As the Wall Street Journal reports, for the second year in a row "philanthropy has seen the deepest decline ever recorded by the Giving USA Foundation, which has tracked annual giving since 1956."
There are bright spots in the report (corporate giving is up, for example), and the earnest folks at the Nonprofit Quarterly seem to have found all of them in their initial review of the report.
There will be much to say about the report in the coming months as the numbers are unpacked and put into their proper contexts. A couple things stand out, however. Giving to foundations is down 8 percent or $31 billion. Charitable bequests declined by 23.9 percent over 2008 to $23.8 billion. The drop in bequest giving may be explained, at least in part, by an unusually high level of bequest giving in 2008.
Taken together, however, bequest giving and giving to foundations represents a segment of giving that is highly deliberative and sensitive to tax implications, estate planning rules, government regulation, and perceptions about the future of one's own financial well-being. To see these two segments of American philanthropy in such significant decline, year over year, may require greater explanation than simply the present state of the economy.
It is difficult to know precisely what role the uncertain regulatory environment in Washington, DC, is having on charitable giving. It can't be good. Is the Charitable Deduction on higher incomes increasing or decreasing? Will the estate tax be reinstated and at what rate? Furthermore, what will be the impact on wealth creation of record deficit spending and higher taxes associated with health reform and the litany of government bailout packages? Will an expanded government role in playing philanthropist (through initiatives like the Social Innovation Fund) create a perception that government is handling problems historically addressed by private philanthropy?
Is government crowding out private philanthropy?
As I said, there is much to be unpacked in Giving USA 2010. Nevertheless, the drop in contributions to foundations coupled with the decline in bequest giving may together provide one window into the impact that an uncertain regulatory regime in Washington is having on American's generosity.
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What exactly are the problems historically addressed by philanthropy and where is the evidence for crowding out? The evidence seems to suggest that it is the bad economy caused by an extreme faith in the market and too much deregulation that has affected giving.