Brief History of Philanthropy in America

The fabulous American volunteers built the greatest nation the world has ever known. They stood their ground at Concord, pledged their lives to independence and, at Benjamin Franklin’s urging, established public libraries and volunteer firehouses.

In the process, these dauntless men and women charted an un-traveled course – one which evolved into a revolutionary understanding of social responsibility. It is as though these new concepts were indigenous to the United states since the cultures our forefathers left behind spoke not at all of helping one another, volunteerism, or of sharing one’s wealth for the betterment of humanity.

History records that the United States was about philanthropy before it was a nation. Volunteers called it “begging” when, in 1643, Harvard conducted what is believed to be our first recorded fund drive. It raised 500 pounds and was thought a “great success.” Every year since, as pioneers spread to cities across the continent, volunteers asked and donors responded.

Then, out of the horror of civil war, a nation of diverse people, nationalities and cultures bound by shared tragedy, tested whether their “nation or any nation so conceived… could long endure.” Separately but simultaneously, on both sides of the contest, armies of volunteers sold bonds and gathered contributions hoping for resolution.

The Civil War’s influence on philanthropy didn’t end with the surrender at Appomattox, however. Their fund raising efforts introduced a process that, during the great wars of the 20th century helped galvanize the nation while formalizing and popularizing charity as fundamental to the American social conscience. And ultimately, the income tax Abraham Lincoln instituted to finance the Union’s preservation grew to such an extent that exemptions from it now encourage charity—particularly among the wealthy.

The modern notion of philanthropy began with Andrew Carnegie, who in an essay titled “The Gospel of Wealth” published in 1889, gave birth to the idea that the rich should, instead of “leaving their wealth to their families, administer it as a public trust during life.”

The Carnegie essay prepared the way for John D. Rockefeller, Sr., who in 1891 hired staff to help manage his philanthropic enterprises. The state of New York chartered the Rockefeller Foundation in 1913, but only after the U.S. Congress refused to do so.

Pressured by an increasingly charitable America and the increasingly obvious need for charity in a booming post war economy, legislation in 1921 finally brought tax relief in exchange for personal giving. Corporations had to wait until 1935 and the Great Depression.

Perhaps prompted by tax breaks, or out of a sense of gratitude, or perhaps motivated by a burning desire to create a better world, giving has increased steadily, from an estimated $1.7 billion in 1921 to more than $200 billion a year; an 88 percent increase in the last decade; and more money than many nations produce as a gross national product.

The long rich history of philanthropy in the United States is now so deeply rooted in our national psyche it is as though “giving generously” even “at the office” has become infused in the American genetic code. Around this an entire industry has grown. In 2003, it included more than 965,000 charitable tax-exempt organizations, employing bread winners by the tens of millions, generating trillions in revenues and supported by the charity of over 100,000 private foundations and the volunteer efforts of more than 90 percent of our adult population.

Never in their wildest dreams could our founding fathers and early philanthropists have imagined that the transfer of wealth in the United States would exceed $41 trillion over the next 50 years. Nor could they have imagined intrepid settlers carving a 48th state out of the Sonoran desert and creating a community that would one day be home to foundations which in 2000 numbered 686 with assets of more than $2 billion.

Reflecting upon the past, Arizona’s grantmakers are compelled to ask, as did Andrew Carnegie, “How best to use this wealth?” The men and women who manage Arizona’s foundations, didn’t invent charity. They are simply dedicated to the difficult art of distributing it better, more effectively and with improved results.