Dr. Patrick Rooney
Executive Associate Dean for Academic Programs and Professor of Economics and Philanthropic Studies at the Indiana University Lilly Family School of Philanthropy
On June 15, JB+A welcomed Dr. Patrick Rooney, Executive Associate Dean for Academic Programs and Professor of Economics and Philanthropic Studies at the Indiana University Lilly Family School of Philanthropy, back to Kansas City for his 13th year of presenting Giving USA. This year’s report was presented as part of the 501(c)Success National Speaker Series program of Nonprofit Connect, sponsored by Jeffrey Byrne + Associates and U.S. Trust.
Powered by a booming stock market and a strong economy, charitable giving by American individuals, bequests, foundations and corporations to U.S. charities surged to an estimated $410.02 billion in 2017, according to Giving USA 2018: The Annual Report on Philanthropy for the Year 2017. In addition to his presentation covering the sources and recipients of giving (check out the 2017 charitable giving numbers here). Dr. Rooney provided insights about five key areas that impact philanthropy:
- Civil Society
- Tax Policies
- Disaster Giving
- Donor-Advised Funds
- Generational Giving
- Civil Society
We’ve heard it before from Dr. Rooney: more people give than vote, and that trend hasn’t changed. A study found that in every presidential election year (for which there is data), more Americans have donated than voted! As the world of politics becomes more and more turbulent, don’t lose sight of the role charitable giving plays. In some cases, changes in public policy or budgets actually drive giving (think ACLU for example, or “rage giving”.) But these reactionary gifts haven’t quite “moved the charitable giving needle” overall. - Tax Policies
Dr. Rooney addressed the misperception that people donate because of a tax deduction. He pointed out the irrationality of that behavior (if someone only cared about himself he would never give, because one is always in a better fiscal position by NOT giving away money). BUT, theoretically anyway, a tax deduction lowers the “cost” of giving (the after-tax price) and consequently, eliminating the tax deduction increases the cost of giving. Dr. Rooney’s research concluded a 35% tax rate and an increased standard deduction would reduce charitable giving by more than $13 billion, and that didn’t include impact from dropping corporate tax rates or doubling the exemption for the estate tax. The research also noted that adding an expanded charitable deduction would increase charitable giving by $4.8 billion. Bottom line, tax and fiscal policy decisions impact charitable giving and the nonprofit sector. - Disaster Giving
Does giving to disasters usurp giving to other sectors? This is an understandable concern, given the phenomenal response we’ve seen over recent years to both domestic and international disasters. But Dr. Rooney reassures us that research indicates there’s not significant displacement: gifts to disaster response average $50 and are in high quantity immediately following a disaster but tend to (but not always) taper off with time and as media coverage shifts away from the disaster. Studies support that there are no permanent effects on giving – to either disaster relief organizations or other charities. - Donor-Advised Funds
The dialogue and debates surrounding Donor-Advised Funds (DAFs) seem endless – but for better or worse, DAFs are here to stay (DAF asset values have more than doubled between 2010 and 2015, from $33.6 billion to $78.6 billion) and are likely to become even more popular with the doubling of the standard deduction, given they are a useful way to “bunch” gifts in a year and maximize tax deductibility. DAFs are often the recipients of “liquidity moments” – meaning, donors can easily place their resources into a DAF and then allocate gifts through the DAF to charities over a period of time.Dr. Rooney cautioned against assuming all gifts to DAFs would have been made directly to either public charities or private foundations if DAFs were not available. He reminded us all DAFs end up in charities eventually (for example, commercial holders of DAFs have policies in place to ensure funds are donated from “dormant” accounts after a set period of time) and are really permanent commitments to philanthropy. It’s still unclear if/the extent to which DAFs cause displacement or reallocation of giving. - Generational Giving
Dr. Rooney shared observations on generational succession in American giving and stressed the importance of understanding differences by generation. The Greatest and Silent generations (born before 1945) had a sense of common purpose, a high confidence in institutions and were active in civic participation. They overcame the Great Depression and World War II and created Social Security. These generations had a larger percentage of families who gave large amounts than later generations.Boomers, GenXers and Millennials (all born after 1946) place a higher emphasis on autonomy, have a lower confidence in institutions and demonstrate less empathy. These generations also participate less in formal religion and experienced more political and economic scandals. These generations have a smaller percentage of families giving large amounts than the Greatest and Silent generations, but among these generational families who do give large amounts, the level of giving is higher than or similar to the level of previous generations. Dr. Rooney stated a critical statistic is that donors are down, and dollars per donor are up but starting to slip. He stressed it seemed unlikely we would increase total giving by applying more pressure to existing donors – rather, we need to have a clearer understanding of why donors are down and better grasp gender differences by generation.
Remaining aware of the deeper variables that impact giving will help us understand our donors and prospective donors better, and enable us to build stronger relationships with them – ultimately improving the overall outcomes of philanthropy, and most importantly, improving our communities.
