Does tsunami relief harm U.S. charities?

Does tsunami relief harm U.S. charities?

Does tsunami relief harm U.S. charities?

Moneybox
Commentary about business and finance.
Jan. 20 2005 4:56 PM

Zero-Sum Charity

Does tsunami relief dry up other giving?

President Bush in early January proclaimed: "The greatest source of America's generosity is not our government; it's the good heart of the American people." He's right. So far, according to the Chronicle of Philanthropy, private relief charities have raised more than $480 million for tsunami recovery efforts, far more than the $350 million committed by the government.

These impressive figures have been accompanied by a huge and unseemly amount of self-congratulation. It's especially unseemly in the case of the government contributions because the federal money is most likely coming out of existing aid budgets—any new money for reconstruction in Sri Lanka and Indonesia will likely mean less money for sub-Saharan Africa. Can the same be said about private donations? Will the private tsunami relief dry up other charitable giving?

Advertisement

History and anecdote suggests it will. Crain's New York Business this week had a fine piece about how five New York nonprofits working in fields such as homelessness and hunger have seen their direct-mail donations fall off a cliff in recent weeks. "Some groups such as Bailey House, which helps homeless people who have AIDS, have even started receiving letters from longtime donors warning that this year's gifts are being redirected to the tsunami relief effort," writes reporter Miriam Kreinin Souccar. TheNew Yorker's"Talk of the Town" mentions that at Brooklyn prep school Packer Collegiate, a "fifth-grade bake sale, which had originally been intended to benefit a less fortunate school in Tanzania, was jointly dedicated to Tanzania and relief for tsunami victims."

Charitable giving is influenced by a range of factors: the economy and the stock market, corporate profits, cultural trends. And tallying up donations can be enormously complicated. That said, American individuals, estates, foundations, and corporations donated nearly $241 billion in 2003, or 2.2 percent of Gross Domestic Product, according to Giving USA's 2003 annual report, which is compiled by the Center on Philanthropy at Indiana University. That's just an estimate, and it doesn't necessarily include church donations. (Such annual numbers are frequently revised once data from the Internal Revenue Service becomes available.)

On the whole, Americans have become marginally more charitable over the past few years. Adjusted for inflation, charitable donations rose an estimated 0.5 percent in 2003 and 0.6 percent in 2002, according to Giving USA. But in 2001, the last time a lethal, catastrophic event captured Americans' imaginations and spurred a charitable outburst, aggregate donations actually fell in real terms. The Chronicle of Philanthropy has noted that "in the two weeks after the attacks, donors contributed at least $550 million to help the victims of that catastrophe." And Giving USA in 2002 estimated that in the nearly four months between Sept. 11 and the end of 2001, donations of $1.88 billion were made to the major Sept. 11 relief funds—a little less than one percent of all charitable giving.

The horror of Sept. 11 definitely inspired Americans to give—and give a great deal—to organizations that labored to help the people and areas affected by the attacks. But it didn't inspire them to give more to charity, on the whole, than they otherwise would have. In 2002, USA Giving reported that total charitable donations rose by 0.5 percent in 2001 but actually fell 2.3 percent when adjusted for inflation. Such a decline is typical for years in which recessions occur.

The outpouring of tsunami donations in early January 2005 probably won't have much of an effect on overall giving levels. And it's likely that many other extremely worthy charities will see their receipts fall. Is that disappointing? Maybe. But there's a different lesson. What's amazing about these very large figures—$480 million (and counting) for tsunami relief, $1.88 billion post 9/11—is that they are just a drop in the bucket of overall donations. They don't really sway the overall numbers. A very large portion of U.S. charitable giving probably isn't spontaneous. Lots of donations derive from bequests and estates, multi-year commitments from foundations and individuals, and annual gifts from corporations. So, the ability of any one event to inspire some fundamental shift in giving is limited.

It's wonderful that so many Americans have responded to a tragedy that has afflicted millions of people we don't know on the other side of the globe. And it's also useful that the amounts are tallied on an almost daily basis, since they provide an optimistic counterpoint to the constantly rising death toll. But we shouldn't go overboard. The milk of human kindness is probably flowing at the usual rate in the United States. It's just getting channeled in different directions.