The Changing Face of Philanthropy

December 2006 Special Sections

In 2005, corporations and individuals donated more than $260 billion to charity, a 6 percent increase over the previous year’s total of $245 billion, according to a Giving Institute study. The numbers confirm what professionals in the nonprofit sector have long suspected—that people have been donating money more generously in the past few years.

Some of the increase can be attributed to an overall improvement in the economy, but at least half of last year’s boost came from donations after disasters like the Asian tsunami, the earthquake in Pakistan, and Hurricane Katrina, says Jean Vukas Roberts, director of gift planning at the St. Paul Foundation and a board member of the National Committee on Planned Giving. Additionally, more than 75 percent of the total giving—$199 billion—came from individuals.

After experiencing extreme natural and political disasters like hurricanes and the terrorist attacks of September 11, Americans are dramatically changing the way they engage with philanthropy by donating more money, increasing volunteerism, and giving with more intention.

“People are giving from deeper motivations than before. There is a search for meaning—these events were a wake-up call,” says Mary Ellis Peterson, gift planning officer at the Minneapolis Foundation. “People tell me, ‘It’s not about making money. It’s about finding meaning in my life.’ They want to pass their values to their kids by getting them involved and teaching them to be generous.”

The search for meaning plays out often at the Minneapolis Foundation. Seminars about tax savings through philanthropy don’t get nearly the robust attendance as sessions conducted by the Foundation on adding meaning to your life through giving.

During the last five years, Janel Goff has observed a desire to give with intention in her clients. Goff, first vice president of the Goff Investment Group with Merrill Lynch in Minneapolis, has helped many clients develop mission statements for their family’s philanthropic giving. Instead of simply responding to phone calls and letters soliciting donations, some of Goff’s clients now use a mission statement to proactively guide the causes or organizations they plan to support.

“The first thing people have to do is ask themselves what matters most: What experiences have impacted their lives? What do they value most?” says Goff. “It’s a great way to get started. Sometimes people think it’s all about writing checks. Checks are wonderful, of course, but many nonprofits will say people should get involved and get passionate about giving.”

Building Legacies
In addition to giving more money and making philanthropic decisions based on a carefully crafted mission statement, individuals have also discovered more structured ways to have a meaningful impact on an organization. Many donors have started directing their most valuable assets, such as real estate, appreciated stock, and life insurance policies, to nonprofits, says Roberts. They understand these types of gifts can have a deeper impact on a cause than a cash donation.

Other donors enlist the help of a financial services firm, such as Northern Trust, to explore planned giving as a way to create a tax-wise charitable strategy. With a planned gift, donors can arrange a gift that provides income for themselves or their heirs while also benefiting a nonprofit. Planned gifts can include gift annuities, bequests, or charitable remainder trusts (see page 209). Planned giving has flourished during the past five to ten years, spurred in part by an increase in professional advisors who offer planning for charitable giving, Roberts notes. Nonprofits also have gotten more comfortable asking regular donors to consider a planned gift in addition to their annual checks.