1

Philanthropy and Voluntarism

2

Outline

• Individual giving• Giving innovations and

institutional philanthropy

3

Individuals Give the Bulk of Donations

Ref.: Oster 1985

4

Religion Gets the Biggest Part of Donations

5

Per Capita Donations 1995,Excluding Religion

€ 0

€ 50

€ 100

€ 150

€ 200

€ 250

€ 300

€ 350

U.S

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xico

Ref.: Salamon, et al 1999

6

Private Contributions, Corrected for Income

Country Non-religious charitable donations per capita

Ranking Ranking, correcting for purchasing power*

United States $278.04 1 2 Israel $210.54 2 1 Spain $121.92 3 3 Belgium $118.60 4 8 UK $117.44 5 4 Sweden $109.30 6 6 Ireland $97.31 7 5 Netherlands $93.77 8 20 Norway $89.28 9 28 France $73.90 10 25 Finland $70.02 11 24 Australia $68.89 12 27 Japan $53.74 13 29 Austria $47.48 14 31 Germany $39.33 15 30 Argentina $28.69 16 13 Hungary $25.56 17 9 Italy $19.25 18 32 South Korea $19.24 19 7 South Africa $13.94 20 16 Slovak Republic $12.60 21 22 Czech Republic $11.66 22 26 Poland $10.52 23 18 Brazil $7.48 24 17 Colombia $7.06 25 15 Peru $6.31 26 10 Kenya $2.08 27 11 Tanzania $1.67 28 12 Romania $1.52 29 21 Mexico $1.06 30 23 Pakistan $1.05 31 14 Philippines $0.48 32 19

7

Gifts of Time

0%

10%

20%

30%

40%

50%

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10%

20%

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8

Percent of Income Givenby State*

State Charity as a % of AGI Average level of charity State Charity as a % of AGI Average level of charityUtah 6.2% $5,347 California 2.7% $2,307Alabama 4.3% $3,656 Delaware 2.7% $2,338Mississippi 4.3% $3,699 Indiana 2.7% $2,301Tennessee 4.3% $3,713 Michigan 2.7% $2,299Arkansas 3.9% $3,314 New York 2.7% $2,283South Carolina 3.8% $3,248 West Virginia 2.7% $2,273Louisiana 3.6% $3,086 Illinois 2.6% $2,219Oklahoma 3.6% $3,062 Iowa 2.6% $2,184D.C. 3.5% $3,052 Montana 2.6% $2,177Georgia 3.5% $3,016 Nevada 2.6% $2,202Texas 3.5% $3,024 Pennsylvania 2.6% $2,189Idaho 3.4% $2,949 Washington 2.6% $2,226North Carolina 3.4% $2,938 Colorado 2.5% $2,111South Dakota 3.4% $2,864 Minnesota 2.5% $2,172Florida 3.2% $2,723 Ohio 2.5% $2,114Maryland 3.1% $2,678 Oregon 2.5% $2,127Kansas 3.0% $2,532 Hawaii 2.4% $2,096Wyoming 3.0% $2,599 New Jersey 2.4% $2,110Kentucky 2.9% $2,487 Wisconsin 2.1% $1,798Nebraska 2.9% $2,481 Connecticut 2.0% $1,740Alaska 2.8% $2,408 Maine 2.0% $1,677Arizona 2.8% $2,380 Rhode Island 2.0% $1,709Missouri 2.8% $2,361 Vermont 1.9% $1,611New Mexico 2.8% $2,413 Massachusetts 1.8% $1,591North Dakota 2.8% $2,421 New Hampshire 1.8% $1,536Virginia 2.8% $2,451 U.S. average 2.8% $2,423

*Taxpayers earning $75,000-$100,000 Ref.: Chronicle of Philanthropy, 8-8-02

9

What Is Associated with Charitable Giving?

