The State of American Philanthropy

Americans are known to be the most generous people in the world, giving to charitable causes at rates that far outstrip our peers in other nations. In 2025, giving totaled more than $600 billion. And that number is driven primarily by individuals. At the same time, federal and state-level laws and regulations sometimes disincentivize philanthropy. Attempts to expose the names of anonymous donors, weaponize the IRS against nonprofits for perceived political bias, and add new strictures around giving threaten to undermine America’s privately funded civil society. This episode of Giving Ventures explores the latest charitable giving statistics from Giving USA as well as a new report, the Free to Give Index, a recent publication of the Philanthropy Roundtable.

Claudia Cummings serves as senior vice president of public affairs at Philanthropy Roundtable, where her bird’s-eye view of the philanthropic landscape gives her a unique perspective to break down the new Giving USA numbers. Matthew Mitchell is a senior fellow at the Fraser Institute and co-author with Jack Salmon of the Free to Give Index, which draws on the methods of Fraser’s often-cited Economic Freedom Indices.

Note: This transcript was generated and cleaned by AI.

Peter Lipsett: I’m guessing, since you’re listening to this podcast, that you think philanthropy is important. I certainly do. I’ve been in the charitable sector for twenty years now and continue to be fascinated by the variation in the types of givers out there, the places they give, and the way the different charities work. It’s really a rich tapestry of groups, people, and ideas. But in our daily lives, we don’t really talk too much about philanthropy — or at least most people don’t, which is why it’s exciting when things like the Giving USA report come out. It gives us a nice tentpole around which we can talk about philanthropy and talk about what’s going on. It’s like a thermometer — it tells us how we’re doing as a nation in terms of our giving. And the most recent report would suggest that we’re doing pretty well. We gave away more than six hundred billion dollars among individuals, foundations, corporations, and bequests back in 2025.

That sounds like a big number, but you have to know what it really means, what it’s telling us, and what it’s compared to. And how does it break down? There are fractures in there that we have to explore. So we’re going to look at that today, and we’re also going to couple that with a new report from the Philanthropy Roundtable called the Free to Give Index, which has analyzed every state to figure out how hard or easy it is to let charities just be charities — to run charities and to give in these different states.

So with those two pieces as guides, I want to explore the legislative and regulatory landscape of philanthropy today. And while saying “legislative and regulatory” doesn’t sound necessarily titillating, it’s really important — important for how we give, our ability to give, and your ability as a philanthropist to have the impact you want to have. So joining me for that discussion are two great talents and great friends, Claudia Cummings, who is the senior vice president for public affairs at the Philanthropy Roundtable — before that, she spent many years leading the umbrella organization for philanthropies in Indiana — and Matthew Mitchell, who is a senior fellow at the Fraser Institute, a Canadian-based think tank, where he directs the Center for Human Freedom. He’s also a scholar at Mercatus, where he worked full-time prior to joining Fraser. Claudia, Matt, so good to see you both.

Claudia Cummings: Thanks for having me.

Matt Mitchell: Thanks for having us.

Peter Lipsett: So let’s start with Claudia, looking at the Giving USA report. Give us the big highlights. Is six hundred — I think it’s six hundred and eighteen billion, roughly — is that a good number? What does it mean?

Claudia Cummings: Yeah, well, six hundred and seventeen billion is the number I have, but somewhere around there — whatever it is, it’s more than the six hundred billion that was given in the prior year. So we’re up. It’s three percent up, adjusted for inflation. And that shows that people are really giving. They’re giving more, and they’re giving freely. I think a few key things jump out to me in this. Individuals still drive giving — nearly two-thirds of all charitable giving comes from everyday Americans. They’re making choices about what they value and how they want to see society, and I think that’s important, and uniquely American.

I think another big headline from this is that bequests are way up — almost twenty percent in a single year. We can talk about that further into the podcast, but I think that’s a huge highlight. Lots of thoughts on that — is it the baby boomers coming to a certain age? Is it the growth in the stock market? Is it some other factor? Really interesting question to see what happens over the next few years. So I’ll stop there, but there are a lot of interesting tidbits throughout the report.

Peter Lipsett: Well, that bequest piece I do actually think is really interesting. We’ve been hearing for years about this great wealth transfer. Back when I first heard about it many years ago, it was going to be a thirty-seven trillion dollar transfer, then it was sixty trillion, and now it’s ninety-three trillion. It only keeps getting bigger, and yet even as time passes, that transfer doesn’t seem to be happening. Does the fact that bequest giving is up mean that we’re finally seeing this great wealth transfer occur? Or is it just an anomaly?

Claudia Cummings: It’s such a huge number. I think it’s an outlier, and we’ll need to see. Giving USA gives us the data, but I don’t know that we know for sure. I do think we’re living in a K-shaped economy right now, and we’re seeing a lot of wealth grow significantly, and that’s also an important factor, I believe.

Peter Lipsett: Now, I don’t know if you’ve unpacked this, but I remember a couple of years ago, one of the big takeaways from the Giving USA numbers — the underlying problem people could see — was that yes, individual giving was way up, but it was being driven by those mega gifts. The Bezoses and Gateses and MacKenzie Scotts — people who could give significant amounts of money — and you were actually starting to see a decline at the lower end of givers. As you’ve looked at the research, do you still see that? Is that still a concern, or is that something you’re still talking about at the Philanthropy Roundtable?

Claudia Cummings: Yeah, that’s a multi-year trend now. I think we can say safely that small donors are down. A few promising bits of light that are really important: religion remains the largest share of charitable dollars at twenty-three percent. So for a lot of folks, that’s their primary source of giving, and it remains a significant place where individual donors are showing up and giving.

I also think that when dollars are tight, the universal charitable tax deduction is important. We’ve gone through a period recently where it’s been on again, off again, and folks can’t keep track of that bouncing ball. Finally, last year, Congress, as part of the One Big Beautiful Bill, put it back on again for the long term. So I’m hopeful that we’ll see those small dollars and individual donors come back to the table and continue with the generosity we know Americans have.

Peter Lipsett: That’s not a big number — what, a thousand dollars?

Claudia Cummings: Yeah. It’s smaller than it has been at times. I can’t recall the exact specifics on it, but I do think it’s important. It tells people that their giving matters, and those signals — we’re going to talk about signals when we get to Matt — I think those signals really matter a lot to folks.

