Rise in Public GivingU.S. inflation reached 9.1% in June 2022, the highest inflation rate in nearly 40 years. An alarming rise in the cost of goods and services paired with stock market volatility reflects ongoing concerns of a burgeoning economic recession. Economists’ forecasts grow bleaker as the government races to tackle historic inflation rates. Even so, 2022 sees a rise in public giving despite mounting economic hardship.

2022 Fidelity Charitable Donor-Advised Funds (DAFs)

According to Fidelity Charitable, the largest grantmaker in the United States, Americans donated a record-high $4.8 billion to Fidelity Charitable accounts within the first six months of 2022. Approximately $128 million of these donations went to Ukrainian relief efforts, providing aid to alleviate the many crises Russia’s invasion of Ukraine caused. Donations to prominent NGOs such as Jose Andres’s Central World Kitchen and the International Medical Corps also increased significantly when compared to previous years.

Fidelity Charitable’s 11% increase in donations is a significant divergence from the norm, as charitable giving is generally the first thing cut from the budget during times of financial duress. The 2008 financial crisis, for example, caused donation rates to plummet by approximately 12%, according to Fast Company.

Recent changes in America’s charitable activity can be attributed to the emerging prominence of Donor-Advised Funds (DAFs). DAFs allow individuals and corporations alike to deposit assets for donations to charity over time. Donors invest their charitable donations in advance, allowing them to tap into these funds later down the road when a crisis unfolds. DAFs are essentially donation reserves that allow donors to access funds that have been already been set aside, thus enabling a steady rise in public giving despite mounting economic hardship.

DAFs Bolster Americans Capacity to Give

DAFs are quite new and have grown in popularity since the financial crisis of 2008. Because DAFs create a ready supply of donations over time, they bolster donors and charities alike against future economic hardships. Rapid economic expansion in the decade since the 2008 market crash boosted general economic confidence and encouraged expansive investment in DAFs, which is translating into elevated levels of giving during times of crisis, according to Fast Company.

The purpose of DAFs is to increase the amount that individuals and corporations are able to give. They are incredibly flexible, allowing individuals to invest cash donations as well as assets such as stocks, bonds, cryptocurrencies, life insurance and retirement funds, according to Nerd Wallet. The versatility of DAFs is part of what makes them so successful, as they provide a plethora of investment options that appeal to everyone from the wealthy elite to the average middle-class American family.

Once an individual invests assets in a DAF, they cannot retrieve their contribution from the fund. This works to prevent individuals or companies from abusing DAFs for their tax-deduction qualities. Sponsoring organization controls DAFs, which controls the assets within DAFs as well as the investment options available to donors, according to Nerd Wallet. Once invested, DAF assets mature or appreciate tax-free until they are donated.

Some sponsor organizations do not have a mandatory distribution date, meaning that a donor can allow their funds to grow as long as they wish before donating. Other sponsor organizations require donors to contribute a portion of their funds to charity regularly in order to avoid fraudulent activity.

DAFs offer various tax benefits, permitting donors to receive tax deductions for their DAF contributions. Tax-related donor benefits contributed to the expansive rise in DAF investment in the past decade, fostering the current rise in public giving despite mounting economic hardship. The tax deductions attributed to DAFs faced criticism in the past as they provide a possible tax shelter for the wealthy. Despite these concerns, DAFs have proven a vital funding source for charities during times of economic volatility by bolstering Americans’ capacity to give.

An Evolution in How Americans Give

Although it is America’s largest DAF sponsor organization, expanding DAF investment is not unique to Fidelity Charitable. The 15th annual DAF report by the National Philanthropic Trust of 2021 analyzes data from 976 charitable DAF sponsor organizations from 2020. The report found that DAF donor grants reached approximately $34.67 billion in 2021, an astonishing 27% increase since 2019.

Additionally, the number of individual DAF accounts within the U.S. reached 1 million for the first time in history. This encouraging increase in charitable investment and DAF donations seems counterintuitive considering the economic austerity imposed by the COVID-19 pandemic. The success of DAFs in 2020 and 2021 reflects the current rise in public giving despite mounting economic hardship.

