Firms lift charities in 2002

When the going gets tough, Americans keep giving - to the tune of nearly $241 billion.

Charitable donations for 2002 set a new high, rising 1 percent over 2001's total in current dollars, according to Giving USA, a report released Monday by the American Association of Fundraising Counsel's Trust for Philanthropy in Indianapolis. The estimated $240.92 billion in gifts equaled 2.3 percent of US gross domestic product.

Although once it is adjusted for inflation the amount represents a 0.5 percent decline since 2001, it still shows "the resilience and pervasiveness of giving in our culture," says Leo Arnoult, chair of the AAFRC Trust.

Most donations come from individuals (76 percent of the total), and some nonprofit sectors were hit harder last year than others. Gifts to human- services organizations were down about 10 percent - making budgets tighter for youth development, shelters, disaster relief, employment counseling, and other social programs. "You'd think with increased need for such services, pockets would open," Mr. Arnoult says.

Human-services groups rely on small gifts from a broad swath of the population and the struggling economy led many people to give less last year. In contrast, other sectors, such as the arts, experienced increased donations, since they tend to attract wealthier patrons who aren't as vulnerable to economic downswings.

Donations to educational institutions were also down, but only by 1 percent. Arnoult sees this as a temporary dip tied to the stock market.

The largest upswing was in gifts to nonprofits that offer refugee assistance, disaster relief, or other aid abroad - little surprise given Americans' new level of attention to foreign affairs. Donations reached $4.62 billion in this category, up nearly 12 percent from 2001.

Overall, 46 percent of nonprofits said they received less than in 2001; 49 percent received more; and 5 percent saw no change.

Corporate giving is notable as the only source that reported substantially higher giving than in 2001. Firms gave more than $12 billion last year, a 10 percent jump. Much of the increase, Arnoult says, is due to better reporting of in-kind gifts, such as a pharmacy's donations to a community health center, or a restaurant's donation of food to a homeless shelter.

But the increase in corporate giving isn't just a matter of improved accounting. Partly it's a ripple effect from multi- year pledges made after the Sept. 11 attacks. In addition, firms have given away increasing shares of pretax profits since the late 1990s, the report says. In 2002, their donations averaged 1.8 percent of profits. Despite the increased generosity, corporate giving represents only 5 percent of total philanthropy - not enough to counteract the pronounced drop-off in funds for human-services organizations.

The annual Giving USA report is based on analysis of tax and other data, plus a survey of nearly 2,000 organizations. It is researched for the AAFRC Trust by the Center on Philanthropy at Indiana University.

Looking ahead, it's unclear what effect the new tax cuts will have on people's generosity.

"Some people say a lower tax rate gives people more discretionary money to give," Arnoult says, "but some say a lower tax rate takes away some of the incentive to give."

As fundraisers wait for the economy to strengthen, Arnoult advises them to sharpen the focus of their campaigns. "They need to go to the people who care about their missions instead of spending [too much] time on acquiring new donors," he says.

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