So yeah, I think it’s important. I’m also interested in another thing in Giving USA: it talks about education, and it’s one of the bigger winners, up about twelve percent. I expect to see that number go up even more in 2027 as we begin to see the $1,700 federal tax credit scholarship.

Peter Lipsett: It was a huge bump in education giving, yeah.

Claudia Cummings: That scholarship is going to be basically free money. It’s a credit that any American can use to give to a K-12 educational institution of their choice. It can be used for tutoring, school supplies, and a whole number of things. I think that’s another place where we’re going to see individual giving perk up and everyday Americans engage.

Peter Lipsett: Well, that’s a great point. I hadn’t really thought about that tax credit — I mean, I’ve been thinking a lot about it because it’s a big deal, but I hadn’t thought about it in terms of what it might do to the charitable numbers, in terms of the optics. But you’re right — all that money’s going to a 501(c)(3) scholarship-granting organization, so it’s going to get counted that way. I was thinking of it as just a tax credit and therefore different, but you’re absolutely right. Hopefully we’ll see more money going into that than, say, alma maters and university annual funds, which maybe aren’t necessarily looked at as favorably.

One more question — I’m sure there’s much more we can unpack here, and we’ll circle back to it, but I also want to talk about the Free to Give Index and how it matters. One more question, though, about the fact that foundation giving didn’t really grow much — what, one percent? I can’t remember if that was one percent real or one percent in actual dollars, but it didn’t grow much. And I kind of expected that, given the positive stock market, to have actually gone up more, because there’s always a five percent floor on what foundations can give. So you’d think that if the economy goes up, foundations have to give more. Why do you think foundations don’t seem to be keeping pace — at least to my novice eyes — with the broader growth of their assets?

Claudia Cummings: Yeah, the growth was still a record number — one hundred and seventeen billion dollars. That’s not chump change. I do think it’s up a bit year over year, and it’s up a little over that five percent floor. Not much, you’re right, but still up.

And I think that continues to show that payouts are strategic — long-term plays. Foundations tend to work directly with their charities, they know their charities, and they work toward specific goals. I don’t think it’s a negative indicator when dollars are up.

Peter Lipsett: Fair enough. All right, I won’t beat up on foundations too much then. All right, Matt, let’s bring you in. Let’s talk about the Free to Give Index, which I think is a really fascinating study. Talk to us about the theory behind it — big picture, just to ground us — and then I’ve got some questions.

Matt Mitchell: Yeah. So the basic idea here comes straight out of economics — we know that institutions matter, we know that incentives matter. We know that in the private sphere there’s a long and growing body of literature suggesting that when people are allowed to make their own economic choices, they tend to exchange more, and you tend to see greater prosperity.

So the idea of this index is to apply what we already know about the private exchange market to the nonprofit and charity world, and see if incentives matter there as well. What we did was start by thinking, big picture, about what types of things might affect charitable behavior and incentives. Because if you’re a donor and you want to make the world a better place, you have choices in how you spend your energy. The more difficult it is to give, the less you’re probably going to give — or you’re definitely going to give less in states that make it more difficult. Similarly, if you’re trying to start a charity, the more difficult it is to get registered, to pay the startup fees, to pay the compliance costs, to hire people to help you fundraise — those incentives matter too.

So the index is constructed from thirty-three different variables, divided into three broad categories — and you could even think of the number as larger, since some of these have many subcomponents. The broad areas are, first, the broad policy environment: the thinking here is that if there’s greater economic freedom in the state, it will be easier to raise the capital needed to make charities possible and to create the kind of surplus value that can be turned into charitable giving. So that’s one — the broad policy environment.

The second branch of the index focuses on charitable freedom. It’s got several subcomponents and is the largest part of the index — it looks at registration fees to start a charity, incorporation fees, reporting requirements, annual fees, and paid-solicitor requirements. Are solicitors required to register? Do they have to post bonds? Do they have to make regular reports to the state? Are there audit thresholds, and so on.

And then the third part of the index looks at the incentives and protections afforded to donors — are there donor disclosure requirements that could require donors to reveal who they are and jeopardize their privacy? Is there donor standing? Are charitable deductions available? That sort of thing.

It sounds a little complicated, but honestly, when it comes down to it, it’s just an exercise in averaging. We gather data for these thirty-three variables, average them within the three broad categories, and then average those categories together, and we end up with a measure of how easy it is to engage in charity — whether the institutions and laws in a state make it difficult or easy.

Matt Mitchell: I was looking at the index, so I didn’t notice that.

Claudia Cummings: Yeah, at one point I stopped talking because he was glitching and I wasn’t sure what to do.

Matt Mitchell: You needed that really hard.

Peter Lipsett: Yeah, part of the reason we like Riverside is because it does — perfect. So I can ask about what you found. All right, so that’s what I’m going to do. Okay, so lots of variables, lots of different pieces to look at — so what does it show?

Matt Mitchell: Yes.

So, first of all, let me give you some of the broad numbers of what we find. It shows that some states make it much easier to engage in charitable activity, and some make it much more difficult. Let’s start with the bad side: California comes in at fiftieth, followed by New Jersey, then Washington, New York, Connecticut, and Illinois. In these states, the incentives to give are much more attenuated, because it’s difficult to start charities, to run charities, to use paid solicitors, and it’s difficult for donors to feel their interests are protected. At the other end of the spectrum, the number one state in terms of freedom to give is Montana, followed by Wyoming, South Dakota, Iowa, Indiana, and Texas. In these states, charitable startup regulations are comparatively few and relatively low — it’s easy to get going, easy to keep operating, and donors face good incentives and are relatively well protected.

So that’s the broad overview. But then the next question is: does it matter? How does this affect actual activity? This is where I think it gets pretty interesting, because when you do something like this — you’ve got thirty-three variables, you spend months and months gathering the data, trying to think through what’s most relevant — you cross your fingers and hope you’ve spent your time wisely, that you’ve actually been studying something that matters. Because you can then compare it to the real world and find out that none of this stuff matters at all. Thankfully, that’s not what we found.

