As Charitable Giving Rates Sag, Foundations Back Ambitious New Effort to Ignite Generosity by All Americans
In a new effort backed by more than $2 million in grants from the nation’s biggest foundations, a group of philanthropy leaders Tuesday announced the public kickoff off a campaign to drive greater giving of time and money, especially from middle- and low-income Americans. Noting that financial donations dropped to an all-time low — just 50 percent of people give — and anger at billionaires and income inequality is growing, organizers of the effort said it is crucial to “reignite generosity — and engage every American in the process.”
In a document outlining the commission’s work, organizers said they worried that in a time of growing division in the United States, one of the key indicators of connectedness crucial to a functioning democracy — support of nonprofit efforts — faced an “uncertain” future. The panel, which calls itself the Generosity Commission, pledged to look both at how philanthropy supports democracy — and at how it has the potential to undermine it.
“Middle-class households are dropping out of giving,” said Jane Wales, vice president for philanthropy and society at the Aspen Institute and chair of the commission. “That’s really worrisome for the health of democracy.”
In addition to considering the concentration of giving among the rich, the group will look at acts of generosity that may not include giving to a nonprofit organization.
“People are redefining their philanthropy and their engagement,” said Suzy Antounian, the commission’s director. “Does that make the nonprofit sector weaker in its ability to plan, to strategize, and to be an effective concentrator of change?”
By fall of 2023, when the commission will offer its final recommendations, Antounian hopes to provide nonprofits a firmer grasp on the answers to those questions.
The 17-member commission includes representatives of large grant makers such as Marla Blow, president of the Skoll Foundation; Cecila Conrad, managing director of the MacArthur Foundation and executive director of its spin-off, Lever of Change; and Rob Rosen, director of philanthropic partnerships at the Gates Foundation.
Charity and volunteer leaders include Kenneth Hodder, national commander of the Salvation Army; Natalye Paquin, president of Points of Light; and Eboo Patel, president of the Interfaith Youth Core.
Wales said members were chosen to include a variety of types of philanthropic organizations at different stages of their development and in different parts of the country. In addition to including people like Hodder and Rockefeller Brothers Fund Chair Valerie Rockefeller, who represent philanthropic organizations started in previous eras, commission members also include Asha Curran, chief executive of GivingTuesday, the online charitable effort created less than a decade ago.
In an effort to broker agreement between conservative and progressive groups, the commission includes members from groups across the ideological spectrum. In addition to some members from left-leaning organizations, the panel includes Wendy Guillies, president of the Kauffman Foundation, a Kansas City foundation that advances entrepreneurship, and Heather Templeton Dill, president of the Templeton Foundation, in Philadelphia, which is a champion of free markets.
The Generosity Commission has budgeted a total of about $3.8 million for its work and is actively fundraising. It has received grants from some of the organizations that employ commission members. Grants came from the Gates, Kauffman, Mott, Sage, and Templeton foundations, the Lilly Endowment, Fidelity Charitable, fundraising software company Blackbaud, and others.
The commission said it planned to “build broad national momentum and bipartisan congressional support for positive change to reimagine generosity across America.”
Modeled on Landmark Effort
The Generosity Commission is modeled after the Commission on Private Philanthropy and Public Needs. Formed nearly 50 years ago, the commission for two years gathered landmark research on American giving and offered a set of recommendations to encourage philanthropy that shaped the work of nonprofits for decades.
The commission’s inclusion of a “donee” group that documented the needs of grant recipients spurred the creation of the National Committee for Responsive Philanthropy and was instrumental in the creation of Independent Sector, a membership organization of grant makers and charities. It also sparked the creation of research centers dedicated to understanding American giving, perhaps most notably the Lilly Family School of Philanthropy at Indiana University.
Many experts in philanthropy, including Aisha Alexander-Young, president of Give Blck, a nonprofit that works to increase giving to organizations founded by Black people, welcomed the work of the commission.
Philanthropy has a reputation problem because it has been “abused” as a tax shelter by too many wealthy donors, said Alexander-Young, who previously served as vice president for strategy and equity at the Meyer Foundation.
