Why the Data on Giving Doesn’t Tell Us What We Need to Know

The Foundation Center has recently issued a report showing that there will be some incremental increase in philanthropic giving over the next year. As always it is good to have data which demonstrates what we already know. What this study demonstrates is that as the economy improves [or at least as the market improves!], there will be more money to give.

Frankly, given the growth in the stock market since its lowest levels, near record corporate profits, and the concentration of wealth in the hands of an ever smaller segment of American society, it would be shocking if the data were to show anything else. Those of us in the field who speak and write about these matters have long since identified that there is a predictable curve in foundation and planned giving: giving typical trails the economy by about a year, both on the way up and on the way down. [There are some technical reasons which makes this so, but that is for another time.] Philanthropic giving during this economic cycle has followed historic patterns to a tee, so this latest study is both predictable and consistent.

I am not saying that such research is a waste of time or irrelevant – just insufficient. The real interesting data which is still on the horizon is where this money will go. Will giving follow historic patterns or will renewed giving capacity be redirected, reflecting profound changes in societal values?

Let’s be clear: we are now about to observe the 2nd great challenge to the role of government in modern society. We are about to see elected officials who don’t believe in government, and thus don’t believe in a safety net for its citizens. The number of food insecure [those who don’t have regular access to sufficient amounts of healthy food] is growing annually. The number of those in or close to poverty has grown by millions in only one year. Yet we have an elected congress which has articulated a commitment to reduce our societal commitment to those most at risk. [The attack on “big government” can mean nothing less!]

While I clearly have strong opinions on what I think appropriate public policy should be, the question for us in the philanthropy field is: what is our role? Some would argue that the only measure of the validity of our giving is our commitment to reduce poverty, illiteracy, homelessness, and hunger. What follows, for many, is that it is crucial to redirect our subjectively directed giving of the last 70 years to objective human service needs of today. If government cannot or will not, then we must. [Of course, let’s remember that “we” are government; if our government doesn’t feed the hungry it means that we are not feeding the hungry!]

There are others who reject this implicit pressure on private philanthropy on the basis that private philanthropy is private for good reason. It should be able to do those things which government shouldn’t do. This approach would argue that we have a system of private philanthropy not to relieve government but to supplement it.

This overly simplistic summary of the 2 competing visions will be implicit in philanthropic decisions as giving capacity improves. Will funders revert to long-standing commitments to cultural or educational or religious institutions? [Probably most.] Will we begin to see major shifts to human service organizations to replace the profound cutbacks from government sources? [I suspect that this will be a minority position] Will funders, many of whom have become more focused and rigorous in their decision making during these tougher times, have a level of impatience with decision-making and service delivery systems of well established organizations? [Likely] Or will they use their replenished pocket books to take a deep breath and take a break from the hard challenges of philanthropy? [For some but not for most]. And most challenging of all, will legislation impacting Medicare, SNAP [food stamps], tax deductions, etc. become such a game changer that none of the patterns of the last 70 years will predict our future philanthropic behavior? [The really big unknown.]

If we want to begin to do some prognostication about philanthropic trends, these are some of the questions that engage me, and I suspect many of the other thought leaders in our field. Dollar amounts matter; where those dollars will be spent matters more.

Richard Marker serves as an advisor to foundations, independent funders, and not-for-profit organizations; he is a Senior Fellow in Philanthropy at NYU’s George Heyman Jr. Center for Philanthropy. Richard specializes in strategic philanthropy and planning and blogs at Wise Philanthropy.