The Giving USA annual report on 2011 charitable giving in the United States, released last week, found that overall charitable giving increased 3.9% from the prior year. However, after adjustment for inflation, that increase was really only 0.9%. A more detailed look included one interesting finding: individual giving to religious organizations is dropping. The report reconfirmed some facts not generally well understood about charities.

Two myths:

#1 – Most charitable donations go to help the poor.

Not really. In 2011, total charitable giving in the U.S. was estimated at about $298 billion, according to Giving USA.  Of this total, only 12% went to Human Services charities. 

The biggest proportion of 2011 contributions (32%) went to religious organizations.  Although you might think that the churches give that money to the needy, many studies have shown that most of a typical church budget goes to salaries and maintenance of a building.  The second highest sector to receive contributions was education, at 13% of the total.

So the organizations providing services to people in need – those most often associated with “charity” –  are really getting only a small portion of charitable donations.

#2 – Most charities get grants from foundations.

No. Most charities receive no revenues or only a small proportion of their total income from foundations and corporations. Looking at the national total of charitable giving, individuals donated 73% in 2011, foundations gave 14%, and corporations contributed only 5%.  Donations from individuals are the major source of revenue for most charities.

Another major source of income for charities is from program services – fees and payments from customers and clients (e.g., ticket sales for arts groups and tuition payments for schools, etc.)

Read the Giving USA Executive Summary and check out individual charities via ERI’s free Form 990 library.