We gathered data on the number of charities per billion dollars of GDP, and what we find is that it’s highly correlated with the index. Just to take one example: if you look at the top five performing states in our index, there are twice as many charities per billion dollars of GDP in those states — 121.8 — relative to the bottom five states, which have 63.2. So what we find is that the essential lesson of economics — that incentives matter — also applies to charitable activity. Incentives matter when it comes to charity.

Peter Lipsett: Yeah, I think this is the big takeaway to me — and maybe it shouldn’t be a surprise — but there are more charities, meaning more people are being helped in more diverse ways, in the places where regulations are a little lighter. And in the places where government keeps adding rule after rule, you’re right, incentives matter, and people simply end up with fewer charities. And what happens when there are fewer charities? Government has to step into the breach. So it becomes this self-perpetuating cycle of government getting more powerful as it regulates more, because people abandon the field. Is that a fair description of what you found?

Matt Mitchell: Yeah, I think that’s fair. I think that’s one of the ways we could — to me, that seems like a perfectly rational hypothesis, and one of the next steps in terms of research. Somebody could take our index and study how governments get more involved in this space, taking on activities we normally think of as charitable. One could also use it to test the view that we need more regulation on charities — people worried about fraud, for example. Well, let’s see: is that concern correlated with the data? Because we now have evidence that there are downsides to greater regulation and more red tape for charities. Let’s compare that against the other hypotheses out there.

Peter Lipsett: And you’re also the lead scholar — or at least part of — the state Economic Freedom Index, is that right?

Matt Mitchell: Yes, I’m a co-author. I won’t claim to be lead scholar, but yes. This is actually part of the Economic Freedom of North America Index. What we’re doing there is looking at how easy states make it for people to make their own economic choices.

Peter Lipsett: So do you see a correlation between the giving index and the state freedom index?

Matt Mitchell: We do. Now, some of that correlation is by construction, because one portion of the Free to Give Index is actually built from the Economic Freedom of North America Index. But the interesting thing is we also decompose it to see how different types of incentives and freedoms relate to one another — and they’re all highly correlated. A state that imposes more restrictions on businesses, making it more difficult for private, for-profit businesses to get started, that has higher taxes, and so on, also tends to make it more difficult for charities to get started. They have more regulations, higher fees, greater reporting requirements, and it’s more difficult to employ paid solicitors. So this tells us there’s quite a bit of spillover — when governments move to restrict economic freedom, it ends up, one way or another, also restricting private-sector charitable activity.

Peter Lipsett: No — you’re focused on the states, and we’ll come back to that state regulatory environment. But Claudia, at the national level, are you seeing any legislative threats that could make it harder for givers nationally?

Claudia Cummings: Yeah, actually. I think what’s an interesting tie-in here is that Justice Brandeis famously said that states are the laboratories of democracy. So you can take what we found in the index and make some informed guesses about what that might mean federally.

Just last week, the House Ways and Means Committee heard three bills that are extremely concerning to me as someone who wants to see a thriving philanthropic sector. All three bills are well-intended — hats off to the authors — intended to stop foreign influence in American society, to stop shenanigans like people breaking the law through violent protests, to stop some genuinely bad stuff that’s going on. But these bad actors are few and far between compared to the 1.5 million charities that exist in the United States, 88 percent of which have less than $500,000 in annual spending. So you’ve got this huge sector, and we’re going after a few bad actors — and they are bad actors, and they have to be stopped — but some of these changes are significant.

Two of the most concerning bills are intended to capture the nationality of all givers. Every charity would have to ask everyone — even someone who throws twenty-five cents in a fountain or puts five dollars in the Salvation Army kettle — for their nationality, which means they’d need to know donors’ identities. It would end anonymous giving. Both bills passed on a straight party-line vote out of committee last week. Those are concerning to me. They really strike at the heart of this tension we sometimes feel in the public square between transparency and privacy — and we always say privacy at the Roundtable.

Although they’re not asking for donors’ names to be disclosed to the government, just aggregate nationalities — unless donors come from a country of concern — the fact that a charity now has to collect that information, and that we can no longer give anonymously, is concerning. I like to give to my alma mater, for instance, and I don’t love the phone calls at night from the earnest college students trying to bring in more for the annual fund. So I give anonymously to my alma mater. These two bills would prevent that.

Peter Lipsett: What’s the point of finding out the nationality? What’s the problem they’re trying to solve?

Claudia Cummings: Again, they’re trying to identify foreign actors attempting to infiltrate society. We’ve seen a bit of that in elections, and there’s some talk of it coming up in the data-center debate. Whatever the case, it’s a very small number of people allegedly giving money through charitable institutions to work on issue campaigns. So they’re trying to identify those individuals, or to stop or disincentivize that. But what that will actually do is dry up a lot of small-dollar giving — quite a bit of anonymous giving, completely. It has huge ramifications, and it’s challenging to help members of the committee, the authors, and members of Congress see that when they’re focused on these headlines about a few bad apples.

Peter Lipsett: Yeah, and if it’s a party-line vote, that means it’s Republicans leading it — a reminder that both sides have bad ideas when it comes to this stuff, which is disappointing. Matt, in your research at the state level — the states that aren’t doing great — were there any particular regulations or rules among the many factors you looked at that had the greatest negative impact, that states which currently don’t have them should make sure they don’t accidentally impose?

Matt Mitchell: One of the things that makes that question tricky to answer is that so many good things go together, and so many bad things go together — it’s difficult to isolate a single defining factor. Some of this goes back to the fact that, somewhat to our surprise, if a state has generally high levels of economic freedom — a good broad policy environment — the donor-confidence subindex also tends to be good, and the charitable-freedom portion, the charity-startup piece, also tends to be relatively good. So it’s difficult to isolate. What you tend to find is that if a state has minimal registration requirements and low fees, it also tends to make it easy for donors to protect their privacy and have standing. So it’s an empirical problem — but a good problem, because it means good things go with good things, and bad things go with bad things, if that makes sense.

Peter Lipsett: Was there anything innovative — anything you saw in the data where some state, or a small handful of states, was doing something really creative?

Matt Mitchell: One thing I found pretty interesting — something I think we could apply more broadly, not just in the charitable context — is the idea that new regulations need to be approved by the actual legislature. That sounds like a good idea for any republic: if you impose a requirement on citizens, it should have to go through elected officials rather than something the executive can simply impose. So that’s a good example of taking the spirit of this index and thinking about it more broadly as good governance.

