Quicker rebound in giving seen

If history repeats itself, charitable donations from households and individuals are not likely to reach their 2007 levels until at least three years after the end of the recession, measured in inflation-adjusted dollars, a new study says.

Foundation grantmaking could take longer to regain pre-recession levels but could increase more quickly than it did after the 1973-75 recession, the study says, because of the recent creation of new foundations and the trend among individuals with assets over $20 million to endow a foundation through their estate plan.

The study, prepared for the Giving USA Foundation by the Center on Philanthropy at Indiana University, was released in October just as the recession was showing signs of giving way to a recovery.

Giving could recover more quickly than after previous downturns, the study says, because per-capita income is higher than in the 1930s of the Great Depression and the early 1970s; a bigger percentage of people have completed college, and individuals with a college degree are more likely to give than those without one; and a greater percentage of households support secular causes.

The study suggests a rebound in giving also could result from a much greater understanding of the role public policy, tax rates and government funding can play in creating incentives or disincentives for giving.

Moderating the recovery in giving, however, could be slow growth in the stock market, the study says, because stock-market changes “now play a larger role in overall philanthropy than they did in the past, when income growth (not wealth growth) was more important.”

Also posing a “potential roadblock to a return to pre-recession levels of giving could be governmental policy changes that discourage charitable gifts, such as lowering the tax rates, which reduces the benefit of the deduction for gifts, or increasing government funding for some types of services such as education,” the study says.

At least some donors, it says, “change the amount they give when the perceive that their own tax benefit will be reduced.”

And some donors, the study says, “prefer not to use their charitable dollars to support programs that have significant financial support from the government.”

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