Giving USA Confirms: Disasters Crowded Other Causes in 2005
International donations hardest hit, with an inflation-adjusted loss of 5% after inflation, but arts & culture groups also see decline.
Though the news headlines tout the large increases in giving in USA, the details reveal a different story. In the mainstream press, the New York Times (Stephanie Strom), Washington Post (Jacqueline Salmon) and AP (Vinnee Tong) offer by-line stories. The Chronicle of Philanthropy (Holly Hall) also offered a free summary story (with a more detailed story to come).
The spin on this annual story is fascinating. Most headline writers pick up on the gross dollar increase and the huge impact of disasters. But on an inflation-adjusted basis, giving increased 2.7%, while 3% of giving was related to Katrina & the tsunami. So that means other giving delined 0.3% on an inflation adjusted basis. Sixty percent of organizations reported an increase in contributions, so forty percent indicated no change or a decline.
The reason given for the overall decline is that the economy wasn't hot in 2005 and personal income fell. Of course part of that was due to Katrina. So Katrina is the first disaster in the US large enough that the impact of the disaster on the economy actually was a factor in the decline of giving.
We have already reported that In the UK, researchers found that 20% of tsunami donations represented contributions redirected from other causes. Why we haven't been able to develop a comparable estimate of redirected giving in the wake of Katrina remains a mystery to me.
The reports note an increase in corporate giving, but there is no mention that most of the corporate giving is now in-kind, as we have previously reported. Corporate in-kind donations were a large part of their reponse to the tsunami and Katrina.
From the editor of Giving USA:
There are many points of concern in the mis-use of data and information in the earlier posting. It is a simple thing to take one figure out of context. This reply is grounded on the data and the expertise contributed by a panel of 32 experts in the field who advise Giving USA.
First, there is no evidence in the U.S. that giving for disasters crowded out or replaced other giving on a broad scale in 2005. It might have had a marginal impact on one subsector, international affairs, but even that is not certain in light of recent giving to that subsector.
Giving USA estimates contributions using two different sets of techniques. The first method estimates how much was donated by looking at the sources of giving. The second approach studies the alloation of giving by type of recipient and relies on a survey of charitable organizations.
Based on survey data collected over decades, Giving USA shows that all subsectors see rises and falls over time for a variety of reasons. The decline in arts giving in 2005 cannot be traced to disaster giving. It can be fairly stated that this subsector is volatile, with swings as organizations receive large bequests, launch significant campaigns, and in other ways see giving change over time.
Disaster relief giving might be at least part of the explanation for a decline in non-disater-related giving for international affairs giving, but even that is not proven--it is a hypothesis that needs to be tested. Prior research published in 2002 by Professors Mark Wilhelm and David Ribar found that for every $1 dollar in disaster giving, 5 cents less was given (adjusted for inflation) to other international affairs organizations. To know what happened in the U.S., economists and others with quantitative analytical skills will need to analyze data, not speculate with a few figures pulled from a press release.
The decline in giving to international affairs before the disaster giving estimate is added should be put in context. Giving to international affairs in 2004 was down by 1.8 % (adjusted for inflation). Maybe the same causes of that year's decline continued in 2005? More research is needed before drawing conclusions one way or the other.
Giving USA 2006 estimates giving twice: once before adding disaster contributions and once with the diaster contributions. The initial estimates of contributions use the tested Giving USA methods and result in a projected decline (adjusted for inflation) of 0.2 percent for 2005. That is reported in the full text, but it is not the focus of the news story. News stories are often written to sell papers, not report data.
The fact is that disater giving occurred IN ADDITION to all other estimates of giving. This is confirmed by a number of studies of organizations and of donors (both individuals and corporations). The U.K. experience is not necessarily the same as the U.S. experience. There is no reason that we should expect it to be.
The author of the initial post is misrepresenting corporate giving by citing "top line" results without digging deeper into the complete reports to see what might account for the preponderance of in-kind giving among corporate donors.
Among 189 respondents to the Conference Board's survey for 2004 (which included pharmaceutical and computer firms), in-kind contributions were 54 percent of the total dollar value. The pharma in-kind donation was $2 billion of the total $6.39 billion in that study. If you remove pharma completely (see Table 2, page 2, Corporate Contributions Report 2004), then in-kind donations are 33% of the remaining total of $3.893 billion.
In a study that reaches a smaller number but all of them among the largest firms of the U.S., The Committee to Encourage Corporate Philanthropy found for 2003, that when pharmaceutical company donations were excluded from the analysis, cash contributions reported by its other respondents were 75% of the total. T
Yes, the pharma industry donates a great deal of medicine. Yes there have been concerns about expired medicines being contributed, but we have also seen major announcements in recent years of donations of new medicines to combat river blindness, AIDS, and other illnesses that affect millions in developing countries, people who will not be able to afford these medicines themselves. Why would donation of viable, proven medicines to fight disease NOT count as a form of contribution?
The U.S. Chamber of Commerce tracked corporate donations for tsunami relief and Katrina relief. Using their data, I find that cash contributions were about 60% of the total reported and in-kind donations (where a value was given) came to 40%. And who is to say that shipping bottled water or medicines is "less" of a donation than cash would be? There are many missing data points in this analysis, so it may well turn out that the market value of donated goods (the value most often reported in the media) does exceed the cash contributions. This is another area where further research is needed.
The book, Giving USA 2006, reports far more than can be covered in a press release. All of the information above is in the forthcoming edition or in Giving USA 2005. I invite readers who are concerned about the quality of data and information in this sector to read the reports, not just the news.
Melissa S. Brown
Managing editor, Giving USA
Posted by: Melissa Brown | June 20, 2006 at 04:43 PM