Charitable Giving – Do Americans Still Give?

By Thomas DeRoss,
Fifth Third Bank

I am constantly asked by non-profits about ways to increase donations to their organizations. There is no panacea or magic answer to what appears to be a simple question. I would like to share with you the two basic types of giving as well as some thoughts about charitable giving and planning.

Every thing we read talks about how we are all living longer and building more wealth. This should be good news for charities as people over 50 control most of the world’s wealth as noted by Judith Nichols writing for “Modern Donor”. The first of the “baby boomers” are turning 60 this year and appear to be accumulating more wealth than their parents. So are these facts leading to a significant increase in charitable giving? The answer is, “Depends.”

A number of factors come into play. Americans have always responded to major disasters such as the tsunami in the Pacific and the devastation left behind by Hurricane Katrina. Record contributions were received for these two major events. In the same breath, Americans have become more sophisticated when considering making charitable gifts. The Internet has made it much easier for prospective donors to research and evaluate how a charitable organization uses the funds they receive. As our population ages, individuals are beginning to ask questions concerning their charitable giving. How much money should be left to family versus charitable activities? When should they give it away? What happens if they need the money for medical expenses or nursing home care? These are just a few of the factors that confound consumers.

One popular question I hear is “What happens if the Government changes the tax rules effecting charitable deductions?” This leads to an important issue. What truly motivates many people to give to a charitable organization? Research consistently shows that most people make charitable gifts to an organization because they are truly passionate about a cause. In other words, the decision is motivated from the heart rather than from receiving some financial benefit. Financial benefits tend to be a bonus under the current tax system.

It is also important to understand the two basic types of giving. These are annual giving versus planned or deferred giving.

Annual giving is typically a campaign-driven focus such as the United Way. Most annual giving is done through payroll deduction with donors making decisions each year about renewing their pledges. Annual giving donors are supporting programs or projects each year and can evaluate the effectiveness of the charitable organization by choosing whether to continue their support.

Planned giving is often referred to as “the ultimate gift”. This means that a charitable donation is made or pledged to an organization usually at some future time. The most common planned gift is leaving a sum of money to a charitable organization in a will through a bequest.

A donor considers planned giving gifts generally when they understand and become more comfortable with the charitable organization. This “trust” builds up over time as long-term relationships are developed with key members of the charitable organization. Since the donor is typically not around to see what the charity is doing with their gift, they become more cautious about committing to this type of donation.

There are also planned giving donors who “surprise” the charitable organization with an unexpected bequest at death. I hear development officers of charitable organizations say that they wish the organization knew the gift was coming so that they could understand better what the donor was interested in and how they might best fulfill their wishes. This does seem like a missed opportunity from both the perspective of the donor and the charitable organization. I recommend that any person considering a planned gift talk to someone at the charitable organization to make sure their gift will accomplish what the donor desires and that the particular gift strategy being considered is the best one for the donor. Donors can ask the organization to keep their conversations confidential so that they do not get solicited for more giving. This is a common concern. Planned gifts also tend to be larger in size than annual gifts.

Which gift should you consider and how do you go about starting a discussion? You should first consult a professional advisor to assist you with some type of financial planning. Share with them your charitable thoughts and plans. It is important to feel financially comfortable about charitable giving within the scope of your financial means, age, and health and family objectives. Do your own research and check out any potential charitable organization you are considering supporting. There are numerous web sites that can be used such as

As recently shown by the generosity of Americans and in combination with Americans accumulating more wealth, charitable organizations need to become more sensitive to describing their mission and sharing their results while donors need to become more educated about their charitable choices and opportunities. There is truly an untapped resource available to improve the quality of life for our society.

There are numerous ways to give money or property to charity that include annual gifts, bequests, and split interest charitable gifts. Split interest gifts can provide benefit to you as well as the charity. Ask your advisor or favorite charity to discuss the many options available to you for charitable giving. “Philanthropy is the joyous art of sharing your gifts for the good of others.”

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