Annual Tally Shows Reduced U.S. Giving. But How Reliable is This Data?

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Once again, Giving USA has released its annual statistics measuring Americans’ charitable giving for the previous year, in this case, 2018. And once again, people who closely follow philanthropy trends are skeptical about the data.

According to “Giving USA 2019: The Annual Report on Philanthropy for the Year 2018,” giving by individuals declined by 3.4 percent adjusted for inflation, a dip that researchers attributed largely to tax law changes that eliminated the need to itemize donations for most Americans and to stock market declines at the end of last year.

Meanwhile, giving by individuals who left a gift to charity after their death declined by 2.3 percent, according to Giving USA. Some experts on bequests, as such gifts are known, said that they wanted to know how Giving USA researchers came up with that figure since the elimination of federal estate taxes has greatly limited actual reports of giving through estates in recent years. No other compilations of data exist.

Giving USA reports that foundation giving was up by 4.7 percent last year, while corporate donations increased by 2.9 percent.

One reason Giving USA’s data raises questions is that the figures it releases each spring are far from final; they are calculated before the availability of tax data and some economic and demographic indicators. Final estimates on charitable giving are not released until two or three years after the figures’ initial release. And such final estimates have become even harder to determine with the tax reforms of 2017, which removed the incentive to itemize charitable giving in the tax returns filed by millions of Americans. As a result, tax data now provide a far less comprehensive paper trail of household giving. To further compound the challenge, the IRS has not yet released final 2017 tax deduction figures; preliminary charitable deduction totals will not be available until early 2020.

In some instances, the academic estimates on charitable giving from Giving USA have proven to be wrong. For example, in 2011, academics at the Lilly Family School of Philanthropy at Indiana University who prepare Giving USA’s annual estimates reversed what the report previously said about giving during the recession. After stating that inflation-adjusted giving declined only slightly or held steady in 2008 and 2009, the academics later said that giving actually fell by nearly 15 percent after inflation.  

“Giving USA is transparent as to its methods,” said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy. Those methods, she said, are the same as the government uses to release figures on gross domestic product or unemployment. Just as the government adjusts its figures as final data becomes available, Osili said, so does Giving USA. At any rate, she added, over the last several years, there is a very small adjustment to the final estimates for charitable giving of between 1 and 2 percent.  

Giving USA is portrayed as a benchmarking tool, and has been touted as “the high holy week for philanthropy” by fundraising consultants. “Whether you’re a member of a development team, CEO, board member, nonprofit consultant or educator, Giving USA 2019 is an essential tool for success,” an article on the Giving USA site states. “It’s more than an intelligence report—it’s a guide to informed fundraising. Giving USA 2019 is filled with opportunities to benchmark your nonprofit against national trends.” 

“Giving USA is a good tool that represents a broad indicator of gross economic trends in giving,” said Robert Sharpe of the Sharpe Newkirk Group, a Memphis consulting firm. (One trend that has experts concerned is the fact that the percentage of all individuals giving dropped below 70 percent, according to Giving USA's latest data, a reflection of reduced numbers of middle-class Americans who can afford to give, said Laura MacDonald, founder of the Benefactor Group, a Columbus, Ohio, fundraising consulting firm.)  

But Giving USA represents an estimate of the aggregate results of hundreds of thousands of organizations of all shapes and sizes in all regions of the country. For that reason, it is not the best benchmarking measure to assess a particular charity’s fundraising performance against peers, Sharpe said.

A better method is to use industry subgroup information for higher education, healthcare, arts, social services, religion or other causes—or find a group of similar organizations in terms of their mission, location and size and form an agreement to share fundraising information. “This method may provide another source of benchmarking to be used in conjunction with Giving USA data,” Sharpe added.