About the History of Philanthropy (History of Donations)

If you’ve ever dropped a few dollars into a donation jar or written a check to your favorite charity, you might be curious about the history of philanthropy (history of donations). Philanthropy is a fascinating subject that dates back to ancient times. Individuals, churches, schools, and organizations have long given their time and money to support those in need.

Below, learn about the exciting history of philanthropy as well as a few strategies for giving to a good cause.

Ancient Philanthropy

It’s possible to trace the concept of philanthropy back to ancient times. Giving for the good of others has occurred for thousands of years, but the word “philanthropy” didn’t appear until 500 BCE in the Greek drama Prometheus Bound. Broken down, phil comes from the Greek word meaning “loving,” while “anthro” comes from anthropos, meaning “human being.” Taken together, philanthropy means “love of humankind.”

As an example of ancient philanthropy, consider the Roman emperor Augustus. He generously donated public aid to more than 200,000 people.

The concept of philanthropy was also mentioned in ancient Egyptian writings, namely, The Book of the Dead. This text specifies that to pass successfully to the afterlife, individuals must have a lifetime of performing benevolent acts toward the poor and suffering.

Medieval Times

Charity and philanthropy were quite common in the Middle Ages. Hospitals, churches, rulers, and wealthy individuals frequently gave their money, goods, and time to the less fortunate. Throughout the 12th and 13th centuries, philanthropists erected hundreds of hospitals and leper houses for the sick and poor.

Some scholars believe that medieval charity was primarily used as a way to elevate one’s social or economic status. Regardless of the giver’s motivations, this philanthropy likely improved the quality of life for hundreds, perhaps thousands, in Medieval times.

Early Philanthropists

Several prominent philanthropists are well known for the role they played in the history of philanthropy. Below, learn about three of the most famous philanthropists of our time.

Andrew Carnegie

Andrew Carnegie, who lived from 1835 to 1919, is often considered the “Father of Modern Philanthropy.” In 1911, he founded the Carnegie Corporation of New York with the intention of helping as many people as possible with his fortune.

Some of the causes Carnegie championed include:

• Establishing and supporting free public libraries
• Founding research institutions worldwide
• Providing pensions to college faculty
• Supporting museums, churches, and schools
• Calling for peaceful resolutions to international conflicts

John D. Rockefeller

John D. Rockefeller was born into a family of modest means, but by the time he reached 40 years of age, he had come to dominate the relatively new petroleum industry. At its highest level, his net worth was about 1.5% of the nation’s total economic output. That would be worth about $280 billion today — nearly three times the wealth of Bill Gates.

Some of Rockefeller’s philanthropic causes include:

• Championing improved public sanitation
• Launching the field of biomedical research
• Creating schools of public health at Harvard and Johns Hopkins
• Funding investigations that led to vaccines for yellow fever and meningitis
• Promoting education for all people regardless of race, sex, or creed

Jane Addams

Jane Addams, who lived from 1860 to 1935, was one of nine children born to a prosperous family in Illinois. She originally intended to enter the medical field but was forced to abandon that goal because of poor health (largely caused by a congenital spinal defect).

After this, she became inspired to establish a settlement house for the disadvantaged in Chicago. At this house, called Hull-House, she raised money for the poor, nursed the sick, and led classes for children and adults. By its second year, Hull-House hosted more than 2,000 guests every week.

Addams was a devoted feminist who championed women’s right to vote, making her one of the most important figures in the history of philanthropy. She also cared greatly for improving poor sanitary conditions in Chicago and gave many speeches on the importance of ending worldwide conflict.

Seven Common Types of Philanthropists

Experts believe there are seven main types of philanthropists. Wondering which category you fall into? Maybe you give for religious reasons or simply because you feel it’s the right thing to do. Perhaps it’s a mix of both.

Types of philanthropists include:

• Communitarian: This is the most common type of philanthropist. They give because they believe it’s smart to invest in one’s community.
• Devout: Many donors give because they believe it’s God’s will that they do so. Of those in this category, 96% of their giving is for religious purposes.
• Investor: This category believes that giving is just good business.
• Socialite: People in this category give because they enjoy it. They commonly like to donate their time to causes they find important.
• Repayer: This type of philanthropist gives as a way to pay back organizations or individuals that have done something good for them.
• Altruist: The altruist gives because they think it’s the right thing to do. They often act as champions for equal rights and other social causes.
• Dynast: The dynast typically comes from an affluent family in which giving is a tradition. They give to continue their family’s legacy.

Philanthropy in the Modern Era

Philanthropy has become much more advanced since ancient times. If you’d like to maximize your charitable contributions, you have many options. Now that you’ve learned about the history of philanthropy, let’s take a look at some popular strategies for giving below.

Donor-Advised Funds

A donor-advised fund, or DAF, is a special type of investment account you can set up for the sole purpose of supporting charitable organizations. DAFs are appealing because you can support multiple organizations through the same account. Here’s how they work.

First, you must establish a Giving Account at your preferred bank. Once you’ve set up your account, you can fund it with cash, stocks, cryptocurrency, or non-publicly traded assets. Some companies donate private company stock and business interests to qualify for an immediate tax deduction.

Keep in mind that once you’ve put money or assets into a DAF, you can’t take it back. You must also use it for the sole purpose of supporting charitable organizations.

Corporate-Advised Funds

Corporate-advised funds, or CAFs, are similar to DAFs but tailored to corporations. Businesses can open this account regardless of how many employees they have. Just as you can with a DAF, you can use a CAF to give to any charitable cause that’s important to your company.