“With big philanthropy and some nonprofits, there’s a disconnect,” especially among younger donors. “Younger generations want to be able to build community and not feel like being a donor or volunteering is something that’s giving you exclusivity or status but is giving you an opportunity to be engaged with your neighbors and community.”
Concern About Middle-Class Donors
For many years, nonprofit leaders have been worried about a slide in the share of Americans who give, which seems to have accelerated in the wake of the Great Recession.
Historically, about two-thirds of households made philanthropic gifts; by 2018, that number had dropped to under half, representing tens of millions of families that had stopped giving to charity since 2000, according to a study conducted by the Indiana University Lilly School of Philanthropy.
The declines have been especially steep among middle- and low-income donors, as contributions from rich people have helped overall giving rise.
The current concentration of giving among the ultra-wealthy and declines in volunteering are cause for concern, said Wales, because they suggest that many people feel their contributions wouldn’t make a difference. Declines in giving may also be a symptom of a disengaged and battered electorate.
Wales is heartened by the fact that some forms of giving have flourished, especially during the pandemic. Those efforts include the work of individuals who provided food and water to migrants at the U.S.-Mexican border and groups who provided elderly Asian Americans with escorts to protect them from being harassed or threatened. A big part of the commission’s mandate is to identify and quantify forms of giving that may not be included in studies on philanthropy or related to groups with federal nonprofit tax status.
The commission is “an opportunity to show how spontaneous actions by citizens suggest a trend in the other direction and possibilities for getting out of the polarization and dysfunction we find ourselves in,” said Wales. “Those folks feel engaged. And maybe that’s more meaningful over time than sending a check to a far-away organization.”
The commission was conceived by members of the Giving Institute, a coalition of fundraising consulting firms. It is housed at the Giving USA Foundation, which the institute created in the name of its signature research effort. Giving USA tracks how much Americans give to charity annually.
To help guide them as they begin to meet over the coming months, commission members will rely on national research it financed on the diversity of donors conducted by the Urban Institute and How We Give Now: A Philanthropic Guide for the Rest of Us, a book based on a year of study by Stanford scholar Lucy Berhholz. Those efforts will be buttressed by research into civic involvement and giving conducted by Nathan Dietz at the University of Maryland’s Do Good Institute and research on volunteering from the University of Pennsylvania.
Scandals and Economic Challenges
In some ways, the conditions surrounding the creation of the commission in the 1970s mirror today’s realities, said Ben Soskis, a historian of philanthropy and senior research associate at the Urban Institute.
That commission’s final report included warnings about the disappearance of middle-class donors whose giving habits changed in a shaky economy. And philanthropy leaders felt under attack following the passage of the Tax Reform Act of 1969, which placed new regulations on foundation activities following a spate of corruption scandals at major foundations and a growing sense among the American public that philanthropy needed to be held accountable.
Rather than allow Congress to take another legislative swing, donors led by John D. Rockefeller created and paid for the commission so philanthropy could play a greater role in determining the final shape of any future legislation, said Soskis.
Today, a bill pending in the Senate would place limitations on how family foundations can operate and would provide incentives for people with donor-advised funds to move those gifts to working charities under a set time frame. Currently people get an immediate tax benefit when they put money into a donor-advised fund, but they face no requirement to distribute the money to working charities within a certain time frame.
The Rockefeller-created commission, said Soskis, tried to “defang” hotly debated issues on how wealth distribution in the United States might impact charitable giving by focusing on very technical aspects of things like providing tax incentives to give.
Many of the key recommendations of the commission were never enacted. The commission wanted to allow low-income donors to write off a greater percentage of their charitable contributions, and they called for allowing people to add deductions for gifts made to charity in addition to using the standard deduction to calculate their total taxable income. Those ideas have not come to pass. Nor has a plan for a permanent federal body to study and oversee nonprofit activity.
Soskis said more research is needed on American giving. But the newly created commission, he believes, is ill-suited to address the causes of wealth inequality that in his view contribute to the decline in rank-and-file donors. Addressing that decline, he said, will only result in what would surely be a politically contentious debate on wealth inequality and how the rich are taxed.
