Philanthropy is more than just fundraisers and awards dinners, and it's not just for the ultra wealthy. It is a vibrant, organized industry that includes generating and disseminating money, goods and services, and fills an important void in the welfare of the world and the economy.
The industry has its own professional organizations which provide advice to nonprofits on everything from fundraising techniques to selecting foundation board members. Umbrella organizations provide support to other nonprofits. For example, The Foundation Center offers training, industry research and a subscription database of available funding sources for nonprofits.

What Do Philanthropists Do?
Philanthropy allows people to help one another by helping the charitable organizations that meet needs not filled by government or other organizations. They raise money, manage assets, organize and disseminate funds and provide other services like supplying food, water and shelter after a natural disaster.

nonprofits are increasing their efforts at advocacy, and influencing political policy in favor of their causes has become a much larger focus. The Center for Lobbying in the Public Interest assists nonprofits in their efforts to effectively have their messages heard and persuade policy changes in their favor.

Where Does the Money Come From?
nonprofit revenue comes from the government, corporations, religious organizations and individual donors. According to the GivingUSA Foundation 2008 report, large national charities reported income of $1.4 trillion in 2007. Grants accounted for 67% of income, while individual contributions made up 22%.

What is the Impact of Philanthropy on the Economy?
There are almost 2 million nonprofit organizations in the United States, according to The Center for Charitable Statistics, and over $46 billion were distributed from nonprofit foundations in 2007.

In 2006, more than 8% of wages paid in the U.S. were from nonprofit organizations. The support services targeting nonprofits include consultants, auditors, software companies and investment management firms.

How has the Economy Impacted Charitable Giving?
GivingUSA Foundation reported a 3% decline in revenue from individual giving to nonprofit organizations. This matches the result found by the Barclays Wealth 2009 report, "Tomorrow's Philanthropist." Barclays states that, while traditional wealthy donors decreased gifts by 2.2%, new younger donors increased giving 2-3%. The foundation also found that wealthy individuals are more socially aware and take a more active role in their philanthropic endeavors.

Recent investment fraud cases and the downturn in the stock market have decimated endowment funds. nonprofits are persevering. The FoundationCenter's newsletter cited numerous employee lay-offs among nonprofit organizations in an effort to channel as much income as possible toward organization missions.

Still, the economy is dependent, to a large extent, on philanthropic giving in support of nonprofit organizations. While the sector is not as large or identified as the for-profit market is, it's a vital component in our economic strategy.

twitter / investopediacom

Related Articles
  1. Entrepreneurship

    3 Entrepreneurs Who Became Successful After 40

    Read about four influential entrepreneurs who didn't achieve fame and success until after their 40th birthdays, including the founder of Walmart.
  2. Budgeting

    The 7 Best Ways to Get Out of Debt

    Obtain information on how to put together and execute a plan to get out of debt, including the various steps and methods people use to become debt-free.
  3. Credit & Loans

    Don't Get Burned by High Credit Card Rates

    The average card charges 11.8%, and some rates top 20%. Experts warn that credit card interest may remain steep.
  4. Savings

    How Volatile Exchange Rates Affect Your Vacation

    Those ever-changing fluctuations can make a difference in anything from your hotel room to an ATM transaction.
  5. Credit & Loans

    Can Corporate Credit Cards Affect Your Credit?

    Corporate cards have a hidden downside. If the company fails to pay its bills, you could be liable for the amount and end up with a damaged credit rating.
  6. Investing News

    What Is The New Credit Card Chip Good For?

    Under current U.S. credit card requirements, credit card issuers are required to issue chip cards as of October 1, 2015. Instead of swiping your card as you do now, you will slide the card into ...
  7. Credit & Loans

    5 Ways to Maximize Your Credit Card Points

    How to get the most bang for your rewards buck.
  8. Investing

    How to Effectively Compare Credit Card Rewards

    There are so many different reward credit cards that are available. Understanding how each type work will help you pick the best card for your needs.
  9. Credit & Loans

    Joint Credit Cards: The Pros and Cons

    A joint credit card may sound like an easy way to split the bills, but make sure you know what you’re getting into first.
  10. Credit & Loans

    Travel Tips: Avoid Exchange Rate Headaches

    How to avoid the most common issues and hassles raised by exchange rates while traveling abroad.
RELATED TERMS
  1. Endowment

    A financial asset donation made to a non-profit group or institution ...
  2. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
  3. Luhn Algorithm

    An algorithm used to validate a credit card number.
  4. Directors And Officers Liability ...

    Directors and officers liability insurance covers you if you're ...
  5. Roll Rate

    The percentage of credit card users who become increasingly delinquent ...
  6. Truncation

    The requirement mandated by the FTC for merchants to shorten ...
RELATED FAQS
  1. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  2. What is the best way to start to rebuild your credit after a bankruptcy?

    Bankruptcies can be devastating to your credit score. Even worse, a bankruptcy will be listed on your credit report for between ... Read Full Answer >>
  3. What were the primary financial crimes involved in the ZZZZ Best case?

    ZZZZ Best was a company started by Barry Jay Minkow that claimed to be a carpet cleaning business. In fact, it was a Ponzi ... Read Full Answer >>
  4. Can a creditor sue me for a delinquent account?

    If a credit card account becomes delinquent, the creditor can sue the debtor for the balance as soon as the delinquency occurs. ... Read Full Answer >>
  5. How do I transfer my credit card history from one country to another?

    It is currently not possible to transfer your credit history to another country if you relocate. The credit metrics used ... Read Full Answer >>
  6. What are some examples of simple interest loans?

    Two good examples of simple interest loans are simple interest car loans and the interest owed on lines of credit such as ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!