Tough news from The Nonprofit Quarterly: 

The Other America’s Philanthropy: What Giving USA Numbers Reveal in 2011

June 20, 2011
Ruth McCambridge and Rick Cohen

As some readers will recall, “The Other America” was a study published in 1962 that was influential in informing social policy. It documented the extent of poverty in the United States – asserting that much of poverty was unacknowledged. Fast forward to 2011. Has a good part of philanthropy forgotten about poverty in this country right in the midst of the worst recession since the depression?

Last week the United Way of the Central Carolinas announced that it had withdrawn $2.5 million out of its $10 million in reserves to try to level fund community agencies struggling with increased need and reduced government contracts. Its fundraising had fallen $5 million short from the previous year.

Yet here comes the headline from this year’s Giving USA report on charitable giving: giving was up by 2.1 percent in 2010 over the previous year, indicating a rebound of charitable giving. We can either think of that United Way as a low performing anomaly or look deeper to understand why so many community organizations are still struggling.

Among fundraisers, there’s an ethic of not crying wolf, of seeing the positive even in the negatives, and assuming that the unending generosity of the American charitable donor will win out. But below the headline, the Giving USA numbers this year present an alarming picture for communities across the United States on any number of counts.

What we see in the Giving USA numbers is a still-depressed domestic giving scene. The 2.1 percent increase logged for 2010 estimated giving is an increase based on numbers for the previous two years that have been adjusted down. The adjusted cumulative decline in Giving for 2008 and 2009 was 13 percent so the 2.1 percent estimated increase brings giving to an 11 percent decline from pre-recession highs.

This decline, as we suggested last year, has not been evenly distributed. What is most obvious in this year’s numbers is a significant disinvestment in people in need on the domestic front. As we understand the numbers, the subsector that took the biggest hit in terms of decreased dollars was human services at a 5.6 percent decline in inflation adjusted numbers last year alone. While at first glance, the category appears to have remained stable, Patrick Rooney, of the Center on Philanthropy where the Giving USA number are crunched, says that 75 percent of the relief giving from this country to Haiti last year went as grants and contributions to domestic human service agencies. Backing that amount out results in the 5.6 percent drop.

The giving that is documented is increasingly not in the form of immediately spendable dollars. It includes gifts to foundations that keep increasing even while foundation grantmaking remains distinctly pallid. Additionally, grantmaking from corporations, reported to be skyrocketing here, is increasingly in the form of in-kind products, particularly from pharmaceutical companies. Some link this largess to attempts to get rid of excess inventory but major corporate cash givers to human services such as the financial sector and retail have been declining.

What the Giving USA numbers suggest is not only a crisis of declining charitable giving reaching human services or social safety net groups, but a class divide where the groups that do well in charitable solicitations are those with connections, with the social class interrelationships that give them automatic access. Meanwhile, charitable giving for human services is very much the province of the less moneyed donors, the payroll deduction donors, the people who volunteer at the shelter or food pantry or clinic because they know the tangible importance of those institutions to their communities.

NPQ believes that there is a class divide in our society, and it is reflected in a class divide in charitable giving and in the nonprofit sector. Just as corporate CEO compensation is now back at pre-recession levels even while joblessness persists, the needs of the poor and of the organizations that serve the poor have virtually disappeared from political discourse and from the priority lists of philanthropy. And the incentives -- bequests, IRA rollovers, etc. -- flow toward the institutions with the fundraising infrastructures and the social connections to major donors.

Is it time to rethink the incentives built into our charitable giving structure, where a donation to a sector or institution serving primarily the affluent, is treated identically to a donation meeting the safety net needs of the poor? If we do not rethink the current structures, the creeping and deepening class divide in our society and in the nonprofit sector will only persist.

To read the entire important report click here.