Peter Lipsett: Yeah. What would both of you say — for donors, organizations working on policy, think tanks, advocacy groups — what are some of the ideal legislative changes they should be arguing for, at the federal and state level?

Claudia Cummings: Yeah, I can go first on that.

Matt Mitchell: Go ahead.

Claudia Cummings: I’m a native Hoosier, so I’m proud to see my state represented in the top five, but we don’t provide donor standing for donors and donor-intent cases. So I’ve been urging folks here in my home state to consider adopting model legislation that exists to do just that — give standing to those who are the donor, or the designee of the donor, to ensure that a charity is using the dollars in the way intended, or, if there’s a need to shift those dollars, that the shift aligns with the donor’s values. I think that’s incredibly important — probably one of the most important things.

Matt Mitchell: The way I like to answer this question is to think in terms of incentives. We started this conversation talking about the incentives of economic actors and charitable givers, but what are the incentives of policymakers? One of the things I’ve found in my career is that the incentive of most policymakers is to not rock the boat — they’re very risk-averse. No offense to great policymakers, but they often don’t have a real entrepreneurial mindset. So one of the advantages of an index like this is to help them see that they’re not standing out on a limb — they can do what other states have done. Here’s the model, follow it, because it seems to work.

I’ll point to Montana, which is at the top of the index. What makes Montana number one? They have no registration requirements, zero-dollar filing fees, and minimal reporting requirements for charities and fundraising professionals. They have no audit requirements. They tend to have a really good overall policy environment, with high degrees of economic freedom and generally favorable regulatory and tax regimes. They tend to have nation-leading incentives and protections for donors themselves — they offer donor standing, and contributions are generally deductible. So they check quite a few of these boxes, and they tend to have a large number of charities per billion dollars. As far as I know, there are no significant downsides — no extraordinary scandals with charities doing terrible things, or the kind of foreign-influence issues Claudia mentioned. So my advice is simple: look at what other states like Montana are doing, and if you like what you see, copy it. There’s no reason other states can’t follow that model — follow Justice Brandeis’s advice and look to the other states as laboratories of democracy. Copy what works.

Peter Lipsett: It’s interesting, because Montana, if I’m not mistaken, is as open as it might be on the charitable side but very restrictive on the political-giving side — it’s got a super-low cap on what you can give, with a lot of regulations around that. So it’s interesting that both can exist in the same state — you can be very restrictive on one side, versus, say, where I am in Virginia, where there’s no cap, so the political restrictions are much lower. Interesting. I don’t know if there’s a—

Matt Mitchell: Yeah. Well, that’s interesting — that’s a good reason for trying to measure as many things as we can, because we do sometimes see that. Sometimes states with very high fiscal burdens and high taxes have relatively low regulations, and vice versa. So it’s important to capture as much of it as you can.

Peter Lipsett: So what do we think — here we are in 2026, the stock market seems to still be doing well. Claudia, are you optimistic that we’ll continue to see more growth nationwide? And, I guess the more important question, is there anything more we can do, other than that tax credit, to bring medium and smaller-dollar donors back into the philanthropic fold?

Claudia Cummings: Yeah, I’m highly optimistic about giving overall. It’s what makes America great — it’s what separates us from so many other countries around the world. We were founded on this idea of a voluntary society. That’s who we are. So I bet on America, and I bet on Americans, and I’m optimistic.

Peter Lipsett: Matt, what do you think the next step is for your research? It sounds like there’s more to unpack there. Is the Roundtable, or some other group, going to take it to that next evolutionary step?

Matt Mitchell: Well, one of the things I enjoy about doing these types of indices is that it’s a very leveraged way to understand the world. At Fraser, we’ve been publishing the Economic Freedom of the World Index — this will be the thirtieth year — and the Economic Freedom of North America Index, which will be the twentieth year. We put these indices out there, and other scholars have used them — they’ve been cited some sixteen thousand times. But more importantly, they’ve been used more than a thousand times by researchers studying the effect of economic freedom on outcomes of interest. So we know, thanks to this research, that states and countries with greater economic freedom have higher income, less poverty, faster growth, more charity, greater levels of happiness, and even cleaner environments.

So when we introduce a new index like this, my great hope is that other scholars will take it up and ask all sorts of questions. We asked one question — when you’re freer to give, do you tend to see more charitable formation? And the answer seems to be yes. But I can see plenty of other questions researchers could ask. I mentioned earlier the idea of whether there are greater scandals or more nefarious activity — well, now we actually have the data, and it would be possible for people to measure that.

The other thing I hope to do, should the Philanthropy Roundtable be interested, is continue this research and put it out every few years, so we have a barometer measuring it over time and can see how states shift — because that’s where it gets really interesting. And what’s great is when you get to the stage where you’re no longer calling policymakers or writing op-eds trying to encourage them to improve their environment — they’re calling you, saying, ‘What can we do to improve our environment? We know about your index, we know it affects people’s charitable activity — how do we make New Jersey into the next Montana?’ That’s where I think it really starts to get interesting.

Peter Lipsett: Well, as I said at the top, there’s not enough discussion around philanthropy in our daily conversations — there’s so much else that drowns it out. But if we want to keep America, as you say, Claudia, as this shining beacon for philanthropy, this really unique position in the world, we have to talk about it. We have to know what’s limiting it, what’s encouraging it, and actually tell people: philanthropy is a great thing, you should be involved, you should give. Even if you can only give a hundred dollars a year, even if it’s only twenty-five dollars a year — do it. Because it will make you happier, it will accrue to your benefit, and it will accrue to society’s benefit.

And when we have good facts to work with — when we know where we stand, thanks to new research like what Matt has put out, along with his co-author, Jack Salmon — it really helps us understand the landscape, so that people like us, who think about philanthropy on a near-daily basis, can go and be cheerleaders for this really important cause. Claudia, Matt, I really appreciate you both coming on and talking about these things. And I encourage everyone to just keep giving, because it’s really important. Thank you both.

Matt Mitchell: Thanks so much for having us.

Claudia Cummings: Thank you, Peter.

