Economic uncertainty saw Americans cut back on their charitable giving again last year, according to two new reports from the US.

For the second year in a row, philanthropy has seen the deepest decline ever recorded by Giving USA since 1956 when it first began tracking charitable giving.

The Giving USA report published by the Giving USA Foundation and the Center on Philanthropy at Indiana University, showed total giving by the wealthy, companies, foundations and bequests fell 3.6% to $303bn (£207bn) compared to 2008 figures, which had shown a 2% fall.

However individual giving fell an estimated 0.4% in 2009, to $227bn (£154.7bn) – a fairly mild drop.

As a measure of gross domestic product, the nation's output of goods and services, giving in the US remained strong compared to previous years. Charitable gifts were equivalent to 2.1% of GDP last year, compared with 2.2% in 2008. Giving has historically hovered at around 2% of GDP.

“Speculation was swirling for many months that charitable giving had to be down by a great percentage in 2009,” said Nancy Raybin, chair of Giving Institute which created Giving USA Foundation in 1985.

“Anecdotally, our experts across the country heard that strong giving in December made all the difference, and the totals for the year bear that assumption out.”

Giving fell across most sectors last year, notably to religious organisations, which account for more than a third of total donations, the largest share. Other sectors that typically receive strong support also declined, including education (down 3.6%) and arts, culture and humanities (down 2.4%), while giving to human services and health organisations rose by 2.3% and 3.8%.

“Using models we have developed, we estimate that the human services, health, international aid and environment/animals subsectors saw increased contributions,” said Patrick M. Rooney, Ph.D., executive director of the Center on Philanthropy. “This focus on vital needs is consistent with what historians tell us happened during the Great Depression.”

Contributions to foundations fell 8% in 2009, following an almost 20% drop the year before. Some foundation assets declined as much as 30% due to recent stock market performance and grant-making fell by almost a tenth last year, according to the Foundation Center, a nonprofit group of foundations.

Donor-advised funds, which allow individuals to make contributions to a third-party charitable fund, receive a tax deduction and later recommend charities to receive the money, are among the fastest-growing charitable vehicles in the US.

The national results from Giving USA reflect all charitable giving to all charitable organisations in the US and calculate total giving by more than 75 million households across the United States, more than 1 million companies, an estimated 120,000 estates, and about 77,000 foundations. The gifts go to more than 1.2 million IRS-registered charities and an estimated additional 350,000 American religious congregations.

In another report also published this week, individual giving was shown to have dropped 4.9%, or $11.2bn (£7.6bn), from $228bn (£155bn) in 2008. The study from the Center of Wealth and Philanthropy (CWP) at Boston College, published by the Association of Fundraising, however predicted more positive news going forward.

Using a new ‘Individual Giving Model’ to project levels of household giving for 2010, researchers say they expect an increase of between 3% and 4.5%, between approximately $222bn (£151bn) and $227bn (£154bn).

The Individual Giving Model, the first in the country designed to estimate future and real-time charitable giving by households on a quarterly basis, bases the projected increase on analysis of the first two quarters according to scenarios that assume relatively low and high economic growth. It estimates how the most recent changes in financial resources affect the aggregate level of household giving. It is designed to be calibrated annually and modified every three months, based on data that are released regularly such as price and market indices.

Liz Lipscomb (nee Goodey), of  the Charitable Aid Foundation (CAF), commenting on the reports said, “These two research reports from the States mirror what we found in our own research, UK Giving 2009, which showed that charitable donations in the UK dropped by 11% in 2008/09.”

She welcomed the idea of a new predictive model, “Although UK charities are still likely to experience the effects of the recession in terms of individual giving levels this year due to uncertainties in the economy, it is very interesting to see that the Boston report predicts an increase in US giving levels for 2010. I welcome the move to build a predictive model and hope that the researchers will share the methodology with UK charities and academics, so we could forecast giving levels in the UK.”

Launched last year, the IGM was constructed by CWP senior research associate John J. Havens and director Paul G. Schervish to provide more current and potentially more accurate indicators of how charitable giving is progressing on a national basis.  

The full report will be published in the July/August 2010 issue of Advancing Philanthropy, the magazine of the Association of Fundraising Professionals.

The complete Giving USA 2010 report, with data covering 2009 giving, will be available at www.givingusa2010.org, at www.givingusa.org and at www.philanthropy.iupui.edu.