Changes in Giving May Not Be a Cause for Alarm
Giving USA Report Points to Shift in Philanthropic Giving
Giving USA released its annual report on philanthropic giving last month. The report states that charitable giving declined in 2022 after record-breaking years in 2020 and 2021 when charitable giving surpassed $500 billion. Although this may sound the alarm for some nonprofits that rely on donations to continue services, there are some things worth considering in the report's findings.
During the early days of the COVID-19 pandemic. Individuals were particularly generous with nonprofits that were struggling to keep services and fundraising activities going while social distancing practices were in place. Donors responded by opening their wallets perhaps even a little more than previous years to help support their community.
By the time 2022 rolled along, Americans were faced with new challenges. Inflation reached a 40-year high, posing economic uncertainty. Households were spending more at the grocery store, and on home repairs and services, leaving less disposable income to donate to charitable causes. Additionally, in the latter half of 2022, stock prices tumbled at a time when many individuals make their charitable contributions for the year, causing some to donate less than usual.
Supporting Nonprofits Through Foundations
Our society continues to support charities, but there has been a shift in how we are supporting our nonprofits. Giving by individual donors had the sharpest decline in 2022 and has been on the decline for years. Forty years ago, when Giving USA started recording charitable giving data, individual giving made up 80% of charitable gifts. By 2018, the percentage of individual donors declined to 70%. In the 2022 data, donations given from individuals totaled 64%.
One reason for the shift in individual giving may be the rise of more individuals establishing family foundations or funds through a community foundation. Dollars to support charitable intentions are given through established foundations rather than their individual pocketbook. In fact, the Giving USA Report shared that giving through foundations had the largest increase, contributing 21% of all charitable gifts in 2022.
The Future of Charitable Giving
What does this mean for organizations as they attempt to reach their fundraising goals this year? History tells us that charitable giving will rebound. Last year’s decline in giving is only the fourth time in the last 40 years that charitable giving did not surpass the previous year. In fact, if you ignore the previous two years when donors were exceptionally generous, 2022 donations were on pace with giving prior to the pandemic. As your nonprofit plans its future fundraising activities, consider building your donor portfolios with more emphasis on foundations and corporations.
For more information on the shift in the fundraising climate, listen to our AMP Up Podcast, "The Evolution of Fundraising" (more episodes: AMP Up Podcast) or contact AMPERAGE Marketing & Fundraising at 319.268.9151 or firstname.lastname@example.org.