Donations to the 400 largest charities dropped 1.2 percent last year, to $46.9 billion from $47.5 billion in 2001, according to The Chronicle of Philanthropy's annual survey released Monday. During the previous five years, donations increased an average of 12 percent each year.
"This economic downturn has just had so many twists and turns that donors aren't feeling very certain about the future, so they aren't as willing to give," editor said. "As donors are feeling more pinched, charities are feeling it, too."
She said the growing number of charities also contributes to the decline, as more organizations compete for donations. In response to the hard times, some charities are changing the way they raise funds, adding staff and sponsoring events to attract donors.
For the first time in a decade, the Salvation Army — with nearly $1.4 billion in contributions — slipped from the top spot, the survey said.
A surge in giving prompted by the Sept. 11 attacks pushed the American Red Cross from ninth to No. 1 last year. With $1.1 billion given to the Red Cross' Sept. 11 fund, the organization's donations totaled more than $1.7 billion — a 161 percent increase over 2001.
Even as larger nonprofits struggled, some smaller charities prospered. According to the report, Conservation International in Washington saw a 251 percent boost in donations. Donations to New York's Museum of Modern Art doubled.
Charity officials have said their task in 2002 was complicated by many challenges: the waves of layoffs, the stock market plunge, the erosion of trust in some institutions, donor fatigue after the response to the attacks.
Gifts to the top 400 charities accounted for nearly a fifth of the $241 billion given to all U.S. charities last year. Nearly 90 percent of donations come from individuals, Palmer said, with the rest from foundations and companies.
The survey's annual statistics, which cover private donations and not government contributions, are adjusted for inflation.
According to a study released in June by the American Association of Fundraising Counsel, total charitable giving in 2002 rose to $240.92 billion from $238.46 billion the previous year — only 1 percent.
When adjusted for inflation, charitable contributions of all types declined one-half of a percentage point compared with 2001, the report said.
In five years of rapid economic growth that began in 1996, giving posted annual increases in the double digits - ranging from 11 percent to 15 percent. But giving in 2001 posted just a 4.5 percent increase, followed by last year's 1 percent rise.
It was unclear whether any of the falloff in giving was due to the changes in the estate tax. Many wealthy families donate substantial sums to charity to reduce the size of their taxable estate. The amount of wealth exempt from estate taxes is scheduled to rise from $1 million to $3.5 million in 2009, before the law expires for a year in 2010.
Claire Gaudiani, senior scholar at Yale Law School and author of The Greater Good, says charitable donations and philanthropic giving is a vital part of the American way of life.
She told CBS News Correspondent Kelly Cobiella that charitable giving is two percent of the gross domestic product, compared to 0.7 percent for the second highest nation, Great Britain.
"Americans aren't generous because we're rich," Gaudiani said, "we're rich because we're generous."