The State of American Philanthropy

Americans are known to be the most generous people in the world, giving to charitable causes at rates that far outstrip our peers in other nations. In 2025, giving totaled more than $600 billion. And that number is driven primarily by individuals. At the same time, federal and state-level laws and regulations sometimes disincentivize philanthropy. Attempts to expose the names of anonymous donors, weaponize the IRS against nonprofits for perceived political bias, and add new strictures around giving threaten to undermine America’s privately funded civil society. This episode of Giving Ventures explores the latest charitable giving statistics from Giving USA as well as a new report, the Free to Give Index, a recent publication of the Philanthropy Roundtable.

Claudia Cummings serves as senior vice president of public affairs at Philanthropy Roundtable, where her bird’s-eye view of the philanthropic landscape gives her a unique perspective to break down the new Giving USA numbers. Matthew Mitchell is a senior fellow at the Fraser Institute and co-author with Jack Salmon of the Free to Give Index, which draws on the methods of Fraser’s often-cited Economic Freedom Indices.

Note: This transcript was generated and cleaned by AI.

Peter Lipsett: I’m guessing, since you’re listening to this podcast, that you think philanthropy is important. I certainly do. I’ve been in the charitable sector for twenty years now and continue to be fascinated by the variation in the types of givers out there, the places they give, and the way the different charities work. It’s really a rich tapestry of groups, people, and ideas. But in our daily lives, we don’t really talk too much about philanthropy — or at least most people don’t, which is why it’s exciting when things like the Giving USA report come out. It gives us a nice tentpole around which we can talk about philanthropy and talk about what’s going on. It’s like a thermometer — it tells us how we’re doing as a nation in terms of our giving. And the most recent report would suggest that we’re doing pretty well. We gave away more than six hundred billion dollars among individuals, foundations, corporations, and bequests back in 2025.

That sounds like a big number, but you have to know what it really means, what it’s telling us, and what it’s compared to. And how does it break down? There are fractures in there that we have to explore. So we’re going to look at that today, and we’re also going to couple that with a new report from the Philanthropy Roundtable called the Free to Give Index, which has analyzed every state to figure out how hard or easy it is to let charities just be charities — to run charities and to give in these different states.

So with those two pieces as guides, I want to explore the legislative and regulatory landscape of philanthropy today. And while saying “legislative and regulatory” doesn’t sound necessarily titillating, it’s really important — important for how we give, our ability to give, and your ability as a philanthropist to have the impact you want to have. So joining me for that discussion are two great talents and great friends, Claudia Cummings, who is the senior vice president for public affairs at the Philanthropy Roundtable — before that, she spent many years leading the umbrella organization for philanthropies in Indiana — and Matthew Mitchell, who is a senior fellow at the Fraser Institute, a Canadian-based think tank, where he directs the Center for Human Freedom. He’s also a scholar at Mercatus, where he worked full-time prior to joining Fraser. Claudia, Matt, so good to see you both.

Claudia Cummings: Thanks for having me.

Matt Mitchell: Thanks for having us.

Peter Lipsett: So let’s start with Claudia, looking at the Giving USA report. Give us the big highlights. Is six hundred — I think it’s six hundred and eighteen billion, roughly — is that a good number? What does it mean?

Claudia Cummings: Yeah, well, six hundred and seventeen billion is the number I have, but somewhere around there — whatever it is, it’s more than the six hundred billion that was given in the prior year. So we’re up. It’s three percent up, adjusted for inflation. And that shows that people are really giving. They’re giving more, and they’re giving freely. I think a few key things jump out to me in this. Individuals still drive giving — nearly two-thirds of all charitable giving comes from everyday Americans. They’re making choices about what they value and how they want to see society, and I think that’s important, and uniquely American.

I think another big headline from this is that bequests are way up — almost twenty percent in a single year. We can talk about that further into the podcast, but I think that’s a huge highlight. Lots of thoughts on that — is it the baby boomers coming to a certain age? Is it the growth in the stock market? Is it some other factor? Really interesting question to see what happens over the next few years. So I’ll stop there, but there are a lot of interesting tidbits throughout the report.

Peter Lipsett: Well, that bequest piece I do actually think is really interesting. We’ve been hearing for years about this great wealth transfer. Back when I first heard about it many years ago, it was going to be a thirty-seven trillion dollar transfer, then it was sixty trillion, and now it’s ninety-three trillion. It only keeps getting bigger, and yet even as time passes, that transfer doesn’t seem to be happening. Does the fact that bequest giving is up mean that we’re finally seeing this great wealth transfer occur? Or is it just an anomaly?

Claudia Cummings: It’s such a huge number. I think it’s an outlier, and we’ll need to see. Giving USA gives us the data, but I don’t know that we know for sure. I do think we’re living in a K-shaped economy right now, and we’re seeing a lot of wealth grow significantly, and that’s also an important factor, I believe.

Peter Lipsett: Now, I don’t know if you’ve unpacked this, but I remember a couple of years ago, one of the big takeaways from the Giving USA numbers — the underlying problem people could see — was that yes, individual giving was way up, but it was being driven by those mega gifts. The Bezoses and Gateses and MacKenzie Scotts — people who could give significant amounts of money — and you were actually starting to see a decline at the lower end of givers. As you’ve looked at the research, do you still see that? Is that still a concern, or is that something you’re still talking about at the Philanthropy Roundtable?

Claudia Cummings: Yeah, that’s a multi-year trend now. I think we can say safely that small donors are down. A few promising bits of light that are really important: religion remains the largest share of charitable dollars at twenty-three percent. So for a lot of folks, that’s their primary source of giving, and it remains a significant place where individual donors are showing up and giving.

I also think that when dollars are tight, the universal charitable tax deduction is important. We’ve gone through a period recently where it’s been on again, off again, and folks can’t keep track of that bouncing ball. Finally, last year, Congress, as part of the One Big Beautiful Bill, put it back on again for the long term. So I’m hopeful that we’ll see those small dollars and individual donors come back to the table and continue with the generosity we know Americans have.

Peter Lipsett: That’s not a big number — what, a thousand dollars?

Claudia Cummings: Yeah. It’s smaller than it has been at times. I can’t recall the exact specifics on it, but I do think it’s important. It tells people that their giving matters, and those signals — we’re going to talk about signals when we get to Matt — I think those signals really matter a lot to folks.

