Charitable Giving

 

Why you should cover poverty and charitable giving in your county

Charitable giving affects most Americans – either as donors or recipients.

Here are five reasons why you should look more closely at charitable donations:

  1. Philanthropy is a significant sector of the economy – Americans give billions of dollars every year to charities and other nonprofits.
  2. Because charitable donations are deductible from individual income tax, they cost the U.S. government an estimated $47 billion in lost revenue in 2010 alone. Journalists need to look at donations as part of examining this perennial public policy issue.
  3. People donate to causes they care about, so examination of individual giving offers a gauge of public interest – or disinterest – in particular social issues.
  4. Many donations that are deductible as “charitable contributions” do not alleviate poverty or its causes, but may actually further the wealth and income gap.
  5. While government has transferred services for the poor to nonprofits, the private donations they expected didn’t materialize.

In an online conversation between David R. Jones, the president of the Community Service Society of New York, and New York Times readers, Jones said that nonprofits have not been able to serve the poor as well as they needed to – in part because they didn’t get the donations that were expected.

“The trend in major giving tends to go to universities and large cultural institutions rather than the small or midsize nonprofits, serving the poor, based in poor communities,” Jones said. ”It has left many non-profits severely underfunded dealing with growing problems for the poor, particularly after ‘welfare reform.’ ”

At the Chronicle of Philanthropy, one commentator suggested that the patterns in “charitable” giving actually contribute to the wealth and income gap. “As a general rule, nonprofit organizations at the top of the financial heap are less likely to provide the kind of assistance needed by those suffering from economic inequity. The wealthiest charities tend to cater to the wealthiest Americans,” Mark Rosenman wrote.

“The top 2.5 percent of organizations that report data to the Internal Revenue Service have over 50 percent of the wealth and bring in over 60 percent of charities’ annual revenues. Colleges, hospitals, and health-care facilities alone constitute that top tier of charities. Compare their finances with those of human-service groups, which account for more than a third of nonprofit organizations but have only about 13 percent of annual revenues and 11 percent of assets.”

 

How to measure the opportunity to cover poverty and charitable giving in your county

Americans are known for their generosity. We give away billions of dollars every year to causes we believe in.

But where does that money go? What causes are served? And how well do our donations meet the needs of our communities?

The National Center for Charitable Statistics offers several ways to gather data about charitable giving, at both national and local levels.

To measure the significance of charitable giving in your community, use NCCS to answer the following questions for your county or all the counties in your market area.

  1. What percentage of Adjusted Gross Income is given in charitable donations in your county or state?
  2. What is the total revenue per capita for charitable organizations in your area?
  3. How does the revenue per capita compare among different types of charities – e.g., human services and health compared to education, arts and culture, or other categories?
  4. How is the total revenue pie divided among these categories of charities?
  5. What is the number of total public charities per 10,000 people in your county? How does that break down by category?

To take this further, you could also rank the counties of your state in terms of these “generosity” and “direct service” measures. Where does yours stand?

Start with this link to view state and local data: http://nccsdataweb.urban.org/PubApps/geoSearch.php. Choose your state to get the totals and then drill down to counties from there.

In the results of a search by state or county, the second section summarizes “Community Needs.” Then, under the “Community Resources” section of the Overview results, you will see statistics about charitable donations within each county, based on deductions by taxpayers who itemized their deductions. You’ll also see a summary of nonprofit public charity activities.

You can quickly compare, for example, your county’s per-capita revenue for public charities with similar-sized or neighboring counties, or with the state average.

Note that these sections may use data from different years. The statistics may not be as recent as you might like, but they are a general indicator about giving. You may prefer to look at this data only for relative comparisons between counties or states.

From the first search page, you can further refine the NCCS information about nonprofit charity activities by category. (The results in the upper two-thirds of the page will be the same as the unrefined totals.)

You may want to update the NCCS Community Needs section with recent population and data profile figures from the 2010 Census. You can also gather current information about poverty from the Census Bureau page.

If you’d like to create tables of data about nonprofit income and expenses, you can use the NCCS search at this link (only public charities, those exempt under 501(c)3): http://www.nccsdataweb.urban.org/tablewiz/pc.php

These searches can show you the totals of the number of charitable organizations by type; total money coming in to or spent by charities for your county compared to other counties; compare your state to other states; or break down income by the type of charity (broad category or major category).

So, for example, you could look at how much your county’s nonprofits typically spend in aggregate on human services compared to education, environmental or religious organizations. You could then compare that to neighboring counties, the state total, or other states.

This data is also available in the IRS Master Files, but the NCCS website makes it more convenient for you to obtain basic numbers.

For the bigger picture, you will want to get information about giving in your region and nationally. Look for analyses put out by the Foundation Center, the IRS in its Statistics of Income Bulletin, and various philanthropic organizations.

 

A step-by-step approach to finding and reporting stories about charitable giving

After you’ve measured the size and impact of charitable giving, you can report on how it contributes to solving particular community problems.

Choose a community need that is significant for low-income people – educational opportunity, health care, or housing. Then follow these steps to do a story about what your community does to help address this need, and what role is played by charitable giving.

