Related – Should Prior Evaluations Be Revisited?
Related – What About Bequests?
The Giving USA report for 2011 was released last month. The report each year provides a preliminary estimate of total giving in America for the previous year.
The latest estimate of $290.9 billion for giving in 2010 represents a 3.8% increase over the revised Giving USA estimate of $280.3 billion in charitable giving for 2009. The revised 2009 figure represents a reduction of more than $23 billion from the $303.7 billion originally announced for 2009 last June. The new, lower estimates for 2008 and 2009 indicate a cumulative decline of more than $40 billion (13%) from 2007 peaks. Declines in giving of this magnitude have not been experienced by America’s nonprofit community since the Great Depression of the 1930s.
The adjustments came as a result of surprising IRS reports on the actual amounts given and deducted in 2008 and the estimated amounts for 2009. This data revealed a much deeper decline in giving by individuals than was previously thought. In fact, deductions by those with incomes above $200,000 dropped by 20% in 2008 alone. The overall decrease in giving for the 2007-2009 period was held to 13% only because those with lower incomes reduced their giving less than wealthier donors who were harder hit by declines in asset values.
An increase or a decrease?
Depending on the timing of reports on giving for a particular year, one may find there was an increase or a decrease in giving for that year. That is because estimates are just that—estimates—and are therefore subject to revision based on new data or recalibrated assumptions at a later date.
Because Giving USA methodology attempts to provide an estimate of giving some two years before the IRS component figures for charitable gifts are available, these estimates are inevitably subject to ongoing revisions.
The result can be confusing to say the least, as the numbers have recently changed more significantly from one year to the next than in the past. Take, for example, the reduction in estimated giving for 2008 from the $315 billion reported last year to a new estimate of $298 billion for that year. This means there was a decline in giving of 7% in 2008 rather than the increase of 1.5% announced last year after originally announcing a decline of 2% two years ago.
To summarize, Giving USA reports that originally announced a modest reduction in giving of 3.6% in 2009 after an increase in 2008 of 1.5% have now been recharacterized as a dramatic drop of 6.2% in 2009 on top of a 7% drop in 2008.
What it means to you
There can be a big difference between academic estimates based on macro-level economic data and reality as ultimately impacted by factual reports on actual donor behavior. Because IRS figures and other objective data lag the Giving USA reports by a period of time, it would be wise to keep in mind that initial reports may not tell the whole story.
Reviewing several years of trends is far more likely to present a better overall picture than does a snapshot based on one year of estimated activity.
