> **Definition**
>
> Philanthropy is the act of giving to charitable causes or engaging in altruistic efforts aimed at improving human welfare and societal well-being.

## What Is Philanthropy?

Philanthropy is an effort an individual or organization undertakes based on an altruistic desire to improve human welfare. It refers to charitable acts or other good works, like efforts that help others or that contribute to the well-being of society overall on a grand scale.

It may involve charitable giving to worthy causes. Wealthy individuals sometimes establish [private foundations](https://www.investopedia.com/terms/p/privatefoundation.asp) to facilitate their philanthropic efforts. Some philanthropists have established lasting legacies through their contributions to public institutions or the arts.

[Nonprofits](https://www.investopedia.com/articles/investing/110215/pros-and-cons-being-nonprofit.asp) are organizations set up to support a variety of social causes, such as educational, health, scientific, public safety, and human rights, that generally do philanthropic work. In the United States, organizations that qualify as nonprofits are exempt from federal tax liability under the [Internal Revenue Code (IRC) 501(c)](https://www.investopedia.com/terms/1/501c.asp).  

### Key Takeaways

*   Philanthropy involves both individual and corporate acts of charity, ranging from donating money and time to creating foundations and supporting global causes.  
    
*   Historical philanthropists, like Andrew Carnegie and Mother Teresa, have set notable examples of significant contributions to society, emphasizing the enduring impact of philanthropic endeavors.  
    
*   Modern philanthropy benefits not only society but also philanthropists themselves, offering emotional and physical health benefits, as well as potential tax advantages.  
    
*   Corporate philanthropy improves public image, enhances brand awareness, and can lead to increased sales and employee satisfaction, showcasing that giving back to society can also benefit businesses.  
    
*   Technology and social media have revolutionized the way individuals and organizations engage in philanthropic activities, making it easier than ever to contribute to causes on a global scale.

![Philanthropy: Gifting time, money, experience, or skills to worthy causes.](https://www.investopedia.com/thmb/TuxfmLN3ZgUBtY2WDxI5widl8pc=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Philanthropy-final-850e0c616e7a4142b0403c59bfc6c5bd.png)

**

## In-Depth Look at Philanthropy

For some people, philanthropy means donations of money, often large sums, to support or create university buildings, research centers, or fund four-year college [scholarships](https://www.investopedia.com/understanding-scholarships-need-and-merit-4783132). For others, acts of philanthropy mean an annual donation to a local theater, food pantry, or public school.

There are many ways to make [charitable contributions](https://www.investopedia.com/terms/c/charitabledonation.asp) on a local to a global scale, including corporate philanthropy. There are also individual philanthropists. Philanthropy may be done for [tax breaks](https://www.investopedia.com/terms/t/tax-break.asp) or altruism, or a combination of the two things. Anyone can be a philanthropist if they give of their talent, time, money, or skills.  

> **Fast Fact**
>
> The word philanthropy traces its origins to the Latin word philanthropia and the Greek word philanthrōpia, which mean love or kindness to mankind.

## The Evolution and Legacy of Philanthropy

Philanthropy dates back to Greek society. For instance, Plato instructed his nephew in his [will](https://www.investopedia.com/terms/l/last-will-and-testament.asp) to use the proceeds of the family farm to fund the academy that he founded in 347 B.C. The money helped students and faculty keep the academy running.

Around 150 years later, Pliny the Younger contributed one-third of the funds for a Roman school for young boys. He instructed the fathers of the students to come up with the rest. The intention was to educate young Romans in the city rather than having them go abroad for schooling.

In 1630, John Winthrop of the Massachusetts Bay Colony preached to Puritan settlers that the rich should care for the poor, who could not help themselves. And in 1638, John Harvard laid the foundations for [Harvard University](https://www.investopedia.com/terms/h/harvard-business.asp) after bequeathing half of his estate to found the school.

Notable philanthropists like Mother Teresa and John D. Rockefeller paved the way for modern contributions by Warren Buffett, Melinda Gates, and Dolly Parton, along with corporations.

> **Important**
>
> Technology, including social media, has also shaped how individuals can give to others.

## Why Philanthropy Matters: Benefits for All

There are many benefits to being a philanthropist. Experts say charitable giving can improve emotional and physical well-being, alongside the satisfaction of helping the greater good. In fact, some studies show that philanthropists have less depression, higher self-esteem, lower blood pressure, and may even live longer than those who don't give.

The [benefits of philanthropy](https://www.investopedia.com/articles/investing/100615/how-aliko-dangote-became-richest-african.asp) are not limited to individuals. Corporations that support charitable giving receive a wealth of benefits, including building a better public image, creating more vital brand awareness, and attracting new partners as well as talent who may be drawn to a company that contributes to charities.

In addition, employees at companies that give back are happier and more productive. And, because corporations are created to make money, a strong philanthropic streak often boosts sales and brings in new customers.