Step 1:

Describe the size of the need: Look at Census data to see the percentage of people in your community without health insurance, or with education less than a high school diploma. Compare to 10 years ago – has the proportion increased or decreased?

Ask government agencies and statewide associations about how they measure the problem, and how that has changed over time. How much of a shortfall do they estimate there is, between government services and the population in need? This is a way of measuring the gap that must be filled by nonprofits and charitable giving.

Step 2:

Compare needs to resources: Develop a list of public charities in your area that provide services for this need. You may be able to start from the total list of nonprofits for your county or market area, and filter by name and category. So for example, if you are looking at educational opportunity for low-income adults, eliminate from your list private schools, youth homes, and associations of educators.

Have any nonprofits in this category closed their doors for lack of funds in recent years?

Review the income of these charities. Compare the income of these nonprofits to the income for nonprofits overall. What is the total income of the public charities serving this need?

What percentage is that of the total revenue for nonprofits in your area?

All tax-exempt nonprofit organizations except churches and state institutions must submit an annual report about their finances to the IRS – Form 990, 990-EZ or for those with small incomes, 990-N (the e-postcard). Private foundations must file 990-PF.

Look at the 990 forms for the organizations of your focus for the past three to five years. Has their income increased or decreased? What portion of their income is from government grants, and how much from private donations? Have staff numbers decreased? Are they spending more on fundraising now?

How does that affect the number of people served? Have they eliminated any services or programs?

Don’t neglect religious congregations, which often have human service projects in the community but are not required to file 990s. [As of 2010, more than a third of all private donations went to religious organizations; this has been the leading category of donation recipients nationwide for 56 consecutive years.]

Step 3:

Gauge the impact of funding shifts: Talk to the staff at these nonprofits. How well do they feel they serve the population in need? Have they lost government grants, and if so, how did they make up for it? Do they spend more time raising money and less time providing services?

How has their program changed to fit the financial picture? Did any major donors exert influence on how the organization carries out its role in the community?

What do volunteers contribute to the effort? Does the nonprofit make any calculation of the value of volunteer time? Have volunteer hours increased or decreased?

Ask them to connect you with people in the community who have been cut from programs when the money dried up.

Step 4:

Talk to those who benefit from public charity programs. Do they feel their needs are being met? Does it matter to them whether the service is provided by the government or a private organization?

Try to walk in their shoes, to have a sense of what it feels like to live according to the whims of charity. Sit in the emergency room and talk to people who are there because it’s the only way to get health care when you don’t have insurance. Or interview people who are standing in a long line, waiting to talk to a counselor about student loans. Spend an evening on a chilly street corner with a guy who’s begging for coins at Christmas, as he watches people come out of shiny stores carrying big packages.

Step 5:

Study the motivations behind giving: Talk to philanthropists and business donors in your community.

Start by reviewing the 990-PF forms of the private foundations (which can be found through any of the nonprofit data sources). Where are they contributing money? How has that changed? Have they shifted to fill gaps left by declines in government funding, or is their recipient mix basically consistent over time?

You can talk to the board members of these foundations about how they view their role in the community. Ask how their philanthropic mission has evolved over time, and what drives it.

Find individual and business donors by scanning the lists of sponsors and supporters, usually listed on printed programs of fundraising events and organization websites. You can also look for names of wealthy individuals in the “Charitable Remainder Unitrust” listings among the nonprofits in your area. These are set up as irrevocable trusts, whereby the individual receives a percentage of the assets until their death, and the remainder is given to charity.

You can ask them how they decide among the many requests for assistance. What motivates them? How do they see the role of charitable contributions in society? In what ways does supporting the community help their business, too?

Often, personal experiences move a person to contribute in a particular sector. Have their charitable donations changed over time, based on the needs of the community?

 

Essential resources

Data

The National Center for Charitable Statistics offers several tools for finding data, and possibly the best information you can get for charitable giving at the county level.

The Federal Reserve does research on income, spending and saving that includes charitable giving and offers the data through its site.

IRS Statistics of Income releases regular reports about all manner of topics, based on a small sample of all tax returns filed nationwide. This includes in-depth looks at the finances of nonprofits, including their sources of income.

Documents and Background

The Center on Philanthropy at Indiana University attempts to bring together academic research and the practice of giving. It publishes the annual Giving USA report, which is a thorough survey of contributions by individuals, foundations and businesses. The executive summary is distributed free.

The Chronicle of Philanthropy publishes a magazine and a newswire on fundraising, giving, and management of nonprofits.

The Council on Foundations presents position papers as part of its advocacy on behalf of its member foundations.

The Foundation Center collects detailed information about grantmakers and publishes reports about the information, including state reports that list the top 10 foundations and trends in what they give money to. Although its online database is behind a paywall, you can access it in person at one of their offices.

The National Committee for Responsive Philanthropy acts as a watchdog on foundations.

This New York Times piece reflected on the meaning of charity itself, and the questions it raises are still in play.

The Urban Institute has a Center on Nonprofits and Philanthropy which does research and analysis of national data and issues.