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. Israel Spain Belgium U.K. Netherlands Ireland France Australia Finland Japan Austria Germany Argentina HungarySlovakia Czech Republic Brazil Colombia Peru Romania Mexico Ref.: Salamon, et al 1999

6 Private Contributions, Corrected for Income

7 Gifts of Time

8 Percent of Income Given by State* *Taxpayers earning $75,000-$100,000 Ref.: Chronicle of Philanthropy,

9 What Is Associated with Charitable Giving? Ref.: PB&F 2002 Gender: Effect depends on income VariableMost common direction of effect on giving TaxesPositive IncomePositive WealthPositive RaceInsignificant EducationPositive AgePositive

10 The Importance of Family 51% 56% 61% 46% 48% 50% 52% 54% 56% 58% 60% 62% 123 to 6 Family size Percentage volunteering

11 Families teach giving behavior 56% 38% 0% 10% 20% 30% 40% 50% 60% Parents volunteeredParents did not volunteer Percentage of adults who volunteer

12 The Role of Religion Charity measureReligious people Secular people t-statistic GIVES * VOLUNTEERS * VALUE OF GIFTS$2,210$64288* GIVES TO NON- RELIGIOUS CAUSES * VOLUNTEERS TO NON- RELIGIOUS CAUSES * Ref.: 2000 SCCBS

13 The Link Between Religion and Volunteering Correcting for country and demos, religious +18 points over secular

14 Informal Giving 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 a house of worship People who do not belong to a house of worship Data: 1999 Arts and Religion

16 Nature vs. Nurture A “God and Giving Gene”? – 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 charity Secular charities only Every week47%40% Almost every week41%37% A few times a year35%32% Never26%29% Data: 1999 Arts and Religion

18 Giving Rises with Income (Mostly)

19 Giving Curve: Industrialized Nations $0$25,000$50,000$75,000$100,000$125, Y D/Y Ref.: CEX data, first quarter 1999

20 Transition Economies 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 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

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 , 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