> **Tip**
>
> The charitable contributions deduction allows American taxpayers who make substantial charitable gifts to take generous tax deductions for the year in which their donations were made, provided they itemize their deductions on their tax returns.

## Navigating Philanthropy and Tax Implications

While it is true that individuals benefit from charitable giving when tax time comes, some benefit more than others. The IRS allows most individuals to deduct around 60% of their [adjusted gross income (AGI)](https://www.investopedia.com/terms/a/agi.asp), but in some cases, 20%, 30%, or 50% limits may apply. 

There are very wealthy individuals who use charitable giving to [shield themselves from large tax bills](https://www.investopedia.com/tax-smart-giving-11727496). But some say [billionaires](https://www.investopedia.com/terms/b/billionaire.asp) are dodging paying their fair share of taxes under the guise of charitable giving.  

## Key Philanthropy Statistics: Trends and Numbers

In 2023, Americans, organizations, and corporations gave about $557.16 billion to national charities. This amount grew by 1.9% in real terms but fell by 2.1% after inflation, says Giving USA 2024. The all-time, inflation-adjusted high was set in 2021 and has not been surpassed since.

Some of the highlights from Giving USA's annual report include:

*   Roughly $374.40 billion in donations by individuals
*   An estimated $103.53 billion by foundations
*   More than $42 billion through [bequests,](https://www.investopedia.com/terms/b/bequest.asp) which are made through trusts and wills
*   More than $36 billion in corporate donations

Religious organizations ($145.81 billion), human services ($88.84), and education ($87.69) received the most money. Donations to foundations (15.4%), public-society benefits (11.6%), and education (11.1%) grew the most. These figures were not adjusted for [inflation](https://www.investopedia.com/terms/i/inflation.asp).

While the increases don't match the levels of giving in 2021 during the COVID-19 pandemic, total giving remains above pre-pandemic levels, even after adjusting for inflation.

## Inspiring Philanthropists: Stories and Contributions

Many people in the United States give money to causes they believe in. The following are some examples of people and corporations that engage in philanthropic activities or did so in the past.  

### Andrew Carnegie

Perhaps the most famous example of philanthropy comes from [Andrew Carnegie](https://www.investopedia.com/articles/financial-theory/09/andrew-carnegie.asp), simply because of the scale of his giving. Carnegie's wealth helped build more than 2,500 libraries all over the world. He also endowed several universities and a charitable trust that still runs 100 years after Carnegie's death in 1919.

Estimates of his total [charitable contributions](https://www.investopedia.com/articles/personal-finance/041315/tips-charitable-contributions-limits-and-taxes.asp) exceed an estimated $350 million. Carnegie lived up to his credo that a man who dies rich dies disgraced, and the rest of society learned to follow his example.

### The Ford Foundation

The Ford Foundation's legacy of giving is another example of how philanthropy works, The corporation was established by Edsel Ford, the son of Ford Motor Company founder Henry Ford. The foundation focuses on strengthening democracy, improving economic opportunity, and advancing education.

Some of the areas the organization covers include:

*   Civic engagement and government
*   Disability rights
*   Gender, racial, and ethnic justice
*   Natural resources and climate change  
    

### Bill and Melinda Gates

Billionaire and Microsoft [mogul](https://www.investopedia.com/terms/m/mogul.asp) Bill Gates and his ex-wife, Melinda, established the Bill & Melinda Gates Foundation to support global development and global health programs. The organization works globally and in the United States to research and combat disease and to fight poverty. According to the foundation's website, it has spent almost $54 billion on charitable giving since 2000. The foundation is committed to increasing its annual payout to $9 billion by 2026.  

### Mother Teresa

You don't have to be a billionaire or give money away to be considered a philanthropist. In fact, there are notable individuals who aren't ultra-rich and are known for their philanthropic efforts. Mother Teresa is one of the most famous examples. The Catholic nun set up the Order of the Missionaries of Charity (now known simply as the Missionaries of Charity) in Kolkata, India, in 1950. The goal of the organization was to provide vulnerable communities with "material and spiritual welfare."  

## What Is the Difference Between Charity and Philanthropy?

While some use the words charity and philanthropy interchangeably, philanthropy often casts a broader net of giving. Its role is to help society or groups in the community flourish over a long-term period. Charity is usually based on individual giving and helping in a short-term way, like donating coats to the homeless in winter, helping out or contributing goods to a local food pantry, or sending money to a scholarship fund. These are all acts of charity but may not be considered philanthropic efforts like building a school or a library or donating millions to a scholarship fund.

## Which Philanthropist Has Donated the Most Money?

According to an annual report in _Forbes_ magazine, Warren Buffet has donated the most money, $56.7 billion, over his 93 years, as of February 2024.  

## How Can I Become a Philanthropist?

Anyone can become a philanthropist, even if they are not wealthy individuals. You can donate your time, efforts, and cash to a specific cause, and over time, you may become known as a philanthropist.

