DEFINITION of 'Philanthropy'

Philanthropy involves charitable giving to human causes on a large scale. Philanthropy must be more than just a charitable donation. It is an effort an individual or organization undertakes based on an altruistic desire to improve human welfare. Wealthy individuals sometimes establish foundations to facilitate their philanthropic efforts.

BREAKING DOWN 'Philanthropy'

Billionaire Microsoft mogul Bill Gates, along with his wife, Melinda, established the Bill and Melinda Gates Foundation to support global development and global health programs. Another example is the Ford Foundation, established by the son of Ford Motor Company founder Henry Ford. The foundation focuses on strengthening democracy, improving economic opportunity and advancing education.

Philanthropy dates back to Greek philosopher Plato in 347 B.C. His will instructed his nephew to use the proceeds of the family farm to fund the academy that Plato founded. The money helped students and faculty keep the academy running.

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 the United States

In 1630, John Winthrop of the Massachusetts Bay Colony preached to Puritan settlers that the rich have an obligation to take care of the poor. Meanwhile, the poor must do the best they can to improve their situation. Three years later, John Eliot wrote a letter to Sir Simonds D’Ewes asking for money to found a college in Massachusetts. In 1638, John Harvard laid the foundations for Harvard University after bequeathing half of his estate to found the school.

Many people in the United States give money to causes in which they believe. Perhaps the most famous example of philanthropy came from Andrew Carnegie, simply because of the scale of his giving. Carnegie's wealth helped build more than 2,800 libraries all over the world. He also endowed several universities and a charitable trust that still runs nearly 100 years after Carnegie's death in 1919. Estimates of his total charitable contributions exceed an estimated $350 million. Carnegie lived up to his credo that a man who dies rich dies disgraced, and the rest of society learned to follow his example.

Statistics

Philanthropy statistics in 2014 point to record giving by individuals and corporations. Americans gave more than $358.8 billion to charities in 2014, an increase of 7.1% over the previous year. Corporations gave $17.7 billion to charities in 2014, an increase of 13.7% from 2013. Individuals gave $258 billion to nonprofit groups.

As much as 32% of charitable donations, or $114.9 billion, in 2014 went to religious organizations. Most of the donations to religious groups went to local places of worship. Around $54.6 billion, or 15%, went to educational groups. Coming in third were human services groups, which reaped $42.1 billion worth of windfalls in that year.

RELATED TERMS
  1. Charitable Donation

    A gift made by an individual or an organization to a nonprofit ...
  2. Private Foundation

    A charitable organization that, while serving a good cause, does ...
  3. Qualified Charitable Organization

    A nonprofit organization that qualifies for tax-exempt status ...
  4. Bargain Sale To A Charitable Organization

    The sale of a good or service to a charitable organization for ...
  5. Bill And Melinda Gates

    Two out of the three co-chairs of the Bill and Melinda Gates ...
  6. Venture Philanthropy

    The application or redirection of principles of traditional venture ...
Related Articles
  1. Managing Wealth

    The Christmas Saints Of Wall Street

    Learn how some of world's richest people spread holiday cheer year-round.
  2. Insights

    U.S. Giving Hits Record High at $373 Billion

    Charitable giving in the U.S. hit a record high for last year, topping at $373 billion. This is a 4% increase from 2014 when it was $359 billion.
  3. Managing Wealth

    How Billionaires Around the Globe Give Back

    This list of foreign billionaire philanthropists is robust. Here's a list of rich entrepreneurs around the globe who have given back in really big ways.
  4. Financial Advisor

    Tips on How to Discuss Philanthropy with Clients

    Advisors shouldn't overlook philanthropy when it comes to their clients' financial lives. Here's how to broach the topic with clients.
  5. Financial Advisor

    How To Plan For The Charitable Giving Boom

    Of the $58 trillion that will be passed over the next several decades, $26 trillion could go to charity. Here's how to plan for that huge shift.
  6. Managing Wealth

    How To Start Your Own Private Foundation

    Private foundations can be time consuming and expensive to set up and operate.
  7. Financial Advisor

    Top Tips for Maximizing Charitable Deductions

    Charitable donations can be a great financial planning tool. Here are some ways to make the most of them.
  8. Financial Advisor

    The Giants Of Finance: Andrew Carnegie

    Though not as well-remembered as some of his contemporaries, Andrew Carnegie's legacy is strong and moralistic.
  9. Small Business

    How Did Andrew Carnegie Get Rich?

    Andrew Carnegie rose from poverty to become one of the world's wealthiest men and the creator of the first billion-dollar corporation, U.S. Steel.
  10. Small Business

    Top 5 Most Successful American Entrepreneurs

    Understand what makes America a breeding ground for entrepreneurs. Learn about five of the most successful American entrepreneurs of all time.
RELATED FAQS
  1. What's the largest charitable donation Warren Buffett ever made?

    Learn about Warren Buffett's biggest financial contributions and how his estate is to be divided between charity and Buffett's ... Read Answer >>
  2. Who does Warren Buffett plan to bequeath his estate to?

    Find out how much Warren Buffett is leaving for his heirs and how he wants the funds invested after his death. Learn about ... Read Answer >>
Hot Definitions
  1. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  2. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  3. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  4. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  5. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  6. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
Trading Center