But the Great Recession offers the perfect case study in why the voluntary sector can’t solve these problems. If people like Mike Lee are correct, then the start of the Great Recession would have been precisely the moment when private charity would have stepped up. But in fact, private giving fell as the Great Recession started. Overall giving fell 7 percent in 2008, with another 6.2 percent drop in 2009. There was only a small uptick in 2010 and 2011, even though unemployment remained very high. Giving also fell as a percentage of GDP (even as GDP shrank), from 2.1 percent in 2008 to 2.0 percent in 2009 through 2011. (The high point was 2.3 percent in 2005.)
As research by Robert Reich and Christopher Wimer showed, the decline occurred with all sources and hit almost all types of nonprofits. Individuals gave 8 percent less in 2008 than the previous year, and their giving dropped an additional 3.6 percent in 2009. Charitable bequests fell 21 percent overall between 2008 and 2010. Contributions by corporations fell in 2008, and only slowly increased afterwards. Foundations also gave less in the Great Recession even though they have legal payout and operating rules to follow that would presumably put a floor on this.
There were some bright spots—giving to food banks, for instance, increased. But as the economy went from free fall in 2008 to stagnation in 2010, private charity still remained depressed. Worse, as a wave of austerity hit state and local governments—with large retrenchment in spending and layoffs of public-sector workers—the state pushed harder on private charity to pick up the slack of social work.