Industry Insights

Takeaways from Giving USA 2016 – The Annual Report on Philanthropy

June 2016
Author:  Nikki Kubly

Nikki Kubly

Director

Audit

Not-for-Profit & Government

1801 California Street, Suite 2900
Denver, CO 80202-2606

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On June 14, 2016, the Indiana University Lilly Family School of Philanthropy, in partnership with Giving USA Foundation and The Giving Institute, issued Giving USA:  The Annual Report on Philanthropy for the Year 2015 (Giving USA). 2015 marks the second consecutive year of all-time high charitable giving, which Giving USA estimates at “one billion dollars a day.” In 2015, the estimated U.S. charitable giving increased to $373.25 billion—a 4.1 percent increase over 2014. For the first time in a decade, charitable giving saw a combined double-digit growth rate of 10.1 percent over a two-year period, which, according to the report, reflects positive growth in the U.S. economy.

In addition, Giving USA reports on U.S. giving patterns and trends and provides a benchmark for measuring annual fundraising efforts—to encourage readers and organizations to use the gathered information and insights to refine their fundraising efforts and understand how economic giving trends correlate by giving source. Below are trend summaries from Giving USA.

Highlights of Giving by Source in 2015

  • Giving by individuals comprised 71 percent, or $264.58 billion
  • Giving by foundations comprised 16 percent, or $58.46 billion
  • Giving by bequests comprised 9 percent, or $31.76 billion
  • Giving by corporations comprised 5 percent, or $18.45 billion

The Top Three Recipient Categories in 2015

  • Religious organization giving increased by 2.7 percent to comprise 32 percent of total giving
  • Education giving increased by 8.9 percent to comprise 15 percent of total giving
  • Human services giving increased by 4.2 percent to comprise 12 percent of total giving

Contributions to foundations declined an estimated 3.8 percent and constituted 11 percent of total giving, while giving to individuals declined 1.6 percent and accounted for 2 percent of total giving.

From 1975 to 2015, total charitable giving increased an average of 6.7 percent per year (adjusted for inflation), with the exception of declines in 1987, 2008 and 2009. From 2009 to 2015—the period following the Great Recession—the inflation-adjusted giving rate increased 23 percent—a growth of $69.70 billion since 2009.

Behind the Numbers

Individuals

Giving USA reported individual giving is based on disposable personal income, which is tied to household total income—a key factor in how much a household gives. In the last 40 years, individual giving as a percentage of disposable personal income was highest in 2000 (2.4 percent) and lowest in 1995 (1.7 percent); in 2015, disposable income increased 3.7 percent.

The report noted that not-for-profits (NFP) will face a challenge compelling younger generations, particularly millennials, to provide repeated support over time. In general, the report found organizations continue to struggle to retain donors and their donations across the generations.

Foundations

Contributions from foundations to the general operations of NFPs have slowed. Larger foundations were found to be funding specific purposes, and education and human services continue to be the top areas for foundation giving. By the end of 2014, assets held by commercial donor-advised funds for the first time exceeded those in community foundation donor-advised funds.

Bequests

The Individual Retirement Account (IRA) Charitable Rollover made permanent in 2015 gave seniors who don’t itemize deductions a new benefit:  they now can donate up to $100,000 to charitable organizations directly from their IRA, without treating the distribution as taxable income. In addition, the 2015 Supreme Court ruling on marriage equality created a new market of bequests, as same-sex couples look to create shared estate plans.

Corporations

Corporations with long-time CEOs and/or CEOs whose compensation is closely tied to long-term stock options tend to be more charitable. NFPs are encouraged to engage corporate volunteers, since those relationships could develop into enhanced financial funding.

Corporate pretax profits are a significant factor in corporate giving. In 2015, giving by corporations was estimated at 0.8 percent of corporate pretax profits. Corporate giving was at an all-time high in 1986, when it reached 2 percent of pretax profits.

Other Giving USA Results

According to the Corporation for National and Community Service’s Volunteering and Civic Life in America 2015 report, the number of volunteers declined from 25.4 percent in 2013 to 25.3 percent in 2014.

In 2014, the greatest percentage of Americans volunteered at religious (34 percent), educational (26 percent) and social services (14.8 percent) organizations. Of these volunteers, Americans ages 35 to 44 were most likely to volunteer (30.6 percent), followed by the 45 to 54 age group (28.7 percent) and the 20 to 24 age group (18.7 percent).

In 2015, the IRS reported the number of charitable organizations increased to 1.18 million—a 6 percent increase from 2014. This number grew steadily from 2005 to 2010 but declined between 2010 and 2011 due to the requirement of the Pension Protection Act of 2006 that NFPs of all sizes—excluding religious organizations—file tax returns beginning in 2007.

For more information, contact your BKD advisor or order the Giving USA report to gain access to a detailed analysis and insights.

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