Saturday, June 16, 2018
Business

Trigaux: Amid wealth inequality, is middle class losing habit of giving to charities?

In the slow economic recovery since the nasty recession a decade ago, researchers are wondering if the hard times back then broke middle class America’s habit of charitable giving.

The numbers are revealing. In 2015, only 24 percent of taxpayers reported a charitable gift. That’s down from 2000 to 2006, years when that figure routinely reached 30 or 31 percent.

"Fewer Americans appear to be giving to charity," concludes a Chronicle of Philanthropy report this month following an analysis of Internal Revenue Service tax data. "The number of households making room in their budgets for charitable giving is shrinking."

This trend is significant, says the Chronicle, which tracks all kinds of philanthropic giving, and warns of "a narrowing of support in America for philanthropy."

Let’s be clear from the start. If this trend is true, it does not necessarily mean that overall giving to philanthropic causes is declining. On the contrary, charity contributions in general continue to rise.

Which means the rich appear to be giving more than enough to make up for the declining number of donors indicated in the Chronicle analysis.

Which in turn could easily reinforce the notion that wealth inequality in America is only getting more severe. The richest Americans may be giving more because they have more to give — witness the Dow Jones stock market index soaring to ever higher records over 23,000 in recent days.

How can we not be reminded of the ultra-wealthy getting only more so after this past week’s announcement of the new Forbes 400 list of the richest billionaires in America? Thirty-five billionaires live in Florida, but this year it took a minimum of $2 billion just to make the list of 400. Last year it was $1.7 billion.

RELATED COVERAGE: On new Forbes 400 list of U.S. billionaires, 35 now call Florida their home.

That means the Forbes 400’s total net worth in 2017 climbed to $2.7 trillion, up from $2.4 trillion. And the average net worth rose to $6.7 billion, up from $6 billion. George Soros, among the wealthier Forbes 400 members for years, this past week shifted $18 billion of his money to his charity, known as the Open Society Foundation. That transfer represents one of the largest ever made by a private donor to a single foundation.

Only 25 of the richest billionaires on the Forbes 400 even have $18 billion in net worth.

The increasing concentration of extreme wealth is not lost on charities. Many philanthropic foundations are focusing their attention and marketing dollars seeking to tap a bigger donation from the nation’s richest wallets.

If that’s where so much of the money is, why not?

At the same time, recent research suggests Americans with far more modest assets who might have given to charities in the past may be financially pressed enough to cut or even eliminate their own charitable giving.

"People say to themselves, ‘It turns out that my house isn’t going to appreciate 15 percent every year. I could lose my job that I thought was really steady and safe. And so I’m going to adjust my giving pattern,’" Texas A&M economist Jonathan Meer told the Chronicle. Meer has confirmed such drops in giving in his research, and puts much of the blame on the recession.

I asked United Way Suncoast CEO Suzanne McCormick, as head of one of Tampa Bay’s biggest conduits of giving, whether she sees a fall-off in widespread giving. She had read the Chronicle analysis and questioned whether judging trends in giving by looking at tax returns was the best tool for accurately capturing how younger adults donate — online, often in small amounts.

Still, McCormick acknowledged that United Way’s local growth in giving was driven less by small donations but by an increase in major gifts. "While this was great news," she said, "I think it indicates that we still need to focus on engaging families and individuals of all income levels in our work."

RELATED COVERAGE: Led again by Publix, United Way Suncoast top corporate givers open wallets in 2017.

Universities, in particular, have aggressively pursued wealthy donors, offering naming rights to some of their most prestigious educational assets.

Area philanthropists have responded across the board. The most recent and startling donation by size — a $200 million commitment — was unveiled late last month. Drs. Kiran and Pallavi Patel will partner with Nova Southeastern University and build a medical school in Clearwater. The sum includes a $50 million gift to Nova and $150 million to help develop the medical education complex. The Patels have been prominent givers to the University of South Florida and area hospitals for years.

RELATED COVERAGE: Kiran and Pallavi Patel commit $200 million for Clearwater medical school.

To honor the $50 million gift — one of the seven largest to any Florida university — Nova Southeastern will name its college of osteopathic medicine the Dr. Kiran C. Patel College of Osteopathic Medicine, and its college of health care sciences the Dr. Pallavi Patel College of Health Care Sciences.

In recent years, similar large-dollar donations to USF have resulted in the university naming its College of Medicine after Tampa philanthropist Frank Morsani, and its College of Business in Tampa after Les and Pam Muma. USF St. Petersburg’s College of Business was named for retired business entrepreneur Kate Tiedemann after her $10 million gift.

Such generosity sounds great and obviously helps schools, museums, hospitals and other do-good organizations in tight times.

But depending on those with the deepest pockets may also be masking a greater challenge: How to rebuild a wage-stagnant middle class that is financially confident and community involved enough to rekindle its own giving.

"Growing inequity in charitable giving may hold risks not only for nonprofits themselves, but also for the nation as a whole," says a 2016 study by the Institute for Policy Studies and Inequality.org.

The study’s title, appropriately, is "Gilded Giving: Top-heavy philanthropy in an age of extreme inequality."

Given today’s political climate and this fall’s focus on major tax cuts likely to bring big benefits to the richest, our gilded age seems here to stay for the foreseeable future.

Contact Robert Trigaux at [email protected] Follow @venturetampabay.

   
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