Philanthropy in the United States

STORY HIGHLIGHTS

• $471 billion was donated to charity in 2020.
• America's 50 most generous philanthropists gave out $14.1 billion in 2018.
• In 2020, Jeff Bezos pledged $10 billion to fight climate change.

In the United States, philanthropy is as American as baseball, apple pie and rock-n-roll music. One popular definition of ‘philanthropy’ is “the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes”. Another popular definition of ‘philanthropy’ is “the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes”.

Philanthropy dates to Greek society. The Greek philosopher Plato died in 347 B.C. leaving funds in his will to help maintain the academy he had founded during his lifetime. He instructed his nephew to use the income from the family farm to maintain the academy so that students would continue to be taught and faculty would continue to be employed. Around 150 years later, Pliny the Younger contributed one-third of the funds for a Roman school for young boys. He instructed the fathers of the students to come up with the rest. The intention was to keep young Romans educated in the city rather than abroad.

In 1638, John Harvard laid the foundations for Harvard University after bequeathing half of his estate to start the school. In an oral will recited to his wife, the childless Harvard who had inherited considerable sums from his father, mother, and brother, donated half of his estate to start what is now Harvard University ‌with the remainder to his wife. Equally as import, he gave his scholar's library comprising some 329 titles (totaling 400 volumes, some titles being multivolume works) to the school. At the time, this bequest was roughly equal to the Massachusetts Bay Colony's annual tax receipts.

Andrew Carnegie (November 25, 1835 – August 11, 1919) is one of America's most famous philanthropists, noted for the large scale of his charitable contributions, which included the building of more than 2,500 libraries worldwide. His philanthropy is estimated to amount to over $350,000,000 during his life and at his death. He gave millions to colleges (usually the smaller ones), to churches for organs, to the Carnegie Foundation for the Advancement of Teaching, the Carnegie Institute of Pittsburgh, the Carnegie Institution of Washington, and the Endowment for International Peace.

Since the late 19th century philanthropy has been a major source of income for religion, medicine and health care, the fine arts and performing arts, as well as educational institutions. Those of you wishing to get a sweeping overview of the history of the nonprofit sector and philanthropy in the United States will be well rewarded by reading Philanthropy in America: A History by Oliver Zunz (Princeton University Press, c2012). It “tell[s] the story of the convergence of big-money philanthropy and mass giving that … sustained civil society initiatives over the 20th century in the [U.S.]." The book is part of Princeton’s “Politics and Society in Twentieth-Century America” series and focuses on the legal and public policy aspects of the topic.

In his book, Zunz explains that after Congress ratified the 16th Amendment (the levying of income tax) in 1913, the Treasury Department created a single category in the tax code for exempting gifts to charity, the exemption in turn nurtured and ultimately entrenched philanthropy in the U.S.  It also allowed groups with divergent interests to work together and foster a powerful and well-supported nonprofit sector.  

He points out that while the philanthropic sector operates on a much smaller scale than government, the resources available to charities and foundation are large and influential enough that the continual “debate about the proper relationship of government to philanthropy has become a distinctive feature of American society.” Throughout the book, he illustrates the constant dance between politics and civil society and discusses how Americans of all classes invested an enormous amount of energy in philanthropy while in the process enlarging American democracy.

Oftentimes, philanthropy is often undertaken by those seeking tax breaks, in addition to feeling good and helping others. Forbes partnered with SHOOK Research of Boca Raton, Florida, and tracked which givers doled out the most funds in 2018. Accounting only for funds that reached beneficiaries—and excluded commitments that have yet to be paid out, most of the top philanthropists are also among the richest Americans in the country. The 5 top givers (and their areas in interest for their giving) in their study were:

1. Warren Buffett (healthcare, education, aids prevention, sanitation)
2. Bill and Melinda Gates (healthcare, extreme poverty, education, access to information technology)
3. Michael Bloomberg (the environment, public health, the arts, government innovation and education)
4. The Walton Family (K-12 education, rivers, oceans, the various interests in the Northwest Arkansas and the Arkansas-Mississippi Delta)
5. George Soros (healthcare, human rights, anti-fascism, and economic, legal, and social reform)

In total, America's 50 most generous philanthropists gave out $14.1 billion in 2018, up from $12.6 billion in 2017 and $12.2 billion in 2016. Collectively, the group's lifetime giving—a tally of funds distributed by their foundations plus direct gifts—exceeds $173 billion.

More recent philanthropy was expressed by Jeff Bezos who pledged $10 billion in February of 2021 to fight climate change and dispersed $791 million in his first grants from that pledge. That was split between 16 groups including the Environmental Defense Fund and the World Wildlife Fund. Nike cofounder Phil Knight donated $900 million to his own Knight Foundation and $300 million to the University of Oregon for a total of $1.2 billion. Construction magnate Fred Kummer also donated $300 million to an educational institution, Missouri University of Science and Technology.

Americans are fortunate that philanthropists continue to use their wealth and fame to change the world, in addition to supporting issues as diverse interests. Modern day philanthropists have cited famous American philanthropists such as Carnegie and Harvard as influences in their giving. The spirit of generosity continues to be a shining light of hope and aspiration for Americans.