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Making Money Matter

Column 27:  August, 2002
Boulder Daily Camera

Enid Ablowitz

Giving Statistics and Guidelines

Have you ever wondered about the total amount of charitable donations given to qualified not-for-profit organizations?  According to Giving USA, in 2001 donors gave more than $212 billion (with a B!). 

To put things in perspective, $212 billion was 2.1 percent of the Gross Domestic Product. If you look at the amounts by source, you may be surprised. Gifts from individuals like you and me account for more than 75% of that total, or $160 billion. Only about $16 billion of that is in the form of bequests. 

What do the statistics tell us?  That lots of people are charitable, and not just mega-givers. It also means that giving would be increased dramatically if we made more end-of-life gifts. As I’ve written before, making a bequest requires becoming more pro-active in your charitable planning.

Here’s a statistic that might surprise you.  Giving USA reported that corporate giving was only 4.3% of total contributions, or just over $9 billion.  Despite the fact that corporate charitable contributions were based on a comparatively high percentage of pretax profits (1.3%), this represents a more than 12% decrease from 2000, and given the current state of corporate affairs, that number will surely decrease again in 2002.

What about foundations?  The Foundation Center reported giving levels of nearly $25 billion in 2001 (not including corporate foundations) which accounted for just over 12% of total giving.  This is a significant increase from the prior year, no doubt reflecting the legal responsibility for distributions based on the prior year’s earnings.  The trend toward the creation of new foundations and multi-year commitments account for some of the increase, as did grants in the aftermath of September 11.  And remember, many foundations are private family foundations set up by individuals.  However, with the stock market debacle, foundations’ earnings will be significantly affected, and some are already reporting cuts in grant-making. 

Who received the gifts?  By far, in 2001 the largest recipient sector - over $80 billion -  was religious congregations/denominations.  Gifts to education reached nearly $32 billion, gifts to human services were nearly $21 billion, and gifts to health totaled over $18 billion.  The other sectors, the art/culture and humanities, public-society benefit organizations, the environment/animals, and international affairs each received $12 billion or less.

So what does that say about us?  We’re a charitable nation, built on the premise that giving is part of our culture and our ethic.  It also says that our system relies on both governmental and non-governmental organizations to meet our needs, and that they work in partnership to do so.  Charitable deductions and other tax incentives encourage giving, underscoring the deeply embedded nature of our social conscience.  Our laws help make us the most charitable nation on earth. 

How much each one of us gives is a very personal decision, but many people have asked me what other people give. It is a complicated question in that there are so many factors.  For example, statistics show that people with lower incomes give a higher percentage of their after-tax dollars.  By the same token, those with higher incomes are more likely to claim charitable deductions and file estate tax returns, so their gifts are often more public.

What’s right for you? Lots of things influence how much you can or want to give, from your lifestyle and future financial needs to your personal values and passions, and the legacy you wish to leave for your heirs.  Giving is both about what you can do now and what you can do later.

First of all, make the distinction between giving from income and giving from assets.  You may have discretionary income that your can give.  Or, you may be living on the income from an asset portfolio for now, but at some later time or at death, you can give a portion or the entire asset away.  There’s even a way you can give the asset to a charitable organization and retain a life income, possibly even increasing your annual return on that asset.  Your giving decisions will depend on your personal circumstances and they may change as your circumstances change.  However, that said, there is a body of experience that can be a guideline for those who want a point of reference.

One affluent donor group polled their participants and created a suggested annual giving level of 5% of gross income or 1% of net worth, whichever is greater.  Another group suggests donors allocate 3% of gross income for annual gifts, and 10% of estate value for legacy gifts.  A third group which looks at all income levels uses 2% for both:  give 2% of income annually and 2% of assets at death.

2002 is proving to be a difficult year financially, especially for non-profits.  Many are facing serious financial challenges in the form of budget cuts from their government funding agencies, declining corporate sponsorships and reduced foundation grant-making…all at a time when the needs they meet are escalating and their missions are more relevant than ever. 

There’s never been a better time to think about your own level of giving

Enid Ablowitz is the Vice President for Advancement at the University of Colorado Foundation, Inc., and Director of Advancement for the Coleman Institute for Cognitive Disabilities.  She has been working as a donor advocate for more than a dozen years.  Her book, Making Money Matter:  Eight Steps to Thoughtful Giving was recently published.  For information on how to obtain a copy, contact her at enidablowitz@hotmail.com.

Send your questions about making charitable gifts to Enid Ablowitz, Features, Daily Camera, 1048 Pearl St., Boulder, 80302

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