Ref.: PB&F 2002

Gender: Effect depends on income

Variable Most common direction of effect on giving

Taxes Positive

Income Positive

Wealth Positive

Race Insignificant

Education Positive

Age Positive

10

The Importance of Family

51%

56%

61%

46%

48%

50%

52%

54%

56%

58%

60%

62%

1 2 3 to 6

Family size

Per

cen

tag

e vo

lun

teer

ing

11

Families teach giving behavior

56%

38%

0%

10%

20%

30%

40%

50%

60%

Parents volunteered Parents did not volunteer

Per

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12

The Role of Religion

Charity measure Religious people

Secular people

t-statistic

GIVES 0.91 0.66 293*

VOLUNTEERS 0.67 0.44 137*

VALUE OF GIFTS $2,210 $642 88*

GIVES TO NON-RELIGIOUS CAUSES

0.71 0.61 141*

VOLUNTEERS TO NON-RELIGIOUS CAUSES

0.60 0.39 121*

Ref.: 2000 SCCBS

13

The Link BetweenReligion and Volunteering Correcting for

country and demos, religious +18 points over secular

Religious participation

70%60%50%40%30%20%10%0

Ann

ual v

olu

nte

erin

g ra

te

60%

50%

40%

30%

20%

10%

0

Switzerland

Denmark

Chile

Portugal

Cyprus

France Slovakia

Latvia

Spain

Japan

Philippines

Canada

New Zealand

Russia

Poland

Slovenia

Czech Rep.

Sweden

NorwayNetherlands

Ireland

ItalyHungary

Austria

USA

N. Ireland

UK

E. Germany

W. Germany

Australia

Religious participation

70%60%50%40%30%20%10%0

Ann

ual v

olu

nte

erin

g ra

te

60%

50%

40%

30%

20%

10%

0

Switzerland

Denmark

Chile

Portugal

Cyprus

France Slovakia

Latvia

Spain

Japan

Philippines

Canada

New Zealand

Russia

Poland

Slovenia

Czech Rep.

Sweden

NorwayNetherlands

Ireland

ItalyHungary

Austria

USA

N. Ireland

UK

E. Germany

W. Germany

Australia

14

Informal Giving

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Money Time Blood Help tohomeless

Place inline

Mistakenchange

Empatheticattitudes

Religious

All

Secular

Data: 2002 GSS

15

What Is “Religious”?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

People who devote “a

great deal of effort” to

their spiritual lives

People who devote

“no effort” to their

spiritual lives

Gives to all causes

Gives to nonreligious

causes

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

People who belong to ahouse of worship

People who do notbelong to a house of

worship

Data: 1999 Arts and Religion

16

Nature vs. Nurture

• A “God and Giving Gene”?– .25-.50 of “innate religiosity”

appears to be genetic– Why not innate charity as well?

• Learning hypothesis– Giving is a learned behavior, and

religious communities teach it

17

Evidence in Favor of Learning

Frequency of church attendance as a child

Percentage of secularist adults who donate to

charitySecular charities

only

Every week 47% 40%

Almost every week 41% 37%

A few times a year 35% 32%

Never 26% 29%

Data: 1999 Arts and Religion

18

Giving Rises with Income (Mostly)

Annual household income

Average value of annual

charitable gifts

Percentage giving

money to charity each

year

Average annual gifts

as a percentage of income

0-$20,000 $458 64% 4.58% $20,001-$30,000 $710 75% 2.84% $30,001-$50,000 $1,093 84% 2.73% $50,001-$75,000 $1,530 89% 2.45% $75,001-$100,000 $2,059 92% 2.35% $100,001 and above $3,089 94% 3.09%

19

Giving Curve:Industrialized Nations

0

0.01

0.02

0.03

0.04

0.05

0.06

$0 $25,000 $50,000 $75,000 $100,000 $125,000

1999 Y

D/Y

Ref.: CEX data, first quarter 1999

20

Transition Economies

Income percentile

Con

trib

uti

on

s a

s a

perc

en

t of

incom

e in

Ru

ssia

0

1

2

3

4

5

6

7

0 20 40 60 80 100

Ref.: RLMS data, 1993

21

Philanthropy by the Poor (U.S.)

