As the end of the year draws near we approach what is often called “the season of giving.” But giving, particularly to charitable causes, during a recession is hard for everyone.
The Idaho Department of Labor reported this week that state unemployment reached 9 percent for the first time since June 1983. Both those working and those unemployed know it’s hard to give in times of financial distress.
The financial woes have largely been blamed on people living beyond their means by taking on too much debt. Many organizations that receive the gifts of this season, charities and other nonprofits, also have taken on too much debt.
Using data from the Internal Revenue Service, the New York Times reported in September that bond issuance from nonprofits nearly tripled over the past decade. As the economy falters and gifts continue declining, these organizations are having as much trouble making payments as homeowners today.
Sign Up and Save
Get six months of free digital access to The Idaho Statesman
Charities and other nonprofit organizations also lost a key source for funding their operations - the stock market. According to a report in the Chronicle of Philanthropy earlier this year the financial market problems of 2007 and 2008 led to a median decline of 29 percent in charitable foundation assets.
The report described how these losses have led to big cutbacks in gifts to charity. These philanthropic foundations are required to pay at least 5 percent of their endowments to charities each year. More than half of the foundations surveyed said they would decrease how much they contribute to charities in 2009.
Like many households, charities will have to save more of what they take in, put off major spending initiatives, and pay down borrowed funds.
All sorts of organizations are asking for help in paying off their debt. One organization owes more than $7.6 trillion - the United States Government.
As of Nov. 16, the principal amount of federal debt held by the public was $7,632,034,000,000. This does not include $4,386,852,000,000 in debt held by the Social Security Trust Fund and other Intergovernmental Debt Holdings.
As a percent of our nation’s income, gross domestic product, the numbers don’t look as bad. United States debt held by the public is 53 percent of our annual income. This compares to 61 percent for Germany and 88 percent for Japan.
Over the past decade economic growth in both Germany and Japan has been well below that of the United States. Average real GDP growth was 1.5 and 1.3 percent in Germany and Japan, respectively, compared to 2.6 percent in the U.S.
Like nonprofits and households, the United States is likely to face much slower economic growth if all the borrowed funds do not go into high-return investments. Like slow growing paychecks, slow economic growth means our debt payments will get harder and harder.
You can help by making a contribution to reduce the United States Federal debt. According to a U.S. Treasury web site you can “make your check payable to the Bureau of the Public Debt.” They ask that in the memo section of your check you note that it is a "Gift to reduce the Debt Held by the Public."
The check should be sent to the attention of “Dept G” at the Bureau of the Public Debt in Parkersburg, WV. G must stand for gift.
According to a report this week from the Reuters News Service a little more than $3 million was donated to this cause last year. The Bureau of the Public Debt is going to have to step up its fundraising efforts if it hopes to put a dent in the $7.6 trillion owed.
But, in this season of giving, perhaps some households will forego wrapped gifts under the tree and send their money to a needy cause.