Wednesday, October 22, 2008

Has the Money from Wall Street Dried up?

With the severe complexion of the financial industries’ bankruptcies, cutbacks, bailouts, and takeovers sweeping through financial markets, donations from highly paid financial professionals are expected to slump. Wall Street professionals have been a part of the richest 1% of the U.S. population. Some 51 percent of individual giving comes from the 10% of households in the highest income groups and slightly less coming from the 90% with income less than $100,000, according to Giving USA. “While higher-income families are major donors to many important institutions, ordinary-income donors are vital, too, for the health of the nonprofit sector in this country,” according to Del Martin, chair of Giving USA Foundation.

It is natural that as the economy slumps people will have less money to give to charity, however, “the trend of total giving of about 2% of income has remained about the same for the past 50 years”, according to Elizabeth Boris, director of the Center on Nonprofits and Philanthropy at the Urban Institute in Washington, D.C.

The effect of the financial crisis on giving is expected to be significant. Will it really? What will nonprofits do to make up for the shortfall? Perhaps the American middle-class will step in to shoulder the burden of bank bailouts and maintain the healthy philanthropic giving that has been our nature for so long. Though trickle-down hasn’t exactly worked, the question is, has it left charities out to dry?

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