Experts are confident that donation rates will continue to rise as 2022 persists, surpassing all previous records. Historically, Americans tend to give more during the fourth quarter of the financial year. The President of Fidelity Charitable, Jacob Pruitt, expects this trend to continue, with hopes of surpassing 2021’s year-end record of $10.3 billion, Fast Company reports. These donations will be a pertinent source of aid for low-income nations that are most vulnerable to high inflation rates.

Most DAF sponsor organizations do not have a minimum initial contribution, meaning anyone is welcome to open an account, according to Nerd Wallet. A small initial investment followed by regular deposits will appreciate over time, allowing one to mature their donation reserve at a pace that fits their financial situation. DAFs are an investment, so starting one now will not reap immediate results nor will it provide instant gratification.

If the past few years have taught us anything, it is that the course of life is unpredictable and that there will always be someone, somewhere in need of assistance. DAFs were designed with this reality in mind, enabling charitable individuals to plan ahead and prepare a ready reserve that can be tapped into when the need arises. A small DAF contribution today could translate into a major impact in the future, so there really is no better time to start investing than the present.

– Mollie Lund
Photo: Flickr

Donate money, not stuffIn the midst of global tragedies, many charitable people decide to send old junk or underused resources to foreigners in need. Here are five reasons why one should donate money, not stuff if one wants to solve global hunger.

  1. “Junk” is a logistical nightmare for volunteers. The people brave enough to enter disaster sites must provide emergency care to people in immediate need. They lack the necessary time to sort, transport and store cheap diapers or old sweaters sent in by well-meaning folks. Yahoo Finance reports an incident where, in the aftermath of Hurricane Katrina, a benefactor sent thousands of pounds of cheese to New Orleans. The trouble was that no working refrigerator could hold such a gift. Lots of material goods appeal to a customer’s wants… they’re not so effective in situations of dire need.
  2. Material donations can wreck a nation’s economy. Kathleen Tierney, the director of a Natural Hazards Center in Colorado, notes how economic problems occur in recovering nations when supply outstrips demand. “If you want to see economic recovery, you don’t want to send so many supplies that you create a situation where people can’t survive in a business sense,” said Tierney. Ultimately, the best use of aid is to help a country until they can take care of themselves. It’s difficult to make one’s living selling T-shirts if a global superpower dropped off millions of shirts for one’s potential customers to wear for free.
  3. Local groups know what resources they need. The Central Texas Food Bank, the largest provider of emergency food distributions in the country, was shut down by flooding during 2017’s Hurricane Harvey. The group’s president, Derrick Chubbs, supports monetary donations instead of material aid. He reasons that relief groups in a disaster area know exactly what they need for certain situations. They only lack the funds to acquire the most helpful tools for the job. The chance to clean one’s house and accomplish a moral good is tempting for a lot of do-gooders. But one can achieve similar results by selling old junk to a consignment store (like Goodwill or Half-Priced Books) and donating the proceeds to a respected charity. With one additional step in giving aid, the effectiveness of a donation multiplies.
  4. “Stuff” is a short-term solution to a long-term problem. The media focuses on the immediate aftermath of a tragedy but often loses interest by the time victims have to return to their homes. Groups like the Salvation Army understand that maintaining emergency shelters and rebuilding destroyed sites takes a long time. This is why nonprofits want people to donate money, not stuff. Not only do charities know what to spend cash on, but they know how to divide that cash to ensure a complete job. Such relief groups cannot fix a community with a stuffed animal sent from across the country.
  5. It’s more effective to call/email your representative. So how can someone help if they feel they lack the money to keep themselves afloat? One free solution would be to contact your representative and ask that your government contribute aid to a country or region in need. The Center for Global Development reports that the U.S. donates only 1 percent of its budget towards International Affairs, which includes disaster relief. Not only can this amount be increased through advocacy, but concerned citizens can ask their representatives to support revenue-neutral bills to solve global problems. Anyone interested in this surprisingly easy path to advocacy should explore The Borgen Project’s page on calling Congress.

