The 2019 Changes to the Giving Landscape report, researched and written by the Lilly Family School of Philanthropy and funded by Vanguard Charitable’s Philanthropic Impact Fund, analyzes newly-released data from the school’s Philanthropy Panel Study (PPS) in order to determine trends of giving from 2000 to 2016.
To prepare this report, the school first received the PPS data from the University of Michigan. The university coordinates and runs the Panel Study on Income Dynamics (PSID), a longitudinal study surveying approximately 10,000 families every two years about their employment, income, wealth, expenditures, health, marriage, childbearing and child development, education, and other topics. The PPS, developed and funded by the school, is the philanthropy module of the PSID.
“The University of Michigan has been conducting this study since 1968. The same families are included in every wave of the study, so we’re able to see continuity over time,” explained Chelsea Clark, Ph.D., research associate at the school and one of the investigators for the report. “The PPS module has been included in the PSID since 2000 and nine waves have been released as of today. The PPS gives us information about which households gave, how much they gave, to what purpose they gave, as well as other data.”
For the Changes to the Giving Landscape report, the school’s research team decided to specifically focus on the Great Recession and how that affected giving.
“With the Recession occurring in the middle of our time series, we were able to compare how giving differed from before to after it. The Recession had a large impact on the economy, so we wanted to understand what happened to giving at that point, and how it has responded since,” Clark said.
Clark and Xiao Han, research associate, discovered that recent data further illustrated a previously-known trend of a declining percentage of households who give. In 2000, 66 percent of households gave, while in 2016, 53 percent of households gave.
“The percent of households who gave stayed fairly stable from 2000 to 2006, but then began declining in 2008,” Han said.
“The Recession seems to have had an impact on household giving. The percent of households that give has been declining since then and we have yet to see a rebound,” Clark added.
Both Clark and Han, though, noted interesting findings about the percent of income given by American households.
“We wanted to dig into the longstanding narrative that Americans give two percent of their income to charity every year. People frequently cite the two percent statistic and then wonder how they can work to increase that percentage,” Clark explained. “Not only does the PPS have this data, it also contains data on various demographic groups. We wondered whether those groups all gave two percent, or whether certain segments of the population gave a larger percentage of their income, while others gave a smaller percentage. Thus, explaining how giving could average out to two percent across all groups.”
In the report, the researchers looked into age, gender, race, and other demographic factors. They also dove deeper into economic factors, specifically studying income, wealth, and job status.
Clark and Han found that different factors do impact that percent of household income given to charity.
“There are certain segments of the population who give a higher percentage of their income. People with higher incomes and more wealth tend to give more than people with lower incomes and less wealth. Older generations tend to give a higher percent of their income compared to younger generations.
“Some demographic groups gave three to five percent of their income, while others gave half of a percent. But overall, this balances out to around two percent when you study the full picture.
“There weren’t significant differences in the percent of household income given from the pre- to post-Recession period based on race and gender. Instead, we found that economic variables had more of an impact on changes to giving,” Clark explained.
Encouragingly, the overall average percentage of income given by all households remained relatively stable from before to after the Great Recession.
“Most of the decline in the percent of households who gave might have been driven by declines in income, or by households who stopped giving or never formed a habit of giving, during the Recession era. In terms of the percentage of income given, that stayed relatively stable over the years,” Han said.
In other words, households who continued to give from before to after the Great Recession continued giving a similar percentage of their incomes, even if their income dropped during this timeframe.
It’s an important finding for fundraisers and other nonprofit practitioners to take note.
“Households who continued to give, gave consistently, even under difficult economic conditions,” Clark said. “Even though the Great Recession was the biggest economic downturn since the Great Depression, many people didn’t stop giving. The dollar amount they gave may have changed, if income decreased, but most people gave a consistent percent of their income, even during hard times.
“For nonprofit practitioners, it’s important to note that you can keep fundraising, even during a Recession. You don’t have to be worried that all of your donors will completely stop giving.
“Giving can become a habit. Even if the economy is hit hard, some people will not change their giving behaviors dramatically.”
The two researchers also emphasized throughout the report that other factors do influence giving besides the economy.
“We discussed the decline in religiosity in the U.S., because people who are more religious not only give more to religious causes, but they also give to secular causes at higher rates. As a result, it’s a concern that as Americans become less religious, they may also become less charitable, impacting philanthropy,” Clark said.
“In addition, technology is rapidly changing how people give. Crowdfunding is not counted in the PPS. Giving to social enterprises is not included. It’s possible that the percentage of households giving would look different if we measured all of these other types of giving.”
This fall, the school will also use the PPS data to produce a research brief and update its GenerosityForLife website, as well as prepare fact sheets with key findings and trends from PPS data.
“This is a fantastic dataset that can be used to look at giving in many different ways. We hope to show what we’ve learned from it so far and how we hope to utilize it in the future,” Clark said.