Donor advised funds were one of the few bright spots in Giving USA’s annual report on charitable donations this week. The three largest donor advised fund administrators—Schwab Charitable, Fidelity Charitable, and Vanguard—saw average contribution growth of 77 percent between 2010 and 2011, the report said. That's a pretty nice jump.
But overall giving in the nation grew at a sluggish pace. Americans gave $298.4 billion to charity last year, up 4 percent, or 0.9 percent when adjusted for inflation. Patrick Rooney, executive director at the Center of Philanthropy at Indiana University, which partnered with Giving USA in preparing the report, says charitable giving has seen its second slowest recovery following any recession since 1971.
He told The Chronicle of Philanthropy that at the current rate of recovery, it would take until 2022 to get back to the level of philanthropy seen in 2007. Last year he expected it would take until 2016.
Individual giving accounted for 73 percent of total charitable contributions last year, to $217.8 billion, Giving USA said. But individual giving as a percentage of disposable personal income remained at 1.9 percent last year, the same level as in 2010 and 2009. (The high was 2.4 percent in 2005.)
Kim Laughton, who heads Schwab Charitable, said that two-thirds of giving tends to cover non-discretionary causes close to donors’ hearts: religious organizations, health concerns close to a family, or alma maters, for example. When markets tank, “Giving is generally more resilient than some other sectors of the economy,” she said.
But the economic woes of recent years are the worst since the Great Depression, she added, and that’s a drag on generosity. “I think people are still sorting out their priorities,” Laughton said. “Has it bounced back to where it was in 2007 before the crash? Not yet.”
Giving by corporations and corporate foundations was flat last year at $14.6 billion. Giving by foundations was up 1.8 percent to $41.67 billion, and bequests were up 12.2 percent to $24.4 billion. Bequests are a volatile number, given the unpredictability of when people die and the substantial sums that sometimes are gifted.
“A few giant charitable bequests in any given year can skew the numbers. Sometimes they’re in the billions,” said David T. Leibell, a partner at the law firm of Wiggin & Dana in Stamford, Conn. For example, last year’s bequests included $2.5 billion to two foundations from the estate of Margaret A. Cargill, an heir to the Cargill Corp. fortune.
While the 77 percent increase in giving to large donor advised funds is substantial, those funds still only account for 3 to 5 percent of total overall giving, said Amy Danforth, senior vice president for marketing and programs at Fidelity Charitable. Still, those increases are driven by high-net-worth and ultra-high-net-worth individuals, she added.
“Those are people who are strategic and looking for impact in their philanthropy,” she said. “These people work with advisors. I think there’s an opportunity there for advisors to recognize that giving is an activity that their clients are engaged in.”