Americans Are In a Charitable Giving Mood

It’s heartening to see that as Americans have been recovering from the Great Recession, they’ve been aiding the less fortunate rather than just spending the money on themselves.

Charitable giving in the United States rose by an impressive 7.1 percent last year, according to the new report, Giving USA 2015, published by the Giving USA Foundation and researched and written by the Indiana University Lilly Family School of Philanthropy.

The $358.38 billion donated in 2014 surpassed the pre-recession peak of (an inflation-adjusted) $355.17 billion in 2007, hitting a 60-year high. And giving by individuals — who made 72 percent of all donations — was up 5.7 percent, to $258.51 billion.

Una Osili, Director of Research at the Lilly school, credits the bump-up to last year’s improving housing, labor and financial markets. “The stock market and the economy and financial security drives giving,” she said.

Giving USA doesn’t break down the numbers by age, but Osili told me that “boomers and older households appear very committed to philanthropy.” The concern now, she said, is “that many are now in the retirement phases of their lives and emerging from lots of shocks from the recession.”

Interestingly, the total number of U.S. donations hasn’t been changing much, just the total dollar amount and average gift size. “Fundraisers call this ‘dollars up, but donors down,’” said Osili.

You’ve probably read about some of the mega-gifts in recent months. “We’re seeing donors becoming more strategic,” noted Osili, who said high-net-worth households and portfolios have recovered faster than the overall economy.

For instance, hedge fund manager and 1980 Harvard Business School alum John Paulson just gave Harvard University $400 million, the largest gift in the school’s history (its School of Engineering and Applied Sciences is being renamed in his honor). A few months back, entertainment mogul David Geffen gave $100 million to Lincoln Center so it could renovate the New York Philharmonic’s home, Avery Fisher Hall (which will become David Geffen Hall in September).

But not every type of charity saw an increase in donations last year: Gifts to the international affairs category actually fell by 2 percent in 2014. “That’s something we’re very interested in,” said Osili.

The chief explanation: There were no huge natural disasters overseas in 2014, like the Indonesian tsunami of 2004 or Haiti’s earthquake in 2010. “Also, some international crises are not necessarily philanthropic; Syria is geopolitical rather than a natural disaster,” noted Osili.

Another 2014 charitable giving report, from the nonprofit software and services provider Blackbaud, said that international affairs organizations were the only sector to see a drop in online giving last year, attributing that mostly to the spike in online giving after the 2013 Philippines typhoon disaster. “Online giving is the first-response channel of choice for donors,” Blackbaud said.

Conversely, Giving USA said, donations to arts/culture/humanities nonprofits soared by 9.2 percent in 2014.

Osili’s analysis: “During the recession, many donors held back giving to the arts and humanities and cultural nonprofits, but now we’re seeing a return to their pre-recession priorities.” In addition, Osili said, arts groups have been getting more technologically savvy, creating crowdfunding and social media campaigns to attract donations.

The outlook for 2015? That depends on whose crystal ball you look into.

The Philanthropy Outlook, written and researched by the Indiana University Lilly Family School of Philanthropy and presented by the Marts & Lundy fundraising and philanthropy consulting firm, forecasts a 4.8 percent rise in charitable giving this year. That's less than in 2014, because its model bakes in modest U.S. economic growth in 2015.

But rival Atlas of Giving describes its early forecast as “bleak at best,” with a possible 3.2 percent decline in charitable giving this year. That’s because Atlas of Giving expects a stock market correction, an interest rate increase and a weak Eurozone economy that “will negatively impact the ability of U.S. corporations to make charitable gifts.”

To cite a hoary journalism cliché: time will tell.

Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More