Giving in the USA

This new editorial will feature an American perspective on recent trends and topical issues in philanthropy.  We are delighted to welcome new columnist Melissa Berman of Rockefeller Philanthropy Advisors, which helps donors create thoughtful, effective philanthropy throughout the world. 

Giving in all forms is growing in the United States, and is now in the neighborhood of $300bn annually.  More than half the foundations in the US have been created in the last 15 years. As a result, the market downturns earlier in this decade had a relatively minimal effect on overall foundation giving.  The explosion of donor-advised funds is equally remarkable: from $5.5bn to nearly $20bn in assets in merely a decade.  More donors are new wealth-holders than ever before.  A generation ago, about 40% of American wealth came from inheritance.  Now it’s about 15%.  US households with assets over $50m give an average of over $1m each annually, and two-thirds of wealthy households report that their giving has increased in the last five years.  In two recent surveys, wealth-holders say they donate because of conviction and commitment, not tax and estate planning.  They also report, again based on two separate but similar surveys, that they’d give more if they trusted non-profits more, had more information, saw lower administrative costs, and knew more about impact. 

We have, in other words, entered an era of enormous possibility and promise for making a better world.  Yet there are also striking changes ahead in how philanthropy is conceived and carried out. 

First of all, aspirations have grown.  Donors are emboldened to think big.  In part, it’s because of a virtuous cycle:  philanthropy is now big news, and coverage of philanthropy itself inspires more philanthropy. 

Second, there’s an emerging expectation that individuals and families of significant means should be actively involved in philanthropy.   

Third, it seems possible to many more people that their philanthropy can fund the solution, not just address the problem.  That’s emboldening many donors to think big – in terms of the issues they will fund, the amount they will commit, and the level of their involvement in the giving. 

Health care, microfinance, global warming, and the UN’s Millenium Development Goals all have a much higher profile in publications like Fortune and the Financial Times.  And increasingly, the coverage is focused on solutions, not problems. Muhammad Yunus, the founder of the microcredit and microfinance movement, won the Nobel Peace Prize last year.  Al Gore won the Nobel Peace Prize this year not only for alerting the world through An Inconvenient Truth, but also for offering a route to addressing the climate challenge.

"Many donors now think in terms of projects and initiatives, not grants and gifts."

Because the opportunity to achieve impact seems clearer than ever, donors are jumping in with both feet much earlier in their lives.  And with earlier giving, it seems, there’s a greater intensity of involvement. Many donors now think in terms of projects and initiatives, not grants and gifts.  The number of operating foundations is on the rise, according to the Foundation Center. 

For many donors, this focus means that ‘giving while living’ is powerfully attractive, and there’s preliminary evidence that more people are making donations while living rather than expressing their charitable impulses posthumously, in bequests.  In other cases, it translates to a decision to spend down a foundation’s endowment in a predetermined amount of time.  The Atlantic Philanthropies’ commitment to spend down its endowment by 2020 is getting careful attention from many donors.  Most notably, the decision by Bill and Melinda Gates to spend down their foundation within 50 years of the last trustee’s death is a stunning endorsement of giving intensively.  

Increasingly, US wealth-holders are looking at all their assets. That can mean going past traditional giving and straight to investing.  As philanthropists begin to look at their capital (and not just the income it throws off) some begin to ask how that capital is invested from a holistic perspective.  Shouldn’t the principal reflect the principles, they ask?  That debate is in its early stages – but where there is attention and money, there will be solutions developed.  The field of mission-related investing will look vastly different five years from now. 

This is indeed a tremendous period of foment.  But the convergence of commitment, capital and ideas is tremendously exciting for all of us who are privileged to participate in philanthropy. 

Melissa Berman is President and CEO of  Rockefeller Philanthropy Advisors