‘Tis the Season of Giving

December 7, 2020

Giving Tuesday was last week, and I thought this would be a good time to share some statistics on charitable giving. The fastest-growing part of the United States economy is now the non-profit sector, which has grown by 25% over the last decade and now represents 5.4% of GDP and 10% of jobs. In 1940 there were 12,500 registered non-profits in the United States; today that number is around 1.6 million. Non-profits now employ 12.3 million people, and receive support from 64 million volunteers and board-members.

In America’s early days, communities banded together to form hospitals, schools, libraries, fire departments, and orphanages. Some of these early non-profits are still in operation today, such as The Library Company of Philadelphia, which is one of the many non-profits founded by Benjamin Franklin. This independent research library focuses on early American society and culture, and has fascinating exhibitions available online such as Women Get Things Done (Women’s Activism from 1860 to 1880).

Tax incentives have, to some extent, shaped modern non-profits and the way we interact with them. Since the establishment of the federal income tax in 1913, the tax code has recognized an increasing variety of tax-exempt organizations. Initially groups were identified as “religious, charitable, scientific or educational” but later Acts (1918, 1921, 1954) extended the definitions to more than 30, and established the modern Section 501(c) that we use today. I am sure you all are super interested in the tax history, so you can find a full timeline in this paper – https://www.irs.gov/pub/irs-soi/tehistory.pdf. Of course, non-profits could not function without donations, so the charitable deduction was not far behind. Section 170 was enacted in 1917 and has been revised more times than I could count. Legislators still seem to be arguing about whether or not to move the deduction “above-the-line” which may increase giving among non-itemizers, a substantially higher percentage of the population under current regulations. This year, in response to the pandemic, the CARES Act temporarily eliminated the deduction limitation for cash contributions to eligible charities. If you are interested in giving more away, as a percentage of your income, now may be the time to do it!

An interesting decade-long study by the Charities Aid Foundation, the World Giving Index,  analyzes charitable giving behavior around the world. To collect data on monetary and non-monetary giving, individuals were asked if they’d helped a stranger, donated money to a charity, or volunteered time to an organization in the last month. The current survey report gave the US a score of 58%, earning it the title of world’s most generous country over the last 10 years. Americans gave $449.64 billion personally in 2019 (5.1% increase), corporate giving increased to $21.09 billion (13.4% increase), and foundation giving increased to $75.69 billion (2.5% increase).

In whatever way you interact with your preferred organizations this season, I hope it brings you much joy and a sense of community during this difficult time when many of us are feeling quite isolated.

Whitney Butler