The Grim Reaper’s Big Year

You thought 2008 was a bad year for giving, what with the lousy economy, and what not? Well, by one popular measure, you are wrong. It was much better than in 2007.

Giving by major donors in the US doubled to more than $15 billion in 2008, from $7.3 billion the year before. Nine out of the ten biggest donors appeared on the list for the first time. That is the headline message of the latest Philanthropy 50 list produced by the Chronicle of Philanthropy.

Measuring giving is notoriously difficult.  It is hard to talk about year on year trends when a mega pledge one year can send the headline figure soaring. (Warren Buffett’s pledge to the Gates Foundation made 2006 the most generous year on record, with the top 50 donors giving away $50 billion.) The 2008 total got a boost from the Grim Reaper, for this was a year that happened to see big bequests taking up 7 out of the 10 top slots on the list, led by the notorious tax-dodger Leona Helmsley. 

There are also the problems that money pledged isn’t money given away, and even then actual donations usually go into a foundation that will use that capital to make grants over many years.

So the apparent boom in 2008 does not mean that funding is any easier for nonprofits. All the commentators agree that things are tough at the moment, as many of the super-rich are having to adjust to life with a few fewer billions of dollars. Philanthropy is not going to beat the belt-tightening.

But more important than the sums given, as we argue in the book, is the impact of giving. What does the list tell us about that? The large number of bequests is not a particularly good sign – the knowledge and skills that philanthrocapitalists bring to their giving is just as important as the money. If only Helmsley had applied all hercreativity to giving rather than fidling her tax returns. 

Yet there were two positive trends that the Chronicle reports in its analysis: first, a growing interest in climate change, particularly a $100 million gift by financier Gerhard Andlinger to Princeton University for a new centre on energy and the environment, which shows that philanthropists want to take on big, strategic issues; second, a focus by donors on rewarding good nonprofit leadership, which is going to be needed more now, in these difficult economic circumstances, than ever.

For more on prospects for philanthropy in 2009 we recommend the Foundation Centre’s focus on the economic crisis. One of the failings of philanthropy during the Great Depression was that donors too often gave to local causes where their money had less impact because these were not the most deprived areas. Foundation Centre is tracking the geographical distribution of grants across the US – it will be interesting to see how well today’s philanthropy can target the communities in most need, co-ordinating its response with government.