Donations rise, but not for all

First the stock-market rebound offered a glimmer of hope. Then the employment scene started brightening. Now those rays of economic recovery are finally improving the outlook for many American charities and other nonprofit groups.

But the pickup in giving has been selective. The stock market's downturn lasted so long that broad swaths of the philanthropic community are still struggling. For example, human-services groups have seen two straight years of declines, after adjusting for inflation.

That's the mixed picture in a study to be released Monday by the Giving USA Foundation and researched by the Center on Philanthropy at Indiana University. Americans donated nearly $241 billion last year, up from a revised estimate of $234 billion in 2002, according to the annual study. That extra $7 billion is enough to give 3.8 million people a $5 meal every day for a year.

"Our major [donor] giving is back up, and [that] is one of our biggest indicators: Those folks are the ones that are holding the stock portfolios and investments that kind of were tanking over the last couple years," says Alan Terwilleger, senior vice president for ministry relations at Prison Fellowship Ministries in Reston, Va. "We're running about 10 percent ahead [of the past fiscal year], so we're feeling really good about it," he says of the group that partners with churches to help prisoners and their families. He expects to raise about $30 million through direct mail and another $18 million from major gifts this fiscal year.

The optimism isn't felt across the board, however. Some charities have experienced a lag between the growing confidence in the economy and the flow of dollars to their coffers. Giving USA reports that while 55 percent of the nonprofits surveyed received more money last year than the year before, 37 percent received less.

Human-services organizations, for instance, face what some observers call a "triple whammy" - declines in individual donations, foundation grants, and government funding - at a time when more people need their assistance. After adjusting for inflation, gifts to human-services groups declined 1 percent last year and about 11 percent the year before. Most donations to these groups come from individuals giving modest sums, so unemployment and uncertainty about the economy probably took their toll.

At the same time, other philanthropic sectors experienced big gains, including international affairs (12.1 percent); health (8.2 percent); and arts, culture, and the humanities (4.9 percent).

Different givers react differently to the economic cycle, experts say. "This is not to say that philanthropy is purely an economically determined phenomenon ... but changes in economic factors can explain a large part of changes in giving," says Patrick Rooney, director of research at the Center on Philanthropy. The strongest predictor of individual giving is the S&P 500 stock-market index. If other factors are held constant, a 100-point increase in the index is associated with a $1.7 billion increase in charitable deductions, Mr. Rooney says.

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