Donations rise, but not for all

Foundations tend to increase donations as stocks rise, but because 2000 to 2002 saw the longest consecutive decline in the stock market since the Great Depression, foundations have taken longer to rebound. Between 2002 and 2003, foundation giving was down 4.7 percent after adjusting for inflation. During the recession, Rooney explains, foundations may have paid out more than the minimum 5 percent of assets that they're required to give, "to help offset other factors that had an adverse effect on the economy.... So now that the economy is in recovery mode, they are perhaps being less aggressive in their payout rate."

The Museum of Fine Arts in Boston has experienced that slowdown in foundation grants, coupled with fewer individual donations, such as memberships for $75 to $1,000. And with a decline in visitors over the past few years, the museum recently decided to lay off 23 employees. "We wanted to be sure we ... had a budget we could live with for several years to come," says Patricia Jacoby, deputy director for external relations. The museum has been promised major gifts from foundations in a year or so, she says, once they have had a chance to build up their assets.

One area of philanthropy less affected by the recession has been gifts to religious groups, because they rely so heavily on donations from committed members. Religious gifts increased 2 percent last year.

At Prison Fellowship, major donors have continued to give over the past few years, though not to the degree that they did during the boom in technology stocks, Mr. Terwilleger says. "Our donors ... take stewardship in a serious way. They do what they can based on what the Lord provides them with each year financially."

One development that surprised officials at Giving USA was a 10 percent surge in bequests last year. With the estate tax being phased out, some feared that people would have less incentive to leave their estates to charity, because they can now leave more to their families tax-free. There's debate about what will happen, though, when the estate tax is eliminated in 2010. Some studies suggest bequests would then go down by 20 to 30 percent, Rooney says. But Congress could reinstate the tax as soon as 2011.

At the Greater Milwaukee Foundation, which distributes funds to a range of local nonprofits, bequests are on the rise after a decade of holding steady. Foundation president Douglas Jansson notes that since World War II, many entrepreneurs have built up businesses with net worths of hundreds of millions of dollars, and now they're becoming philanthropists.

California philanthropist Ed Hogan, for instance, set up a foundation after selling a 40-year-old family travel agency a few years ago. He recently announced plans to build a $5 million sanctuary for horses injured in last fall's wildfires. "What's interesting," says Mr. Jansson, "is that [these business owners] are deciding not to leave everything to their kids. They're going through this difficult conversation in the family about how much is enough or how much is too much.... We're just at the cusp of this huge transfer of wealth."

Although the rebound may feel slow to some, Giving USA chairman Henry Goldstein likes the long-term upward trend of American philanthropy. "Despite the shaky economy, despite unemployment, despite Iraq ... giving remains strong," he says.

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