U.S. Giving Roars Back...But for One Sector It's More Like a Meow

Giving USA recently released its report on philanthropy for 2014 and the news is encouraging; giving has increased five years in a row.

According to the report, published by Giving USA Foundation and researched and written by the Indiana University Lilly Family School of Philanthropy, Americans donated an estimated $358 billion to charity in 2014, surpassing the pre-recession peak of $355 billion. That's 7.1 percent higher than 2013, and a nice rebound from the dark days of the recession in 2009, when giving dropped 15 percent to $303 billion.

But pardon my having to repeat the same lamentation I had at last year's report. Why is corporate giving still so underwhelming?

Every year, this report looks at four sources of giving: individuals, foundations, bequests and corporations. As usual, individual giving led the charge by far, comprising 72 percent of total giving.

Here's a full breakdown of the numbers:

  • Individual giving;258.5 billion, representing 5.7% increase over 2013
  • Bequest giving (8% of total):28 billion, 15.5% increase over 2013
  • Foundation giving (15% of total):54 billion, 8.2% higher than in 2013
  • Corporate giving (5% of total):17.8 billion, 13.7% more than in 2013

Individuals are making big donations earlier in life, a pattern the report characterizes as "stunning." Unsurprisingly, many of these gifts come from the high-tech world. Bill and Melinda Gates donated $1.9 billion to their foundation. Sean Parker donated $550 million to his foundation and his donor-advised fund at Fidelity. Jan Koum gave $556 million to the Silicon Valley Community Foundation.

The report summarized several trends:

  • Most gifts of1 million or more went to foundations or colleges
  • Gifts from tech entrepreneurs have skyrocketed, but donors from the financial world are giving less
  • Tech entrepreneurs gave nearly half of the total donated by the top 50
  • 50 percent of the gifts from tech donors came from those age 50 or younger

"The 2014 growth among eight out of nine types of charitable organizations is good news for the philanthropic sector as a whole," said W. Keith Curtis, chair of the Foundation and president of nonprofit consulting firm The Curtis Group. "The growth can be attributed, in part, to the ways charities have been working smarter during daunting times. Nonprofits increasingly are making sure they have strong cases for support, communicate frequently with donors and provide proof of the impact charitable gifts make."

And now for the cranky portion of this missive. Personally, I think there's room for philanthropic companies to be more philanthropic. A lot more room.

The good news is that while companies are still the laggards when it comes to giving back, this year's performance is an improvement from the year before, when corporate giving actually declined. Corporate giving last year grew by 12 percent, to $17.8 billion, but represented 0.7 percent of profits.

Perhaps companies should take a page from Philanthrocapitalism, the must-read book by Matthew Bishop and Michael Green. The authors make the case that the best way to ensure the success of philanthropy is to change the way we judge donors, from a "simplistic focus on how much they give" to a "rankings based on what philanthropists actually achieve with their giving." I think the same criteria same should apply to corporate donors.

In the introduction to its 2009 "Best Givers" list, Barron's focused on who was actually getting results, using criteria such as "innovation, quality of alliances with other groups, [and] the ripple effects of their giving." The upshot was that the Gates Foundation was bumped down to No. 7, whereas Brad Pitt was recognized for his pledge of $5 million to construct low-income homes in New Orleans in the wake of Hurricane Katrina.

Arianna Huffington also recognized the need for a better assessment of philanthropy beyond raw dollars. Years ago, she launched the Slate 60 Huffington Virtue Remix after being "appalled" by how the original list treated every philanthropic dollar the same. The result of Slate's lack of oversight was that Robert Mondavi's $20 million donation to the American Center for Wine, Food and the Arts in his hometown of Napa, Calif. was judged with the same level of praise as the $30 million that Ron Burkle, Ted Fortsmann and John Walton gave to the Children's Scholarship Fund for low-income children.

Huffington rightly argued that all acts of generosity are not equivalent, and those that advance one's own self interests should not be interpreted as equal to those that address pressing social needs.

"If giving--like hemlines--can follow fashion," wrote Huffington, "we must convince the new millionaires that gifts that save lives are more fashionable than gifts that build art galleries. And I write this as an unapologetic art lover who has spent many more hours in opera houses, concert halls, and museums than in homeless shelters."

Companies have an important role to play in supporting nonprofits, and I applaud those corporate leaders who are finding ways to be creative and resourceful in giving not just volunteer hours but significant hard dollars to needy causes. Just as Huffington pushed wealthy donors to step up their game, I hope that more corporate leaders recognize the world is not just listening to what they say but watching what they do. And if they want to own any story about creating positive impact in the world, they must start by reaching deeper into their corporate wallets.