## What Is Corporate Philanthropy?

Corporate philanthropy is the act of giving to charitable causes and/or organizations by corporations. The most common way of giving through a corporation is by donating money, but there are other ways to do so. Some of them include volunteering (as when employees donate their time to charities), scholarships, community investments, and sponsorships.

## What Are the Different Types of Philanthropy?

Philanthropy [can take many different forms](https://www.investopedia.com/charitable-trusts-vs-private-foundations-11714014). It can be done by individuals and corporations. Or it may combine their efforts—for example, when a company matches donations that individual employees make. Or it can be done by bequest, which means instructions are left to give money and other assets to charity in a trust or someone's will. People can donate money directly to charity, fund scholarships, or offer grants and stipends. And it isn't just money that falls under the philanthropic umbrella. People can donate their time through volunteer work.

## The Bottom Line

Many of the world's billionaires donate a good portion of their wealth to charitable causes, but you don't need to be wealthy to contribute. Anyone can donate part of their income or time to supporting a useful cause.

Philanthropy can support education, scientific research, public safety, or human rights. In addition to the social benefits, it can also help individuals and corporations enhance their image in the public eye. With the evolution of technology and social media, philanthropy is becoming easier than ever.

> **Article Sources**
>
> 1.  Internal Revenue Service. "[Exemption Requirements - 501(c)(3) Organizations](https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-501c3-organizations)."
>     
> 2.  The Internet Encyclopedia of Philosophy. "[Plato: The Academy](https://iep.utm.edu/academy/)."
>     
> 3.  Dix, T. K. "Pliny's Library at Comum." _Libraries and Culture_, 1996, vol. 31, no. 1, pp 85-102.
>     
> 4.  Encyclopedia.com. "[A Model of Christian Charity: John Winthrop 1630](https://www.encyclopedia.com/education/educational-magazines/model-christian-charity)."
>     
> 5.  The Colonial Society of Massachusetts. "[TRANSACTIONS OF THE COLONIAL SOCIETY OF MASSACHUSETTS MARCH MEETING, 1919](https://www.colonialsociety.org/node/245#rah0403)."
>     
> 6.  Cleveland Clinic. "[Why Giving is Good for Your Health](https://health.clevelandclinic.org/why-giving-is-good-for-your-health/)."
>     
> 7.  Thomas Jefferson University. "[How Charity Is Good for Your Health](https://giving.jefferson.edu/about/news/how-charity-is-good-for-your-health.html)."
>     
> 8.  EurekAlert. "[People Who Give, Live Longer](https://www.eurekalert.org/news-releases/887795)."
>     
> 9.  Internal Revenue Service. "[Charitable Deductions: Publication 526](https://www.irs.gov/pub/irs-pdf/p526.pdf)."
>     
> 10.  Fidelity Charitable. "[9 Ways to Reduce Your Taxable Income by Giving to Charity](https://www.fidelitycharitable.org/guidance/charitable-tax-strategies/reduce-taxable-income.html)."
>      
> 11.  Oxfam. "[Do The Rich Pay Their Fair Share?](https://www.oxfamamerica.org/explore/stories/do-the-rich-pay-their-fair-share/)"
>      
> 12.  The Guardian. "[We Don't Want Billionaires' Charity. We Want Them to Pay Their Taxes](https://www.theguardian.com/commentisfree/2018/oct/26/dont-want-billionaires-philanthropy-pay-their-taxes)."
>      
> 13.  Lilly Family School of Philanthropy. "[Giving USA: U.S. Charitable Giving Totaled $557.16 Billion in 2023](https://philanthropy.indianapolis.iu.edu/news-events/news/_news/2024/giving-usa-us-charitable-giving-totaled-557.16-billion-in-2023.html)."
>      
> 14.  Carnegie Corporation of New York. "[Andrew Carnegie's Story](https://www.carnegie.org/interactives/foundersstory/#!/)."
>      
> 15.  Ford Foundation. "[Our Origins](https://www.fordfoundation.org/about/about-ford/our-origins/)."
>      
> 16.  Ford Foundation. "[Our Priorities](https://www.fordfoundation.org)."
>      
> 17.  Bill & Melinda Gates Foundation. "[About Us: Our Story](https://www.gatesfoundation.org/about/our-story)."
>      
> 18.  Missionaries of Charity. "[About Us](https://missionariesofcharity.org/about-us-read-more.html)."
>      
> 19.  Forbes. "[America’s Top Givers 2024: The 25 Most Philanthropic Billionaires](https://www.forbes.com/sites/forbeswealthteam/2024/02/15/americas-top-givers-2024-the-25-most-philanthropic-billionaires/#:~:text=Warren%20Buffett%20tops%20our%20list,%2456.7%20billion%20in%20lifetime%20giving.)."