“There are limits to what a commission on charitable giving or generosity can really do,” he said.
Aaron Dorfman, head of the National Committee for Responsive Philanthropy, agreed, saying that the solution to giving declines can be found in tax changes, particularly to the estate tax, that would prompt more wealthy people to have incentives to give rather than pay more to the federal government. A commission that was likely geared toward reaching a consensus probably doesn’t have an appetite for such a political fight on tax policy.
Still, Dorfman welcomed the creation of the commission, saying he hoped it would further understanding of what reliance on rich donors means for charities.
“The concentration of support for our nonprofit sector coming from a smaller and smaller number of people is concerning,” he said. “It distorts the democratic nature of the nonprofit sector if it’s really being funded only by wealthy elites rather than by a broader swath of Americans.”
Michael Hartmann, senior fellow at the Capitol Research Center, a conservative research group, hopes the panel takes a broad look at the work of nonprofits. In particular, he thinks the commission should investigate whether nonprofits are skirting too close to the line — or even crossing it — in getting involved in political activities.
The politicization of nonprofits, including the tacit understanding that community organizing work can have a direct sway on the outcome of elections, may be “furrowing the brows” of some would-be donors, who have decided to withhold their support,” asserts Hartmann, who is also co-editor of the Giving Review.
The criticisms faced by donors are being dealt out by both conservative and liberal populists, who view endowments and the use of donor-advised funds with suspicion, Hartmann said. He noted, in particular, the candidacy of J.D. Vance, author of Hillbilly Elegy, for U.S. Senate. Vance, an Ohio Republican, has called the Ford Foundation a publicly subsidized “cancer on society.” Vance said in an interview on Fox News that Ford advances a “radical left-wing ideology,” such as the teaching of critical race theory.
Hartmann said critiques of philanthropy are sure to continue, as Republicans face good odds in recapturing the U.S. House after next year’s midterm elections. Republicans will be in charge of the Congress, either half of it or all of it next time,” Hartmann predicted. ” You can darn well bet that there might be some hearings or investigations. Populist conservative attacks on philanthropy are not going to go away.”
Looking to what’s next, at least one commission member, Conrad of Lever for Change, said the scope of the panel’s work will be broad.
“It’s much too early to rule out any kind of area that we might want to cover,” she said. “I can’t imagine that anything is off the table.”
A host of research and policy questions come up, she said. For middle-income families, changes in the structure of the work force, declines in disposable income, and increased political polarization may be responsible for drops in giving and volunteering. Rich donors, she said, may fear public scrutiny or may simply not know what sort of giving will have the impact they want.
Adds Wales: “Knowing who is on the commission, I expect that we won’t shy away from hard questions.”
Seeking Ideas From the Public
An important way to find out more will be through the commission’s work to get feedback from the public.
The commission hasn’t designed how that will work. It will start with using focus groups, surveys, and social-media campaigns to invite the broader public to weigh in on giving. Following that, the commission may seek high-profile efforts to spread the word about its work, like advertising at major sporting events or on popular television shows.
“We want to capture and celebrate the ways in which giving. volunteering, and civic engagement are being reimagined before our eyes,” said Antounian, the director of the commission. “And our sense is that research alone won’t get us there.”
Philanthropy has been an essential part of the American experience since native Americans provided for colonial settlers, said Jackie Bouvier Copeland, founder of Black Philanthropy Month. But for too long, she said, informal giving has been done “under the nose” of the philanthropic establishment.
“We need institutional philanthropy to respect the creativity and energy around mutual aid and assistance that is emerging all over the U.S. from every demographic and not to treat it as sort of a diluted or inferior form of philanthropy,” she said.
She hopes the commission will take serious consideration of the benefits provided by informal givers. But even more important, she said, philanthropy will continue to lose the trust of the broader public if the commission doesn’t take action following its national conversation.
If no action is taken, she said, the work of the commission will be viewed as merely a public-relations campaign to elevate the standing of philanthropy and rich donors in the minds of the American public, without doing anything to steer more money to help society.
Said Bouvier Copeland: “This commission will do more harm than good if it listens and does nothing.”