So yeah, I think it’s important. I’m also interested in another thing in Giving USA: it talks about education, and it’s one of the bigger winners, up about twelve percent. I expect to see that number go up even more in 2027 as we begin to see the $1,700 federal tax credit scholarship.

Peter Lipsett: It was a huge bump in education giving, yeah.

Claudia Cummings: That scholarship is going to be basically free money. It’s a credit that any American can use to give to a K-12 educational institution of their choice. It can be used for tutoring, school supplies, and a whole number of things. I think that’s another place where we’re going to see individual giving perk up and everyday Americans engage.

Peter Lipsett: Well, that’s a great point. I hadn’t really thought about that tax credit — I mean, I’ve been thinking a lot about it because it’s a big deal, but I hadn’t thought about it in terms of what it might do to the charitable numbers, in terms of the optics. But you’re right — all that money’s going to a 501(c)(3) scholarship-granting organization, so it’s going to get counted that way. I was thinking of it as just a tax credit and therefore different, but you’re absolutely right. Hopefully we’ll see more money going into that than, say, alma maters and university annual funds, which maybe aren’t necessarily looked at as favorably.

One more question — I’m sure there’s much more we can unpack here, and we’ll circle back to it, but I also want to talk about the Free to Give Index and how it matters. One more question, though, about the fact that foundation giving didn’t really grow much — what, one percent? I can’t remember if that was one percent real or one percent in actual dollars, but it didn’t grow much. And I kind of expected that, given the positive stock market, to have actually gone up more, because there’s always a five percent floor on what foundations can give. So you’d think that if the economy goes up, foundations have to give more. Why do you think foundations don’t seem to be keeping pace — at least to my novice eyes — with the broader growth of their assets?

Claudia Cummings: Yeah, the growth was still a record number — one hundred and seventeen billion dollars. That’s not chump change. I do think it’s up a bit year over year, and it’s up a little over that five percent floor. Not much, you’re right, but still up.

And I think that continues to show that payouts are strategic — long-term plays. Foundations tend to work directly with their charities, they know their charities, and they work toward specific goals. I don’t think it’s a negative indicator when dollars are up.

Peter Lipsett: Fair enough. All right, I won’t beat up on foundations too much then. All right, Matt, let’s bring you in. Let’s talk about the Free to Give Index, which I think is a really fascinating study. Talk to us about the theory behind it — big picture, just to ground us — and then I’ve got some questions.

Matt Mitchell: Yeah. So the basic idea here comes straight out of economics — we know that institutions matter, we know that incentives matter. We know that in the private sphere there’s a long and growing body of literature suggesting that when people are allowed to make their own economic choices, they tend to exchange more, and you tend to see greater prosperity.

So the idea of this index is to apply what we already know about the private exchange market to the nonprofit and charity world, and see if incentives matter there as well. What we did was start by thinking, big picture, about what types of things might affect charitable behavior and incentives. Because if you’re a donor and you want to make the world a better place, you have choices in how you spend your energy. The more difficult it is to give, the less you’re probably going to give — or you’re definitely going to give less in states that make it more difficult. Similarly, if you’re trying to start a charity, the more difficult it is to get registered, to pay the startup fees, to pay the compliance costs, to hire people to help you fundraise — those incentives matter too.

So the index is constructed from thirty-three different variables, divided into three broad categories — and you could even think of the number as larger, since some of these have many subcomponents. The broad areas are, first, the broad policy environment: the thinking here is that if there’s greater economic freedom in the state, it will be easier to raise the capital needed to make charities possible and to create the kind of surplus value that can be turned into charitable giving. So that’s one — the broad policy environment.

The second branch of the index focuses on charitable freedom. It’s got several subcomponents and is the largest part of the index — it looks at registration fees to start a charity, incorporation fees, reporting requirements, annual fees, and paid-solicitor requirements. Are solicitors required to register? Do they have to post bonds? Do they have to make regular reports to the state? Are there audit thresholds, and so on.

And then the third part of the index looks at the incentives and protections afforded to donors — are there donor disclosure requirements that could require donors to reveal who they are and jeopardize their privacy? Is there donor standing? Are charitable deductions available? That sort of thing.

It sounds a little complicated, but honestly, when it comes down to it, it’s just an exercise in averaging. We gather data for these thirty-three variables, average them within the three broad categories, and then average those categories together, and we end up with a measure of how easy it is to engage in charity — whether the institutions and laws in a state make it difficult or easy.

Matt Mitchell: I was looking at the index, so I didn’t notice that.

Claudia Cummings: Yeah, at one point I stopped talking because he was glitching and I wasn’t sure what to do.

Matt Mitchell: You needed that really hard.

Peter Lipsett: Yeah, part of the reason we like Riverside is because it does — perfect. So I can ask about what you found. All right, so that’s what I’m going to do. Okay, so lots of variables, lots of different pieces to look at — so what does it show?

Matt Mitchell: Yes.

So, first of all, let me give you some of the broad numbers of what we find. It shows that some states make it much easier to engage in charitable activity, and some make it much more difficult. Let’s start with the bad side: California comes in at fiftieth, followed by New Jersey, then Washington, New York, Connecticut, and Illinois. In these states, the incentives to give are much more attenuated, because it’s difficult to start charities, to run charities, to use paid solicitors, and it’s difficult for donors to feel their interests are protected. At the other end of the spectrum, the number one state in terms of freedom to give is Montana, followed by Wyoming, South Dakota, Iowa, Indiana, and Texas. In these states, charitable startup regulations are comparatively few and relatively low — it’s easy to get going, easy to keep operating, and donors face good incentives and are relatively well protected.

So that’s the broad overview. But then the next question is: does it matter? How does this affect actual activity? This is where I think it gets pretty interesting, because when you do something like this — you’ve got thirty-three variables, you spend months and months gathering the data, trying to think through what’s most relevant — you cross your fingers and hope you’ve spent your time wisely, that you’ve actually been studying something that matters. Because you can then compare it to the real world and find out that none of this stuff matters at all. Thankfully, that’s not what we found.

