Stock Market’s Drop Will Probably Reduce Number of Gifts of $1-Million to $50-Million

The economic downturn is unlikely to cause any major decrease in the number of gifts of $50-million or more that donors make to charities, a new study suggests. But the drop in the stock market is likely to sharply reduce the number of gifts of $1-million to $50-million.

Commissioned by the fund-raising consulting firm CCS and conducted by the Indiana University Center on Philanthropy, the study examined 4,844 gifts of $1-million or more from wealthy individuals that were publicly announced from January 2000 to September 2007.

The gifts studied totaled more than $122-billion, and the median contribution was $2.8-million, meaning that half the donations were more than that and half were less. About 60 percent of the gifts were less than $5-million.

During the recession that followed the 2001 terrorist attacks and technology-stock bust, many big gifts declined with the market: Donations of less than $50-million numbered 646 in 2000, but fell to a low of 394 in 2003. But for the 201 gifts of at least $50-million in the study, the market’s performance made no difference.

The study also examined the types of donors who make gifts and the causes that get the most support.

Among people who make gifts of $1-million or more, entrepreneurs, investors, and realestate developers were more likely than salaried employees, partners in law or accounting firms, and those with inherited wealth to direct their gifts to foundations, the report found.

Foundations received 45 percent of the donations, a larger share than any other type of institution.

Colleges and universities received 29 percent, while the next largest percentages went to health and arts organizations, both of which captured 6 percent of the total. The smallest amount, less than 1 percent of the total, went to religious organizations.

The number of donations that went to foundations prompted the researchers to suggest that charities of all kinds have an opportunity to obtain big gifts if they can persuade people to give money directly to their causes, rather than to their foundations.

Among other findings in the study:

• When giving $1-million or more, donors generally wanted the money to finance a specific purpose or project: Capital gifts made for a building or for acquiring land accounted for the highest percentage of gifts, as a share of both total dollars (23 percent) and number of gifts (29 percent), followed by gifts for a specific program or project, which captured 21 percent of the total amount donated and 25 percent of the number of gifts.

• Gifts with no strings attached and those that charities could use to pay their administrative and operating costs were less popular: Fifteen percent of gifts had no restrictions and 14 percent could be used to pay for operating expenses. Women were more likely than men, couples, or families to make unrestricted and operating-support gifts, and families were the least likely.

• Men or married couples made most of the donations in the study: They made 3,717 big gifts, compared with 829 from women and 223 from families. The size of the gifts was the same, regardless of who made them: The median gift made by women was $2.7-million, compared with $3-million for men and $2.7-million for couples.

A full copy of the report, “An Analysis of Million Dollar Gifts January 2000-September 2007,” is available free online.