• Why do we care?– Philanthropy is not just about money– Charitable behavior in disadvantaged

communities• All income is not created equal

– Earned income pushes giving up among the poor– Government transfer income pushes giving down– The poor do not appear more likely to give

informally than others• Extra wealth increases giving by the poor more than

among the rest of the population– Savings– Home ownership

Ref.: PB&F 2002

22

Does Charity Lead to Higher Incomes?

• Statistical objectives– Look only at the part of the income-giving

relationship that goes from charity to income changes

– Control for other factors like education, age, and race

• Two people, identical in every way, except that one gives $100 and the other doesn’t

• First person enjoys—as a result of the gift—$375 dollars in higher income

23

Philanthropy and Economic Growth

$-

$100

$200

$300

$400

$500

$600

$700

$800

1957 1962 1967 1972 1977 1982 1987 1992 1997 2002

An

nu

al g

ivin

g p

er c

apit

a

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

Per

cap

ita

per

son

al in

com

e

Giving

Income

• 1% increase in giving this year ($1.9b total) results in a GDP increase of $37b

• Philanthropy is an excellent investment

24

Givers are much happier than nongivers

• Why?– Our brains are wired to serve– Approval of our peers– Improved control– Better health– Better citizenship

25

Outline

• Individual giving• Giving innovations and

institutional philanthropy

26

“New Philanthropy”

• New philanthropists appear different from their predecessors– Younger wealthy give less than older wealthy, on

average– New wealth comes from new sources– New philanthropy tends to be more “hands-on” and

entrepreneurial– Relatively little geographical bounding

Ref.: Brown 2000

U.S. Silicon Valley, CA (1998) Belongs to a work-related organization 16% 52% Belongs to a religious organization 70% 26% Gives to religious organizations 48% 37% Gives to education organizations 20% 36% Gives to human-service organizations 25% 18%

27

The Future with New Philanthropy

• Why pay attention to these trends?– Economy increasingly hi-tech: new

philanthropy will soon not be “new”– $11.6 trillion to be bequeathed from 1998-

2017, much to new philanthropists

• What do the trends suggest?– Future for old-money charities is uncertain– Fundraising should focus on industries and

interests, not geography– Will new philanthropy gravitate to religion

as it ages?

Ref.: Brown 2000

28

E-philanthropy

• Harvard Business School’s Initiative on Social Enterprise: By 2010, 1/3 of all philanthropy will take place over the internet…

• …but at present, only $10m is given in e-philanthropy each year ($1 for every $13,000 given)

• E-philanthropy firms (e.g. Charitableway) failing

Ref. Brooks 2002

29

Planned Giving Instruments

• Pooled income funds– Pay lifetime annuities– Split between charity and beneficiaries

• Charitable lead trust– Dividends pay to charity till time t– After t, principal pays to beneficiary

• Charitable remainder trust– Dividends pay to beneficiary till time t– After t, principal pays to charity

Ref.: Hodgkinson (Salamon) 2002

30

Development Innovations

• Venture philanthropy– Foundation giving in search of large,

immediate payoff outcomes across a wide variety of potential activities

• E-philanthropy– Donations given over the internet

• Credit card donations taken from websites• Donation portals: collect donor information and

donations for a commission• Charity malls: For-profits that advertise on NPO

sites and donate a percentage of sales to the charity

Ref. Brooks 2002

31

Institutional Philanthropy

• Foundations– 50,000 and growing– $450b in assets

• Corporations– 75% of corporate giving not from corporate

foundations– Cash and in-kind giving

• Federations (pass-through organizations)– General: United Ways– Specific: American Cancer Society, March of Dimes

• Gift funds– Donor-advised and controlled accounts– Run by for-profit investment firms

Ref.: Lenkowsky (Salamon) 2002

32

Foundation Types

• Independent: 95%– Operating (6%)– Non-operating (94%)– Usually connected with family

fortunes

• Community: 1%– Pool community assets

• Corporate: 4%

Ref.: Lenkowsky (Salamon) 2002

33

Challenges to Institutional Philanthropy

• Payout rate– Currently 5%, including ops costs– Proposal: 5% after ops

• Effectiveness– Measuring outcomes– Accountability

• Philanthropic competition

Ref.: Lenkowsky (Salamon) 2002