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Needy get a smaller slice of charity

Less than one-third of individual gifts help those on the lowest rungs of society.

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For most Americans, "charitable giving" connotes donating their resources to help those who are less fortunate to better their situation.

Yet how much of charitable giving actually goes to benefit the neediest in society? According to recent studies, much less than most people expect.

Not quite one-third of the money donated by individuals in 2005 (30.6 percent) went to help the economically disadvantaged, according to a 2007 study sponsored by Google. And only 15.7 percent of foundation funds were given to aid programs in low-income communities.

This divergence at a time of rising economic uncertainty and government cutbacks has stirred renewed debate within the nonprofit sector and raised concerns in Congress. As the gap widens between the well-off in America and those on the lower rungs, should individuals and foundations respond more to those in greatest need? Is that what philanthropy is about?

In Congressional hearings this fall, Rep. Xavier Becerra (D) of California questioned whether gifts to such institutions as art museums and universities should receive the same tax benefits as contributions to charities that help the poor. Some senators, meanwhile, have questioned whether foundations that seem to be building up their assets rather than distributing funds should be required to give out more than the 5 percent of assets the law now requires.

In recognition of pressing needs, some in the world of philanthropy are taking steps to reorient their funding practices. Under the leadership of Rip Rapson, a former deputy mayor of Minneapolis, the $2.9 billion Kresge Foundation in Troy, Mich., has defined a new values-based strategy that includes encouraging "low-income opportunity."

In a July speech to educational leaders, Mr. Rapson talked of "the economic bifurcation of America," and the need for philanthropy to serve as "society's social venture capital."

"I wish more foundations would take that proactive step," says Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy. "Grantmaking targeted for the neediest populations is steadily declining as a proportion of overall giving."

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