We gathered data on the number of charities per billion dollars of GDP, and what we find is that it’s highly correlated with the index. Just to take one example: if you look at the top five performing states in our index, there are twice as many charities per billion dollars of GDP in those states — 121.8 — relative to the bottom five states, which have 63.2. So what we find is that the essential lesson of economics — that incentives matter — also applies to charitable activity. Incentives matter when it comes to charity.

Peter Lipsett: Yeah, I think this is the big takeaway to me — and maybe it shouldn’t be a surprise — but there are more charities, meaning more people are being helped in more diverse ways, in the places where regulations are a little lighter. And in the places where government keeps adding rule after rule, you’re right, incentives matter, and people simply end up with fewer charities. And what happens when there are fewer charities? Government has to step into the breach. So it becomes this self-perpetuating cycle of government getting more powerful as it regulates more, because people abandon the field. Is that a fair description of what you found?

Matt Mitchell: Yeah, I think that’s fair. I think that’s one of the ways we could — to me, that seems like a perfectly rational hypothesis, and one of the next steps in terms of research. Somebody could take our index and study how governments get more involved in this space, taking on activities we normally think of as charitable. One could also use it to test the view that we need more regulation on charities — people worried about fraud, for example. Well, let’s see: is that concern correlated with the data? Because we now have evidence that there are downsides to greater regulation and more red tape for charities. Let’s compare that against the other hypotheses out there.

Peter Lipsett: And you’re also the lead scholar — or at least part of — the state Economic Freedom Index, is that right?

Matt Mitchell: Yes, I’m a co-author. I won’t claim to be lead scholar, but yes. This is actually part of the Economic Freedom of North America Index. What we’re doing there is looking at how easy states make it for people to make their own economic choices.

Peter Lipsett: So do you see a correlation between the giving index and the state freedom index?

Matt Mitchell: We do. Now, some of that correlation is by construction, because one portion of the Free to Give Index is actually built from the Economic Freedom of North America Index. But the interesting thing is we also decompose it to see how different types of incentives and freedoms relate to one another — and they’re all highly correlated. A state that imposes more restrictions on businesses, making it more difficult for private, for-profit businesses to get started, that has higher taxes, and so on, also tends to make it more difficult for charities to get started. They have more regulations, higher fees, greater reporting requirements, and it’s more difficult to employ paid solicitors. So this tells us there’s quite a bit of spillover — when governments move to restrict economic freedom, it ends up, one way or another, also restricting private-sector charitable activity.

Peter Lipsett: No — you’re focused on the states, and we’ll come back to that state regulatory environment. But Claudia, at the national level, are you seeing any legislative threats that could make it harder for givers nationally?

Claudia Cummings: Yeah, actually. I think what’s an interesting tie-in here is that Justice Brandeis famously said that states are the laboratories of democracy. So you can take what we found in the index and make some informed guesses about what that might mean federally.

Just last week, the House Ways and Means Committee heard three bills that are extremely concerning to me as someone who wants to see a thriving philanthropic sector. All three bills are well-intended — hats off to the authors — intended to stop foreign influence in American society, to stop shenanigans like people breaking the law through violent protests, to stop some genuinely bad stuff that’s going on. But these bad actors are few and far between compared to the 1.5 million charities that exist in the United States, 88 percent of which have less than $500,000 in annual spending. So you’ve got this huge sector, and we’re going after a few bad actors — and they are bad actors, and they have to be stopped — but some of these changes are significant.

Two of the most concerning bills are intended to capture the nationality of all givers. Every charity would have to ask everyone — even someone who throws twenty-five cents in a fountain or puts five dollars in the Salvation Army kettle — for their nationality, which means they’d need to know donors’ identities. It would end anonymous giving. Both bills passed on a straight party-line vote out of committee last week. Those are concerning to me. They really strike at the heart of this tension we sometimes feel in the public square between transparency and privacy — and we always say privacy at the Roundtable.

Although they’re not asking for donors’ names to be disclosed to the government, just aggregate nationalities — unless donors come from a country of concern — the fact that a charity now has to collect that information, and that we can no longer give anonymously, is concerning. I like to give to my alma mater, for instance, and I don’t love the phone calls at night from the earnest college students trying to bring in more for the annual fund. So I give anonymously to my alma mater. These two bills would prevent that.

Peter Lipsett: What’s the point of finding out the nationality? What’s the problem they’re trying to solve?

Claudia Cummings: Again, they’re trying to identify foreign actors attempting to infiltrate society. We’ve seen a bit of that in elections, and there’s some talk of it coming up in the data-center debate. Whatever the case, it’s a very small number of people allegedly giving money through charitable institutions to work on issue campaigns. So they’re trying to identify those individuals, or to stop or disincentivize that. But what that will actually do is dry up a lot of small-dollar giving — quite a bit of anonymous giving, completely. It has huge ramifications, and it’s challenging to help members of the committee, the authors, and members of Congress see that when they’re focused on these headlines about a few bad apples.

Peter Lipsett: Yeah, and if it’s a party-line vote, that means it’s Republicans leading it — a reminder that both sides have bad ideas when it comes to this stuff, which is disappointing. Matt, in your research at the state level — the states that aren’t doing great — were there any particular regulations or rules among the many factors you looked at that had the greatest negative impact, that states which currently don’t have them should make sure they don’t accidentally impose?

Matt Mitchell: One of the things that makes that question tricky to answer is that so many good things go together, and so many bad things go together — it’s difficult to isolate a single defining factor. Some of this goes back to the fact that, somewhat to our surprise, if a state has generally high levels of economic freedom — a good broad policy environment — the donor-confidence subindex also tends to be good, and the charitable-freedom portion, the charity-startup piece, also tends to be relatively good. So it’s difficult to isolate. What you tend to find is that if a state has minimal registration requirements and low fees, it also tends to make it easy for donors to protect their privacy and have standing. So it’s an empirical problem — but a good problem, because it means good things go with good things, and bad things go with bad things, if that makes sense.

Peter Lipsett: Was there anything innovative — anything you saw in the data where some state, or a small handful of states, was doing something really creative?

Matt Mitchell: One thing I found pretty interesting — something I think we could apply more broadly, not just in the charitable context — is the idea that new regulations need to be approved by the actual legislature. That sounds like a good idea for any republic: if you impose a requirement on citizens, it should have to go through elected officials rather than something the executive can simply impose. So that’s a good example of taking the spirit of this index and thinking about it more broadly as good governance.

