Introduction

With data on million dollar giving in the US having been collected for more than a decade[1], it is evident that the financial crisis and economic downturn has had a significant and long-lasting impact on million dollar-plus donations. Both the number and total value of donations remain below pre-crisis levels.

That said, the increase in individual donors is encouraging. In 2014, more individuals gave gifts of at least a million dollars, more often, but in smaller amounts. This may signal that individuals and households now have greater confidence about the economy and are prepared to invest in philanthropy in a major way.

Given the relative openness and transparency of high-net-worth donor information, we are able to put together a clear picture of the nature and scale of such giving, and have made some observations about recent developments in US philanthropy.

 

 

[1] A Decade of Million-Dollar Gifts, in collaboration with CCS, researched and written by the Indiana University Lilly Family School of Philanthropy; and the Million Dollar List, http://www.milliondollarlist.org

Disaster response

Giving in response to disasters

Natural and man-made disasters made global headlines in 2014.

Among the most high-profile was the Ebola virus epidemic in West Africa, which was first reported in Guinea in March and quickly spread to neighboring countries[2].

This was the largest Ebola outbreak documented, and million dollar donors quickly stepped up to provide funds to combat this disease; some 10 gifts totaling more than $63m from US donors were noted. Gifts came from all donor types, but Paul Allen, co-founder of Microsoft, was particularly significant; giving to the cause both as an individual and through his family foundation[3].   

 

 

 

[2] Centers for Disease Control (CDC), 2014 Ebola Outbreak in West Africa

[3] Paul Allen, Philanthropy: Ebola Program

Public-private partnerships

Public-private partnerships: The Detroit factor

As in previous years, the relationship between government funding and private philanthropy continued to play an important role in US society in 2014.

Detroit is a prime example of such collaboration. In 2014, the city emerged from bankruptcy (the largest bankruptcy of any municipality in the country to date), with foundations in the area committing significant financial support, in particular to its government pension system. In what has been termed a ‘grand bargain’, ten major foundations in Detroit, as well as supporters of the Detroit Institute of Arts, pledged a total of $466m over 20 years to the government pension fund to enable the city to pay the pensions promised to workers and the retired[4].

Supporting a pension system is not the typical realm of major foundations, but the hope is that in doing so, Detroit will be able to recover faster from bankruptcy proceedings and its workers and pensioners will face a less uncertain future. There is concern in some quarters that this situation sets a dangerous precedent – with the government expecting foundations and private funding to step in in similar circumstances – but others note the unusual nature of the situation and the fact that Detroit is unique in its large number of very wealthy foundations.

Detroit charities featured heavily in million dollar giving data in 2014, with seven $1m+ gifts alone going to the Detroit Institute of Arts. Local car manufacturing donors such as the Chrysler Foundation, Ford Motor Company Fund, General Motors Corporation and Toyota were among the major donors to city institutions. One gift of note was for $2m from the Michigan Health Endowment Fund to the local United Way affiliate to help Detroit residents whose water service had been suspended due to overdue water bills[5].

While Detroit’s ‘grand bargain’ is the most significant example of a public-private partnership in 2014, other gifts similarly illustrated the capacity for philanthropy to support the ‘public good’. These gifts went to a diverse set of government entities and causes, from restoring city parks and building community centres, to supporting public school systems and improving roads and other infrastructure.

Responsible investment

Responsible investment

Both in the US and the UK, foundations with endowments are starting to think more about how they can best align their assets with their mission. 

Some adopt the practice of responsible investment, which takes environmental, social, governance and ethical considerations into account when investing the endowment. They may also incorporate impact investing, by investing in businesses or funds that produce a financial as well as a demonstrable social and/or environmental return.

Social and mission-related investing are becoming increasingly common in the foundation world[6]. While developing the skills and mindset to engage in these investments may be a challenge for organisations new to this area, the benefits of having greater opportunities to leverage assets to achieve their mission, as well as generate financial returns, cannot be ignored.

The high-profile Divest:Invest campaign is just one example of a call to action for foundations to think differently about how they manage endowments. The campaign encourages divestment from the fossil fuel industries (coal, oil and gas), replacing this with investment in clean energy, clean agriculture and local business. A significant number of high-profile individuals and organisations have joined the movement, including Rockefeller Brothers Fund.

[6] R Cohen, Put your Money where your Mission is, Non-Profit Quarterly (NPQ), 2013 

History

What is the history of philanthropy in the US?

Philanthropy in the US dates back to the country’s colonial period, and was influenced by the Puritan beliefs of its earliest founders. The first major bequest in US history was in the 17th century from John Harvard to what is now Harvard University. From that time on, the US has been known for its large numbers of associations and other non-profit organisations.

Today, philanthropy in the US is encouraged by a number of factors, including the tax code, as gifts to charitable organisations are usually tax-deductible. The US also has a strong culture of publicity surrounding charitable giving. Whether by individuals, foundations or corporations, such giving is often high-profile and can serve to build the reputation of the donor. Indeed, it is the norm to be open about one’s giving at all levels of the wealth spectrum. Philanthropy is also well documented, for example in the Chronicle of Philanthropy.

Giving by Americans has remained broadly consistent over the past decade, at around 2% of GDP, though it does fluctuate depending on the state of the economy.

It is important to note that the US is not a welfare state. Compared to countries such as the UK, the government does not provide the same degree of social services. This significantly influences the scale and nature of philanthropy (as does tax policy), and shapes the way in which donors think about their giving relative to the work of government.

While philanthropy in the US has undergone many changes through its history, the sector remains strong and is receiving ever-greater attention. Philanthropy by wealthy individuals and families is widespread; indeed, nearly every high-net-worth household in the US contributes to the non-profit sector.