report doesn’t cover is the income stratification in this sector. Where does the money go if we look at nonprofits by size? And how has that changed over time?
Using National Center for Charitable Statistics data from the Business Master Files, I looked at the numbers of organizations by expenditure size in 1995, 2000, 2010 and 2012. The chart below shows the growth in the number of public charities using only the data from those filing Form 990*. The colored areas represent the proportion of the total number. As you can see, public charities below $100,000 in expenditures (the bottom of the chart) account for just about 44% of the total number of charities, while those over $100 million (top of the chart), are just .07%. If you add together the top two categories, organizations above $10 million in spending, they total only 4.5% of reporting US public charities.
But here’s where it gets really interesting. In order to look at the sources of data using the readily available, I had to switch over to the NCCS Core Files of public charities which is not an exact match in numbers to the BMF. But it was the only way I could view the category on the 990 called “Contributions, Gifts & Grants,” which is most of the philanthropy. The good news is that the amount of giving increased, reflecting the growth in numbers. That growth came at the top, with the top 4% of charities receiving 66.4% of total dollars given (the top two bars), up from 51% in 1995. The contributions received by those small organizations at the bottom (under $1M) stayed pretty flat, compared to the bigger organizations.
These disparities worry me a lot. Like US society, the gains have come at the top.
We already know that organizations with more fundraisers raise more money. And the smallest organizations, if they can afford a fundraiser at all, can’t compete financially for talent with the big guys.
But this is a lot to chew on before a holiday weekend. I’m hoping to break this data down even more in a future post.
*The number of public charities that did not report is very large, ranging from 332,305 in 1995, to 585,526 in 2012.
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Thanks for the insight. Very interesting. Do you think the top 4% receiving a disproportionate amount of the dollars mirrors the growing wealth gap or are these separate issues? I would theorize that the super rich are primarily giving to organizations that are serving themselves like universities, museums, and personal DAFs. I wonder if the growing disparity is simply an outcome of a growing oligarchy.
Randy,
The types of organizations included in the top tiers include a lot of universities and hospitals/health systems. But there are other groups as well. More research is needed to better understand these trends.
Gayle
Very interesting indeed. Thanks for pulling this all together. I have a few thoughts. One is precisely what you mentioned — the more money you have, the more money you can afford to spend raising more money. Similar to the current US economy, wealth begets wealth. And tax policies for the richest of the rich in this country are allowing them to accumulate more and more. To the extent that this results in increased philanthropy, I’m betting 99% of the donations go to the charities in your top two tiers. This underscores for me the importance of the estate tax and the need to advocate for more progressive tax policies. Lastly, there’s the charitable tax deduction. I know I’m in the minority of the nonprofit fundraising community when I say that I support lowering the deduction. It’s the richest individuals and the “richest charities” who benefit most. And these are not the nonprofits working to create social change, remedy injustice, close the wealth gap, etc. I have long maintained that any decreased giving from the uber-wealthy as a result of decreasing the deduction by a few percentage points would be more than offset by the good that would come from increased tax dollars available for public services and government contracts for work often done by the very nonprofits who fall in the lowest tier of giving.
Tina,
I hope to get deeper into the top tier, looking at the Philanthropy 400 and others. Also looking by sector.
I’m conflicted on the charitable deduction, but certainly think it is unfair that those who don’t itemize don’t get the deduction, continuing to skew the tax advantage to the top tiers of income. If the increase in revenues would go to social policies that close the income gap, I’d be for it. But mainly I think it will go into more war making – or to cover the debt from past war making.
Gayle
It seems to me that with so many huge crises coming around, people want to get more bang for their buck, so that organizations like MSF (DWB) got my money during a tsunami/earthquake/ war devastation crisis last year. Maybe perception of lack of impact by local groups has an impact also. Alternatively, local groups that have very distinct impacts, such as Latino Dollars for Scholars – where you actually meet the recipients – also has appeal. Dunno. Just something to think about and look at.
Sarah,
So nice to see you pop up here!!
I do think people want to give where they can see impact, or where their heartstrings are tugged. And some of the biggest organizations do include international groups. But I’m sure when I’ve completed the research I’ll find the health care/hospitals and universities as a big factor as well. And those biggest groups do have the capacity to reach more donors, and to provide donors with one on one attention that small organizations find very hard to do.
Gayle