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Financial Planning > Charitable Giving

Forget Chicken Little

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What’s the current state of philanthropy? Eileen Heisman, CEO of National Philanthropic Trust, notes that “when the market was high and we didn’t know how much higher it would go, charitable giving in generous sums was really the norm among the wealthy and the super-wealthy.” In that atmosphere and among those social groups, she recalls, “there was a lot of pressure to give to a gala or capital campaign by someone who was a friend or business colleague, but where you might not have any connection to the actual charity.” That’s no longer the case, she says, which returns charitable giving to its traditional role in American society. “Within the past five years, 83% of the gifts that were made came from individuals,” she says, citing GivingUSA data, which showed a total of $307 billion in charitable giving in 2008, down only 2% “in this terrible economy.” She says that while “many people think that the great majority of charitable giving comes from corporations and foundations, that’s never been true” in the United States. “Americans own philanthropy like no other country; we have a lot of government support for it,” including our tax laws, but she argues that people give not because of estate or tax planning reasons, but “because of the cause. They want to make a difference in the world…to leave a legacy, to include their children, to see the impact of their gifts. They want to be close to their giving.”

Citing de Tocqueville’s observations in the 18th century, since the beginning of American society with the town meeting, “Americans would gather as a group around a cause and make a difference,” Heisman argues, then “they dip into their own pockets and say “We’re going to support this charity.” There are a million charities in the United States, she says, representing “2% of the gross domestic product. It’s remarkable, actually.”

Heisman has a triage theory on philanthropy. One group consists of “natural givers, they’ll give no matter what. There’s another group of people who with the right nudging or education or social pressure, will give, too. There’s a third group that you can give all the estate planning reasons in the world, present them with every cause, have them watch every bleeding-heart video, but they just feel nothing and won’t act.”

While she admits that “charitable giving will lag a bit; people have to feel significantly wealthy for a time before they start giving away more assets,” she remains optimistic. “There’s a lot of Chicken Little going on right now about charitable giving. There’s this notion that things are really terrible out there in the charitable giving arena, but it’s not true.”