Is Philanthropy Facing a New Normal, or a Return to the Norm?

by Patrick M. Rooney

Giving is up after two years of significant declines during the worst recession since the Great Depression. But what does that mean?

Is it just a glimmer of hope, or does it warrant a sigh of relief? Will the recession have a lingering effect on American’s giving habits? Will the uptick become a sustained upturn?

Giving grew an estimated 2.1 percent in real terms in 2010. That’s great news, and it’s reasonable given the still uncertain state of the economy. We would expect a modest economic recovery to equate to modest growth in giving.

Nevertheless, giving – and the charities that rely on it – still have a long way to go. Giving took a worse hit during the Great Recession than in previous recessions, falling a combined 13 percent in 2008 and 2009 after adjusting for inflation. Even with a recovery of 2 percent, that’s still an 11 percent drop from the high point achieved just three years earlier.

Many nonprofits are still hurting. And the sobering reality is that if giving continues to grow at the rate it did last year, it will take almost six more years to reach pre-recession levels. The recession, and indeed the past decade, has been tough for charities in many respects. Giving is now at about the same level in real dollars as it was a decade ago.

That said, giving remains a core American value. Philanthropy has held its own in spite of two recessions, terrorism, wars and a series of devastating natural and man-made disasters. Adjusted for inflation, total giving exceeded $280 billion a year every year for the past decade, and surpassed $290 billion in six of the last seven years. This tells us that despite personal and economic hardship, Americans remain steadfastly committed to each other and their communities. Philanthropy is at the heart of who we are as a society, and it is undeterred, if occasionally deferred, by hardship.

A return to growth in total giving is a positive sign. And while the results are somewhat mixed across the various subsectors, the fact that giving to human services declined in real terms and that giving to education, the arts, and public-society benefit organizations has grown the fastest in 2010 (after international, which has grown rapidly over the past decade) suggests that donors may be returning to their pre-recession choices for giving.

Patrick M. Rooney is Executive Director, The Center on Philanthropy at Indiana University.

Here’s more on Giving USA 2011 on eJewish Philanthropy.