A generosity gap? Not on our watch

For anyone concerned about the future of Los Angeles and the role of charitable giving in creating a healthy community here for us all, a recent study by the UCLA Luskin School of Public Affairs is cause for serious concern.
June 29, 2016

For anyone concerned about the future of Los Angeles and the role of charitable giving in creating a healthy community here for us all, a recent study by the UCLA Luskin School of Public Affairs is cause for serious concern. The report, “The Generosity Gap: Donating Less in Post-Recession Los Angeles County,” documents a decline in local giving of nearly 16 percent, from $7.16 billion to $6.03 billion, from 2006 and 2013.

One vital function of this sort of study is to provoke thought and dialogue to spur change. The Luskin School report certainly accomplishes that. It encourages exploration of the root causes of the decline, and of actionable steps that can address changes in local charitable giving. The study also provides data that encourage deeper analysis; here certain anomalies become clear — especially with respect to the Los Angeles Jewish community. 

The report asserts that “historical patterns of local generosity may be shifting to a new, lower norm, across all household income levels.” However, I can state with confidence that donors to the institution I am privileged to lead — the Jewish Community Foundation of Los Angeles — are a significant exception to this generalization. As points of comparison, for the beginning and end years analyzed in the report — 2006 and 2013 — grants by The Foundation and its donors to Jewish and nonsectarian charitable institutions in Los Angeles County actually rose by 18 percent, from $33 million to $39 million. As a percentage of our total grant-making, our foundation’s giving to local causes grew sharply from 47 percent in 2006 to 60 percent in 2013, underscoring our donors’ commitment to Los Angeles causes.

How has this happened? First, the focus at The Foundation is on planned giving via donor-advised funds, endowments and family-support organizations (i.e., family foundations within our foundation). As the study noted, giving was highest — about 65 percent — among households that have estate plans in place; this is true for the vast majority of our donors. Our strong, committed donor base is fortunate enough to have a greater ability to give than the broader population. In addition, most were better able to withstand the economic downturn.  

Without being able to point to empirical evidence, it is also my belief that we are blessed with donors who give generously out of a passion for philanthropy and a deep commitment to tikkun olam — repairing the world. This is not meant as a boast, but is an attempt to highlight what sets apart the most generous. I will revisit this point below in suggesting actionable recommendations for the future.

Regrettably, for each donor with an ability to give, there is a vastly larger number of individuals who simply do not have the means. As political strategist James Carville once said about elections, “It’s the economy, stupid.” The broader downturn in charitable giving is, sadly, a reflection of the sluggish economies of the city and county of Los Angeles. Our region’s population has grown by 1 million over the past 30 years, but the number of jobs has declined by 165,000, according to the Los Angeles 2020 Commission. A study by the AFL-CIO says that for three out of four full-time workers, real wages (adjusted for inflation) are lower than they were 30 years ago. Wage erosion is greatest among those who need it most: those in the bottom half of the salary scale. Among the working poor — the bottom quarter of earners — pay fell by 26 percent over roughly the same 30-year period. What this means is that the nonprofit and social-services safety net that is experiencing lower donation levels is being strained by a larger number of our neighbors who are no longer able to sustain themselves.

Another important change occurred in the Los Angeles regional economy during the period studied in “The Generosity Gap” report. Our region experienced a further exodus of corporate headquarters. Departing with them were numerous managerial-level, white-collar, middle- to upper-middle-income jobs. Based on my experience working with donors in this category, I suspect that a significant portion of the $1.1 billion decline in charitable giving is a direct result of these corporate relocations. In fact, I would venture to guess that in fast-growing corporate headquarters regions such as Dallas-Fort Worth over these years, we would see a trend in giving the reverse of what we have experienced in Los Angeles.

It is also important to note that the beginning and end points of the study represent very different times in our economy, and this in all likelihood skewed the findings. In 2006, we were experiencing robust economic growth, soaring local real estate values and strong consumer confidence. By contrast, in 2013, the region was still struggling from the effects of the deepest economic downturn since the Great Depression. The study focuses on two years that hardly qualify as an “apples-to-apples” comparison.

A struggling regional economy … stagnant wage growth … the loss of corporate headquarters … does all this mean the outlook for giving is bleak?

Not necessarily. The economy of the Los Angeles region is undergoing a fundamental and positive transformation. Our growth engines include a large and fast-growing crop of startups, especially information-age and digital sector enterprises. Many of these companies are staffed by members of the millennial (or Gen Y) generation — those born after 1980, who account for more than a third of the working-age population. On the cusp of raising families, and likely to be burdened by student loans and other obligations, millennials understandably do not yet give high priority to charitable giving. Yet their willingness to donate their time and money to causes that capture their interest — such as the ALS “Ice Bucket Challenge” phenomenon that swept social media — suggests that they are likely to be as charitable as any prior generation when their circumstances improve.  

Do the findings of “The Generosity Gap” mean the challenges to charitable giving in Los Angeles are greater than ever before? The report certainly deserves our attention. But we must also consider the countervailing trends, not the least of which are the powerful information-age resources that enable us to create virtual communities that can connect disparate segments of our population in new and meaningful ways. 

Working together, among the ways we can surmount these challenges are the following:

Invest in impact philanthropy programs that can reach large numbers of stakeholders. An example is Moishe House, an emerging community model for engaging millennial Jews that subsidizes housing in exchange for creative programming in communal living spaces. Its effective programs, national growth and sheer energy have been powerful drivers of its success. While Moishe House focuses on Jewish engagement, it is representative of the significance of impact, which can apply to almost any nonprofit category — from arts and culture to human need.

Engage the next generation in charitable giving that addresses their interests.  Causes that will appeal to millennials, the next wave of givers, might be fundamentally different than those that attracted their parents. The types of organizations are likely to be more grass-roots and localized, and they are likely to want to receive information via social and digital media, not glossy mailings. To earn their support, charities will have to understand, honor and respond to the preferences of this new generation.

Become charitable-giving role models for your children and grandchildren.  Dorothy and Osias Goren have for decades been pillars of Los Angeles Jewish and general-community causes. They knew instinctively that their charitable passions would not necessarily be the same as those of their children or grandchildren. Now in their 90s, they created charitable funds at The Foundation for each of their three children and 10 grandchildren, with the simple goal of sparking a passion for giving among their progeny — at which they have succeeded admirably.

Extend and leverage limited resources through collaborative funding. The often-overused word “synergy” is certainly apt here. Individuals, institutional and corporate funders and nonprofit institutions need to coordinate their giving programs, seeking to identify opportunities for high-potential programs, address pockets of need and, when necessary, respond to episodes of crisis.

Poverty, job and income stagnation, homelessness and other societal problems create real headwinds for the entire Los Angeles region. Nonetheless, I have a fundamental confidence in our community’s future, and particularly the outlook for Jewish Los Angeles, based on our unwavering belief in tikkun olam. We should regard “The Generosity Gap” as an opportunity to provoke fresh thinking and constructive dialogue, and then bind together to surmount the challenges that inevitably lie ahead.

Marvin I. Schotland is president and CEO of the Jewish Community Foundation of Los Angeles, which manages more than $1 billion in charitable assets for local Jewish philanthropists, and in 2015 distributed $96 million in grants locally, nationally and in Israel.

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