Charitable giving dropped 2.1% in 2023 after inflation, according to the most recent Giving USA report, the key findings of which were released Tuesday.
For years now, nonprofits have been worried about the decline in the number of Americans who give. This year’s Giving USA report won’t allay their concerns: Giving by individuals in 2023 dropped 2.4%. The share of overall giving that came from individual donors continued to decline, albeit slightly, from 67.4% in 2022 to 67.2% in 2023. As recently as 2013, individual donors accounted for 73% of overall giving.
In 2023, foundations accounted for 19% of overall giving ($103.5 billion), bequests accounted for 8% ($42.7 billion), and the remaining 7% came from corporations.
While 2023’s drop in giving is discouraging, there are signs that charitable giving may finally be settling into a new normal after several years of being buffeted by unusual events like the pandemic and record inflation.
“The organizations that we’re working with saw a slight decrease” in 2023, says Rick Dunham, founder of Dunham+Company, a fundraising consulting firm. “A lot of it has to do with the economy. Donors pulled back in the past year, primarily because of inflation and personal economic situations.”
The economy was a big factor in giving last year, says Una Osili, associate dean for Research and International Programs at the Indiana University Lilly Family School of Philanthropy, which helps produce Giving USA.
“Giving rises as the economy improves,” Osili says. “The economy outperformed expectations. The stock market was also performing at double-digit rates, even adjusted for inflation. However, inflation continued to be a challenge.”
Nonprofits like Feeding San Diego, which provides meals to the hungry, felt the crush of inflation in multiple ways last year. Donors talked about being uncertain how much they could give at the same time the price of food went up and the number of people using its services swelled.
“When you look at the economy holistically, it might look like things are rosy, but the bottom line is that food is far more expensive than it was four years ago, and wages have not kept up,” says Ali Colbran, the group’s senior director of development. “So there are more families that need help from places like Feeding San Diego today than even during 2020 and 2021.”
Inflation was 8% in 2022, which contributed to a precipitous drop in giving that year. (Giving USA’s updated estimates put that decrease at 8.4%.) In 2023, inflation was just 4.1%, but it was still enough to wipe out any gains in giving. Using current dollars, giving grew from $547 billion in 2022 to $557 billion, a gain of 1.9% that turns into a 2.1% loss after taking inflation into account.
Similarly, all causes but one — giving to individuals — saw giving gains in current dollars. But giving to religion dropped 1%, to international affairs 1.6%, and to individuals 20.5% when adjusted for inflation.
The international relief organization Project Hope says each year in recent memory, including 2023, it has raised money for a humanitarian crisis — including conflicts in Ukraine and the Middle East as well as massive natural disasters such as earthquakes — and it’s been hard to get donors’ attention as more and more bad things happen in the world.
“It really kind of feels like the world is on fire right now,” says Cinira Baldi, chief development and communications officer for the group. “There’s a little bit of people feeling like, ‘There’s so much going on, I don’t know if I can make a difference.’”
While three causes saw mild decreases, the rest had gains. Human services rose 1.7%, environment and animals 3.9%, and health 4.4%. More significant were gains for arts, culture, and humanities, 6.6%; education, 6.7%; public-society benefit, 7.2%; and gifts to foundations, 10.8%.
The report notes that contributions to causes that saw the biggest jumps — public-society benefit organizations and foundations — dropped 15% and 21%, respectively, from 2021 to 2022.
Some of the causes with the biggest gains are those that have significant support from high net worth donors, Osili adds.
“Many wealthy households had high rates of savings, and their balance sheets were quite strong going into 2023,” she says. “If you put all that together, the sectors that high net worth households tend to give to — education, the arts, public-society benefit — those performed relatively well.”
Last year’s Giving USA report highlighted the role of exceptionally large donations — gifts of $550 million or more — which totaled nearly $14 billion in 2022, or 5% of individual giving. In 2023, the influence of outsize gifts lessened, with about $8 billion in megagifts accounting for about 2% of individual giving.
“We are down in megagiving from where we were,” says Jon Bergdoll, associate director of data partnerships at the Lilly Family School of Philanthropy, who notes that the giving is still very high. “Last year’s amount would have been a record for any year prior to 2020.”
The nonprofit world’s reliance on wealthy donors is a problem, says Woodrow Rosenbaum, chief data officer for GivingTuesday. He says everyday donors will likely continue to fall away unless nonprofits work hard to bring them back into the fold.
“We’ve been saying for quite some time it is vital for the nonprofit sector to engage more broadly if we’re going to reverse that trend and be resilient into the future,” Rosenbaum says. “So what happens next for nonprofits depends a lot on how nonprofits show up.”
Many organizations say giving has gotten off to a strong start in 2024, and fundraisers are cautiously optimistic about the second half of the year.
(AP)
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Trump’s tax reform is probably to blame. By increasing the standard deduction, and reducing the deductions for state and local taxes as well as mortgages, it substantially reduced the number of people who itemize. While this was very good for middle class taxpayers (as well as poorer taxpayers), it means that most people who were able to deduct charitable contributions no longer can do so since you can only deduct charitable contributions if you itemize deductions.