What’s Measured Matters . . . Private Giving to Arts & Culture: Way Up in 2014!

Posted by Mr. Randy Cohen, Jul 10, 2015 0 comments

Support for the nonprofit arts in the U.S. is a mosaic of funding sources—a delicate 60-30-10 balance of earned revenue, private sector contributions, and government support. The arts sector relies on contributions to keep its cultural products and services affordable and accessible to our communities.  We pay close attention to philanthropy because even small fluctuations in contributed revenue can be the difference between an arts organization broadening its reach or facing a deficit. Every year the Indiana University Lilly Family School of Philanthropy publishes their annual Giving USA analysis on philanthropy. Their latest report shows that 2014 was a very good year for the arts.

Arts Philanthropy Reaches a New High!

In 2014, private sector giving to the arts, culture, and humanities (by individuals, foundations, and corporations) totaled $17.23 billion, representing a 9.2 percent increase from 2013.

·        Even when adjusted for inflation, this represents a robust 7.4 percent increase. 

·        2014 was the fourth consecutive year of growth in giving to the arts. 

·        The arts had the highest rate of growth in charitable contributions among all the giving categories tracked in the report.

According to the Giving USA report,“More arts, culture, and humanities organizations saw increases in charitable contributions in 2014 compared with 2013, with online giving showing particularly strong growth.”  

The arts received a larger share of all charitable giving in 2014

After reading about total dollars contributed to the arts and how it is changing year-to-year, I personally love to dive into the Appendix of the report to see how well the arts are competing against the other charitable sectors. Every nonprofit sector also seeks the benefits of private philanthropy, so maintaining a strong share of overall philanthropy demonstrates the relevance of the arts. 

As a percentage of all giving, the arts increased its share from 4.7 percent in 2013 to 4.8 percent in 2014. This was their largest piece of the total giving pie in recent history.  While changes in the shares posted in the graph below are indeed fractional, they are by no means insignificant.  Consider this scenario:  If the arts had a 4.8 percent share of total philanthropy in 2008 instead of 4.1 percent, they would have received $14.4 billion instead of $12.29 billion—a $1.1 billion difference at a time when those dollars were vitally needed by arts organizations! 

Total Charitable Giving Hits a New High in 2014

Private contributions to all charities in 2014 totaled $358.4 billion—a 7.1 percent increase from 2013 (+5.4 percent when adjusted for inflation).  Changes in total giving correlate strongly with changes in economic performance measures such as Gross Domestic Product (GDP), the S&P 500, and disposable personal income. The report notes, “Because stock market values are an indicator of financial and economic security, households and corporations are more likely to give when the stock market is up.” Giving also gained ground in the context of the total economy.  In 2009, philanthropy represented 1.9 percent of GDP. That has risen steadily to 2.1 percent of GDP in 2014.

Who is Giving?

·        Individuals have long been the largest contributor to philanthropic causes.  In 2014, individuals gave $258.51 billion—up 5.7 percent from the previous year.  Additional contributions by individuals are captured as part of Bequest Giving, which increased 15.5 percent to $28.13 billion. 

·        Corporate giving grew the most in 2014, increasing 13.7 percent to a total of $17.77 billion. Corporate giving is directly linked to profits and the economy. In 2014, the GDP grew 3.9 percent and pre-tax profits grew 8.3 percent, thus the high rate of growth in giving.

·        Foundation giving increased by 8.2 percent in 2014 to $53.97 billion.  Within foundations, grantmaking by Community Foundations continues to grow at the fastest rate (10.9 percent).

Where Do the Dollars Go?

Religion continues to receive the largest piece of the giving pie and historically has been the area to which Americans donate the most—$114.9 billion in 2014 (32 percent of all giving).  Education is the next largest area of giving (15 percent), followed by human services (12 percent), giving to foundations (11 percent), health (8 percent), arts and culture (4.81 percent), public/society benefit (7 percent), international affairs (4 percent), and environment (3 percent). 

Are You Preparing NOW for the Next Economic Downturn?

While there is much to celebrate with these 2014 numbers—sure, take a moment for some high-fives—our current strong economy will one day cycle back downward.  The arts compete well for charitable dollars in good times, but tend to struggle in a down economy as many funders move their giving to what they perceive are more pressing human service needs. Are you preparing for that inevitability right now?  Do your donors, who may reflexively redirect their arts dollars to other charities during tough economic times, understand that support for the arts is not a frill, but rather an investment in a healthier community?  Don’t just thank your individual, foundation, and corporate funders this year. Be sure they also understand how their contributions improve our communities socially, educationally, economically—benefits that persist in both good times and bad. (Get started here with my Top 10 Reasons to Support the Arts.)

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