Peter Lipsett: Yeah. What would both of you say — for donors, organizations working on policy, think tanks, advocacy groups — what are some of the ideal legislative changes they should be arguing for, at the federal and state level?

Claudia Cummings: Yeah, I can go first on that.

Matt Mitchell: Go ahead.

Claudia Cummings: I’m a native Hoosier, so I’m proud to see my state represented in the top five, but we don’t provide donor standing for donors and donor-intent cases. So I’ve been urging folks here in my home state to consider adopting model legislation that exists to do just that — give standing to those who are the donor, or the designee of the donor, to ensure that a charity is using the dollars in the way intended, or, if there’s a need to shift those dollars, that the shift aligns with the donor’s values. I think that’s incredibly important — probably one of the most important things.

Matt Mitchell: The way I like to answer this question is to think in terms of incentives. We started this conversation talking about the incentives of economic actors and charitable givers, but what are the incentives of policymakers? One of the things I’ve found in my career is that the incentive of most policymakers is to not rock the boat — they’re very risk-averse. No offense to great policymakers, but they often don’t have a real entrepreneurial mindset. So one of the advantages of an index like this is to help them see that they’re not standing out on a limb — they can do what other states have done. Here’s the model, follow it, because it seems to work.

I’ll point to Montana, which is at the top of the index. What makes Montana number one? They have no registration requirements, zero-dollar filing fees, and minimal reporting requirements for charities and fundraising professionals. They have no audit requirements. They tend to have a really good overall policy environment, with high degrees of economic freedom and generally favorable regulatory and tax regimes. They tend to have nation-leading incentives and protections for donors themselves — they offer donor standing, and contributions are generally deductible. So they check quite a few of these boxes, and they tend to have a large number of charities per billion dollars. As far as I know, there are no significant downsides — no extraordinary scandals with charities doing terrible things, or the kind of foreign-influence issues Claudia mentioned. So my advice is simple: look at what other states like Montana are doing, and if you like what you see, copy it. There’s no reason other states can’t follow that model — follow Justice Brandeis’s advice and look to the other states as laboratories of democracy. Copy what works.

Peter Lipsett: It’s interesting, because Montana, if I’m not mistaken, is as open as it might be on the charitable side but very restrictive on the political-giving side — it’s got a super-low cap on what you can give, with a lot of regulations around that. So it’s interesting that both can exist in the same state — you can be very restrictive on one side, versus, say, where I am in Virginia, where there’s no cap, so the political restrictions are much lower. Interesting. I don’t know if there’s a—

Matt Mitchell: Yeah. Well, that’s interesting — that’s a good reason for trying to measure as many things as we can, because we do sometimes see that. Sometimes states with very high fiscal burdens and high taxes have relatively low regulations, and vice versa. So it’s important to capture as much of it as you can.

Peter Lipsett: So what do we think — here we are in 2026, the stock market seems to still be doing well. Claudia, are you optimistic that we’ll continue to see more growth nationwide? And, I guess the more important question, is there anything more we can do, other than that tax credit, to bring medium and smaller-dollar donors back into the philanthropic fold?

Claudia Cummings: Yeah, I’m highly optimistic about giving overall. It’s what makes America great — it’s what separates us from so many other countries around the world. We were founded on this idea of a voluntary society. That’s who we are. So I bet on America, and I bet on Americans, and I’m optimistic.

Peter Lipsett: Matt, what do you think the next step is for your research? It sounds like there’s more to unpack there. Is the Roundtable, or some other group, going to take it to that next evolutionary step?

Matt Mitchell: Well, one of the things I enjoy about doing these types of indices is that it’s a very leveraged way to understand the world. At Fraser, we’ve been publishing the Economic Freedom of the World Index — this will be the thirtieth year — and the Economic Freedom of North America Index, which will be the twentieth year. We put these indices out there, and other scholars have used them — they’ve been cited some sixteen thousand times. But more importantly, they’ve been used more than a thousand times by researchers studying the effect of economic freedom on outcomes of interest. So we know, thanks to this research, that states and countries with greater economic freedom have higher income, less poverty, faster growth, more charity, greater levels of happiness, and even cleaner environments.

So when we introduce a new index like this, my great hope is that other scholars will take it up and ask all sorts of questions. We asked one question — when you’re freer to give, do you tend to see more charitable formation? And the answer seems to be yes. But I can see plenty of other questions researchers could ask. I mentioned earlier the idea of whether there are greater scandals or more nefarious activity — well, now we actually have the data, and it would be possible for people to measure that.

The other thing I hope to do, should the Philanthropy Roundtable be interested, is continue this research and put it out every few years, so we have a barometer measuring it over time and can see how states shift — because that’s where it gets really interesting. And what’s great is when you get to the stage where you’re no longer calling policymakers or writing op-eds trying to encourage them to improve their environment — they’re calling you, saying, ‘What can we do to improve our environment? We know about your index, we know it affects people’s charitable activity — how do we make New Jersey into the next Montana?’ That’s where I think it really starts to get interesting.

Peter Lipsett: Well, as I said at the top, there’s not enough discussion around philanthropy in our daily conversations — there’s so much else that drowns it out. But if we want to keep America, as you say, Claudia, as this shining beacon for philanthropy, this really unique position in the world, we have to talk about it. We have to know what’s limiting it, what’s encouraging it, and actually tell people: philanthropy is a great thing, you should be involved, you should give. Even if you can only give a hundred dollars a year, even if it’s only twenty-five dollars a year — do it. Because it will make you happier, it will accrue to your benefit, and it will accrue to society’s benefit.

And when we have good facts to work with — when we know where we stand, thanks to new research like what Matt has put out, along with his co-author, Jack Salmon — it really helps us understand the landscape, so that people like us, who think about philanthropy on a near-daily basis, can go and be cheerleaders for this really important cause. Claudia, Matt, I really appreciate you both coming on and talking about these things. And I encourage everyone to just keep giving, because it’s really important. Thank you both.

Matt Mitchell: Thanks so much for having us.

Claudia Cummings: Thank you, Peter.

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