By Jon Bergdoll and Anna Pruitt, Ph.D.
Giving USA, researched at the Indiana University Lilly Family School in partnership with Giving USA Foundation, is the longest running and most trusted annual report about U.S. philanthropy. Each year, Giving USA publishes an estimate of total charitable giving in the U.S. In 2020, that estimate reached a record $471.44 billion.
What types of giving are counted in Giving USA?
Giving USA estimates charitable giving by individuals, foundations, estates, and corporations. For the purposes of Giving USA, charitable giving is defined as donations made to organizations designated as 501(c)3 by the IRS, which include public charities, private foundations, and religiously-exempt organizations such as congregations.
For the giving by individuals estimate, Giving USA includes a calculation for households that itemize deductions each year, as well as households that do not itemize their deductions, thus capturing a nationally representative picture of charitable giving by all households in the United States.
For estimating individual giving for those who itemize each year, the model begins with tax data, specifically, data the IRS received from individuals. The model incorporates various economic variables such as personal consumption and changes to the S&P 500 Index.
To estimate individual giving for those who do not itemize, as has been done for the past decade, Giving USA develops an estimate using the Lilly Family School of Philanthropy’s Philanthropy Panel Study (PPS) data, which is based on the responses of about 9,000 American households on their charitable giving behaviors.
We work hard to ensure that this picture of charitable giving to 501(c)3 and other charitable organizations is as thorough as possible. However, the most recent data from the PPS indicate that under 50 percent of all U.S. households made a charitable contribution in 2018. What does the picture look like for other types of giving back that do not go to 501(c)3 organizations?
What types of giving are not counted in Giving USA?
Of the ways to give back that are not captured in Giving USA, two of the most common approaches are informal giving and crowdfunding.
- Informal giving
Informal giving is defined as giving directly to individuals, households, or businesses. One study found that the average Arizonan household gave $501 informally, and recent PPS data similarly found a mean of $441 for giving outside of child support and alimony to individuals living outside the home.
Unfortunately, informal giving is difficult to estimate since there is no formal and consistent way that this giving is being counted; unlike giving to a 501(c)3 organization, informal gifts cannot be deducted for tax purposes. One thing we do know, however, is that donors of color are more likely to participate in this direct form of giving.
Crowdfunding is a blanket term that simply refers to the practice of raising small amounts of money from a large number of funders to support a project. Crowdfunding can include campaigns that raise funds for nonprofits as well as campaigns that raise funds for individuals or businesses.
Crowdfunding campaigns that raise dollars for nonprofits are included in the Giving USA totals, and a recent study by our school found that about 22 percent of crowdfunded dollars went to nonprofits. However, the largest share of crowdfunding dollars (58 percent) went to helping individuals (family, acquaintances, or strangers). These dollars are not be captured in the Giving USA totals. We also know that women as well as younger and more diverse donors are likely to give to crowdfunding campaigns.
Unfortunately, like informal giving, there is no standard data collection on crowdfunding that could serve as the basis for an estimate.
While Giving USA does a great job of capturing giving to 501(c)3 and other formal charitable organizations, there is room for additional research. We see a growing, dynamic, and diverse donor base giving through informal channels as well as crowdfunding. Given the importance of these approaches to philanthropy, we also hope to see growth in the data collection in this area.