– Nick Edinger

Photo: Pixabay

“Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?” And while my favorite government-hating, cigarette-smoking, religion-bashing comedian does have a point, scientists from the Rehabilitation Institute of Chicago are starting to prove that life actually isn’t a zero sum game. It turns out that people, contrary to popular belief, actually like other people.

Scientists are quickly figuring out that giving is inherently rewarding. The brain isn’t only looking out for itself, but for the well-being of others. Using tools like fMRI scanning, which highlights blood flow in different parts of the brain, scientists can pinpoint the areas of the brain that control these social impulses, making the “why” behind generosity clearer and clearer.

Neuroscientist Jordan Grafman hypothesizes that altruism exists because it helps ensure the survival of kin, and even more importantly, the well-being of a strong collective.

Dr. Grafman and his team have discovered that a part of the midbrain, the mesolimbic system, which controls cravings for food and sex, releases dopamine when people make decisions to donate to a worthy organization. And when asked to do the same thing anonymously, the subgenual area lit up, the section that plays a role in releasing oxytocin, the “love” hormone – the effect psychologists are calling “helper’s high.”

Some insisted that upbringing determined whether a person would be selfless or selfish: a person’s culture taught them and molded them into who they are. Others argued that selfishness didn’t exist as much as impulsiveness, and it is when we learn to control these impulses that we become altruistic. Analogous to the cliché of “actions speaking louder than words,” regardless of someone’s intentions, it’s what they do that matters.

While this feel-good chemical reaction has a clear association with altruism, it is not exclusive to it. Thus forcing Grafman to look further. There had to be other parts of the brain that the pleasure system partners with. The answer lay in the anterior prefrontal cortex, (aPFC) the region in the front of the brain used in making moral judgments.

The experiment found that participants who volunteered and were the most charitable showed the highest activity in the aPFC. Because it’s so difficult to be altruistic, especially when it’s at our own expense, the brain encourages this type of behavior by giving “rewards” in the form of chemicals released.

In fact, studies are showing that the more oxytocin is released, the more empathetic and generous people feel.

To all those cynics who argued that humans are inherently selfish creatures, you aren’t exactly wrong. Dr. Bill Harbaugh, an Economist from the University of Oregon, studied a group of law school graduates donating to their alma mater. His findings showed that they would donate just enough to earn the highest title in their bracket, and that giving with no expectation of pleasure or other reward is rare. While he acknowledges that this may be done unconsciously, at the end of the day, he argues, “people care about prestige.”

Astoundingly, it isn’t only to prove a point that this research provides, but the possibility to make people more generous. Stanford psychiatrist and bioengineer Karl Deisseroth has managed to take genes from algae, amongst others, and incorporate them into mouse neurons. The result: a “prosocial” mouse-a mouse that will literally cuddle you to death.

Chloe Nevitt
Feature Writer

Sources: PsyBlog, NINDS, The Wall Street Journal, PNAS

“I’ve seen the slums right in front of me! This is no joke! They really need your help! Poverty is real!” -Niall Horan, One Direction

Young Hollywood stars seem to be taking on a more active role when it comes to standing up for the world’s poor. One Direction band members spent time volunteering in Accra, Ghana expressing support for Comic Relief’s red nose day. The 1D members were very moved by the sights they had seen while on the trip. Harry Styles and Liam Payne were brought to tears while visiting with children in an emergency room.

The children were suffering from undernourishment and diarrhea. Sadly, many of these aliments can be prevented with proper vaccinations and care. Other band mate, Zayn Malik, is quoted saying “We all waste money on stupid things but surely the most important thing we can spend a few pounds on is protecting children from these preventable illnesses.” Also, singer and song writer Katy Perry took a four day trip to Madagascar.

Perry spent time playing with children, becoming educated on the scarcity of water, and listening to the stories of women and children who have been exposed to violence. Perry states, “In less than one week here in Madagascar, I went from crowded city slums to the most remote villages – and my eyes were widely opened.” Perry also learned that for every two children in the country, one is suffering from chronic malnutrition.

