For the first time ever, in 2017 charitable giving exceeded $400 billion a year, an average of more than $1.1 billion donated a day, and an increase of 5.2 percent over 2016. But according to the annual Giving USA report, which estimates all giving to charitable organizations across the United States, the biggest increase in donations was driven by large gifts from major philanthropists to their own foundations, including $4.6 billion by Bill and Melinda Gates to their foundation, $1 billion from Michael and Susan Dell to their foundation, and $2 billion from Mark Zuckerberg and Priscilla Chan to the Chan Zuckerberg Foundation.
The report tracks where donations came from and where they went, and in both cases, foundations saw an increase. In fact, contributions to foundations saw the biggest increase among recipients in 2017, rising 15.5 percent to $46 billion. Giving by foundations was up 6 percent at $67 billion.
See a list of the top 10 largest donations in 2017. Five of them went to universities, four to foundations, and one $165 million gift to Nature Conservancy.
Nonprofits, professional fundraisers, and financial advisors look to the report to form strategies for raising and donating money. Joy Selak, a philanthropic advisor with Rodman & Associates, says the community might interpret the increase as a sign that foundations are the main source of funding for nonprofits. But as per every year, individual giving accounts for the vast majority of donations, at 70 percent in 2017. “People think the foundations will take care of it,” said Selak, “but a lot of their charitable giving is sitting inside their foundations.”
Foundations are not always a reliable source of funding for nonprofits. While gifts to foundations do count as charitable donations, they often depend on the financial success of the individual, family, or corporation that created the foundation, which can depend on such factors as the stock market, tax laws, and changing government policies. Another factor is that, for the most part, that money does not immediately impact nonprofits. By law, foundations are required to distribute only 5 percent of their assets to charity in the form of grants, and most stick to that percentage distribution. In 2014, the latest data available, grant-making foundations had a total of more than $865 billion in assets.
Stephen Saunders, an Austin estate planning lawyer and philanthropic advisor, says the sector should not be looking at giving to foundations as a loss for other charities. “They’re looking at this number as a ‘glass half empty’ and ‘glass half full situation’, but instead they need to look at it as a ‘glass is filling up’ situation,” he said. “It means there’s more money permanently endowed for charity.”
In advising nonprofits, Stacy Wheeler Ehrlich of Seeds for Change Consulting says foundations should not be the main target for fundraisers and instead, they should diversify their donations by cultivating relationships with individuals. “And they should remember that, at foundations, it’s an individual that can often make a decision on where their money goes,” she said.
As to where the donations went, religious organizations continue to receive the most donations at $127 billion. Education and human services are a distant second and third at $59 billion and $50 billion, respectively. They’re followed by foundations, then health organizations, public-society benefit organizations, and arts organizations, all of which saw an increase in donations. See a graphic that illustrates the Giving USA report.
PHOTO: By Oracle PR from Redwood Shores, Calif., USA (Michael DellUploaded by Schreibvieh) [CC BY 2.0], via Wikimedia Commons