Impact Investing

Impact investing gives companies and individuals a way to support important causes while generating financial returns that benefit them. For instance, someone who wants to support finding a cure for cancer might invest in a medical research company.

Some high-net-worth investors make charitable grants to organizations to support projects that otherwise wouldn’t be financially viable. Even if you can’t afford such a large donation, you still have a few other options for impact investing. These include:

• Depositing money into a nonprofit loan fund. These funds allow individual investors to pool capital and spread their risk across a diversified portfolio.
• Investing in bonds, mutual funds, or exchange-traded funds (ETFs) that choose companies with values you support.
• Investing directly in companies with an explicit social mission, such as lowering the usage of fossil fuels or reducing poverty.

Asset Donations

Donating cash isn’t the only way to support your favorite cause. You can also give assets that can be traded on a public market, such as stocks, as well as:

• Cryptocurrency
• Real estate
• Vehicles
• Life insurance
• Privately held business interests
• Collectibles and fine art

Donating assets isn’t quite as straightforward as giving cash, so you might want to consult an accountant or tax professional if you intend to make a large contribution. You must also get a donation receipt if you plan to deduct your contribution from your taxes. Non-cash donations over $5,000 also require an independent appraisal of the item’s value per IRS rules.

Foundations and Nonprofits

Charitable foundations and organizations have had an enormous positive impact on society. They have helped lift the poor out of poverty, educate youth, heal the sick, assist endangered animals, and much more.

Did you know that charitable organizations, public charities, and private foundations aren’t quite the same thing? If you’re planning on giving, it’s important to understand the differences.

Charitable organizations are nonprofit institutions, often run by volunteers and supported by the generosity of donors. Although many are tax-exempt, not all qualify for 501(c)(3) status. This status is reserved for organizations that are exclusively charitable (that is, they don’t conduct non-charitable activities).

Private foundations are typically supported by an individual, a family, a corporation, or a mix of these. To qualify for this status, the foundation must use at least 5% of its annual assets for charitable activities or grants. All private foundations receive 501(c)(3) status by default.

Public charities can include churches, hospitals, schools, and charitable organizations that provide grants to others. They are called public charities because they receive funds from various sources, including individuals, foundations, and government agencies.

Private foundations must deal with stricter federal rules than public charities. Federal law regulates:

• The foundation’s business holdings
• Amounts paid out for charitable programs, grants, and operating costs
• Financial transactions carried out between the foundation and its officers, largest contributors, and other insiders
• Reasonableness of expenses used to run the foundation

The Benefits of Philanthropy

Now that we’ve discussed the history of philanthropy, let’s look at a few benefits of philanthropy. They include:

• You can feel good about making a positive impact by giving to a cause you hold dear.
• Philanthropic activities provide long-term job opportunities for those who might otherwise struggle to find work.
• Philanthropy can be life-changing for disadvantaged groups, such as low-income families, unhoused individuals, refugees, and people with disabilities
• Giving can provide tax breaks to individuals and businesses. The IRS allows individuals to deduct qualified contributions of up to 100% of their adjusted gross income. Corporations can deduct contributions of up to 25% of their taxable income. Any contributions that exceed that amount can carry over to the following tax year.

Different Types of Philanthropy

Philanthropy is a broad umbrella covering several types of giving, such as corporate, community, religious, and social impact. We’ll explain each of these next.

Corporate Philanthropy

Corporate giving is an excellent way for companies to support the communities in which they do business. Corporations have much deeper pockets than the average individual, allowing them to make large investments in causes they and their employees care about.

A few types of corporate philanthropy include:

• Matching gifts. This is the most popular method of corporate giving. Companies promise to double or triple the amount given by employees to a certain charity or cause.
• Volunteer grants, also called Dollars for Doers programs. With these programs, a company donates money based on how many hours of volunteer work an employee performs for a charity. For instance, if an employee volunteers for 10 hours, their employer might donate $100.
• Corporate grants. Under a corporate grant program, a corporation awards money to a nonprofit for a specific project. Typically, corporations limit the number of grant recipients, but some allow for unlimited recipients (such as the Microsoft Ads for Social Impact and Google Ad Grant programs).
• Volunteer support initiatives. Companies can set aside specific times for employees to get together and volunteer.
• In-kind donations. For example, a law firm might join their state’s pro bono attorney network, or a company may donate its old computers to a library or school.

Community Philanthropy

Community philanthropy, as the name implies, involves gathering the support of community members to improve the area in which they live. This type of philanthropy is appealing because community members can benefit from the results.

Support can include:

• Cash gifts
• In-kind donations such as equipment, food, clothes, and meeting venues
• Pro bono services of individuals and community organizations
• Time devoted to improving the community

Types of community philanthropy include:

• Giving circles in which a group of individuals pools resources and then decides how to spend those resources in the community
• Identity-based philanthropy to support specific groups, such as women, people of color, and religious communities
• Community foundations. These grant-making public charities receive funds from various sources and usually serve a specific geographic area.
• Youth banks, which give young people control over the allocation of grant funds

Religious Philanthropy

Religious philanthropy is an incredibly popular way to give. According to the 2021 Giving USA Report, religious contributions comprised 27% of all charitable dollars given. That’s more than any other category, including education, health, international affairs, and environmental causes.

People of faith can donate money to their houses of worship or join volunteer groups with other congregation members.

Social Impact Investing

We discussed social impact investing above, but it’s worth another mention here. Social impact investments can support important causes such as:

• Building affordable housing
• Cleaning up the environment
• Conducting research into treatments and cures for certain diseases
• Implementing renewable energy sources in a community

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