Lastly, singer Demi Lovato spent her 21st birthday volunteering in Africa. Demi, states, “With 21 being a milestone birthday, I wanted a memorable and meaningful way to celebrate, rather than throw a big birthday bash.” The trip hosted by Me to We, Free the Children organization, allowed Demi to help build a school in the impoverished village.

These and many other famous pop stars are starting a new trend; a new trend to become more giving with their time and finances. Hopefully this trend stays and spreads to more Hollywood stars. These pop stars are not only trend setters but, role models to young people everywhere. Modeling to fans everywhere that the worlds not just about the latest gadgets or toys. The world is full of poverty and death that can be prevented. This includes children and adults that die by the thousands each day from preventable causes. Acts of giving like the ones mentioned above help people in need. Hopefully many more acts of giving will be created as a result of these pop stars.

– Amy Robinson

Sources: UNICEF, Huffington Post

The Amanda Palmer Ted Talk on asking explores a new way of selling records. The singer-songwriter-blogger-provocateur, known for pushing boundaries in both her art and her lifestyle, made international headlines this year when she raised nearly $1.2 million via Kickstarter (she’d asked for $100k) from nearly 25,000 fans who pre-ordered her new album, Theatre Is Evil.

But the former street performer, then Dresden Dolls frontwoman, now solo artist hit a bump the week her world tour kicked off. She revealed plans to crowdsource additional local backup musicians in each tour stop, offering to pay them in hugs, merchandise and beer per her custom. Bitter and angry criticism ensued (she eventually promised to pay her local collaborators in cash). And it’s interesting to consider why. As Laurie Coots suggests: “The idea was heckled because we didn’t understand the value exchange — the whole idea of asking the crowd for what you need when you need it and not asking for more or less.”

Summing up her business model, in which she views her recorded music as the digital equivalent of street performing, she says: “I firmly believe in music being as free as possible. Unlocked. Shared and spread. In order for artists to survive and create, their audiences need to step up and directly support them.”

A Penny Saved, A World Changed? Diverting
Let me start by saying that I love my dog.

When I’m not working on this blog I am teaching English to Ethiopian immigrants here in Columbus, OH. I work mostly with adults and so far the class has been a great experience and I learn a few neat things as I teach and converse with the students. Just the other day we spent a long time learning the new term “pet”. Most English speakers will be able to recognize that word and meaning right away because they have heard it or used it many, many times and they have the linguistic competence to use the word without thinking much about it. The first step of explaining the new word was easy enough and led to the understanding that these “pets” where animals. We would ask “Did you have any pets back home?” “Yes, three cows and a goat.”

We spent a few minutes more explaining the difference between domesticated pets and livestock and continued with the day’s lesson. One man asked whether pets should be called “it” or “he/she”. After answering that man’s question I realized how much we really do love our pets. To many pet owners, their animals are almost human. I’m much more than guilty of being “that dog guy”, I will talk to the dog of a stranger in a foggy park at dusk, I will share the bed with my dog and I’ll even talk to the dogs’ owners sometimes.

That being said, my dog is a dog. She (I still can’t call her “it”) may seem almost human, but she is just a dog. I was thinking about this recently as I stopped in the store to buy some dog food. My healthy, four-year-old dog eats generic, dry, boring dog food that comes in 50 lb. bags. Walking around the dog care aisle I saw designer foods that cost a hefty penny more and I remembered the simple fact that people love their dogs. But, what about the difference? One national name brand dog food is about $12.50 for about 18.5lbs. of food. One designer name brand food costs $29 for 15 lbs. Even if we disregard 3.5 lb. the difference in favor of the cheaper alternative that gives us about $16.50 saved. Now, $16.50 saved for every 15lbs of dog food will add up to a significant sum by the end of the year, especially with multiple dogs.

What if that money went to help other humans, other people? The idea of diverting isn’t anything new, save a bit of money on things here and there and give to a greater cause, but it does work. I’m not saying that we shouldn’t love animals, or that we shouldn’t occasionally spoil the creatures we spend so much time with, but maybe we could take a chunk of that saved change and share it with our human brothers and sisters as well, be it through groups like The Borgen Project or any organization you’d like.

– Kevin Sullivan

Photo: DoggySpace