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Philanthropy and Voluntarism

Philanthropy and Voluntarism. Outline. Individual giving Giving innovations and institutional philanthropy. Individuals Give the Bulk of Donations. Ref.: Oster 1985. Religion Gets the Biggest Part of Donations. € 350. € 300. € 250. € 200. € 150. € 100. € 50. € 0. U.S. U.K. Peru.

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Philanthropy and Voluntarism

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  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. € 350 € 300 € 250 € 200 € 150 € 100 € 50 € 0 U.S. U.K. Peru Brazil Israel Spain Japan Mexico Ireland Austria France Finland Belgium Hungary Slovakia Australia Romania Germany Colombia Argentina Netherlands Czech Republic Per Capita Donations 1995,Excluding Religion Ref.: Salamon, et al 1999

  6. Private Contributions, Corrected for Income

  7. Gifts of Time

  8. Percent of Income Givenby State* *Taxpayers earning $75,000-$100,000 Ref.: Chronicle of Philanthropy, 8-8-02

  9. What Is Associated with Charitable Giving? Gender: Effect depends on income Ref.: PB&F 2002

  10. 62% 61% 60% 58% 56% 56% 54% Percentage volunteering 52% 51% 50% 48% 46% 1 2 3 to 6 Family size The Importance of Family

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

  12. The Role of Religion Ref.: 2000 SCCBS

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

  14. Informal Giving Data: 2002 GSS

  15. What Is “Religious”? 100% 100% Gives to all causes 90% 90% 80% 80% 70% 70% Gives to nonreligious causes 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% People who devote “a People who devote People who belong to a People who do not great deal of effort” to “no effort” to their house of worship belong to a house of their spiritual lives spiritual lives worship Data: 1999 Arts and Religion

  16. Nature vs. Nurture • A “God and Giving Gene”? • .25-.50 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 Data: 1999 Arts and Religion

  18. Giving Rises with Income (Mostly)

  19. 0.06 0.05 0.04 0.03 D/Y 0.02 0.01 0 $0 $25,000 $50,000 $75,000 $100,000 $125,000 1999 Y Giving Curve:Industrialized Nations Ref.: CEX data, first quarter 1999

  20. 7 6 5 4 Contributions as a percent of income in Russia 3 2 1 0 0 20 40 60 80 100 Income percentile 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 $800 $45,000 $40,000 $700 Income $35,000 $600 $30,000 $500 $25,000 Per capita personal income Annual giving per capita $400 $20,000 Giving $300 $15,000 $200 $10,000 $100 $5,000 $- $- 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 • 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 1998-2017, 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

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