Americans’ donations down 10.5%

Amid mass layoffs, inflation, stock market chaos and the threat of a recession, Americans are clinging to their cash. A Giving USA report released Tuesday finds that total charitable donations fell to $499 billion in 2022, down 3.4% from 2021 — or 10.5% when adjusted for inflation. Yet some were expecting the news to be worse. “There was a 20 to 25% decline in the stock market and an 8% inflation rate, but Americans still gave nearly a half trillion dollars,” Giving USA Chairman Josh Birkholz tells The Associated Press.

• Glass half-full: The decline follows two years of very strong giving, including 2021, when donations topped half a trillion dollars for the first time. Contributions to international causes saw inflation-adjusted growth in 2022, likely driven by the war in Ukraine, CNN reports.
• Glass half-empty:Americans have given less than the year before only four times in the past four decades, and the share of Americans making donations fell below 50% for the first time. Education, health and the arts were areas to which contributions decreased.

By Melissa Cantor, Editor at LinkedIn News

We saw amazing generosity in 2020 and 2021, as donors stepped up to assist with growing needs related to a global pandemic and economic crisis and recovery, as well as support for social justice efforts. Following these record-breaking years, 2022 saw a decline in charitable giving. Declines in total giving are relatively rare, occurring just three times in the last 40 years: 1987, 2008, and 2009. That said, donors supported charitable causes with nearly a half trillion dollars in 2022.

Giving USA Foundation has released annual estimates of charitable giving for 2022, showing a decline in giving, with $499.33 billion total. After two years of record-breaking generosity, Giving USA 2023: The Annual Report on Philanthropy for 2022 reports a decrease of 3.4% in current dollars—10.4% adjusted for inflation, from a revised total $516.65 billion in 2021.

Key factors that influenced giving significantly were stock market volatility and economic uncertainty, causing donors to make difficult decisions about their giving.

The following key trends in giving by sources were notable in 2022:

• Compared to 2021, individual giving was down 6.4%, at $319.04 billion—13.4% when adjusting for inflation. Individuals are still the largest source of giving at 64%, though that percentage of total giving has been decreasing since 2017 (70%). Following two record years affected by pandemic-related giving, 2022 donors were impacted by a decline in disposable personal income and an 8% inflation rate—the highest in 40 years. Notably, individual giving as a percentage of disposable personal income was 1.7% in 2022, tying the lowest level recorded by GUSA, in 1995.For many, disposable personal income is linked to household income, which can determine how much is given philanthropically.

• Corporate giving grew by 3.4% in current dollars, reaching its second highest level on record. However, all four giving sources—foundation, individual, and bequest giving included—saw decreases when adjusting for inflation.Factors affecting corporate giving include GDP growth of 9.2% and a corporate pre-tax profit increase of 6.6% in current dollars.
• At 21%, foundations are continuing to grow their share of total contributions over time. Foundations comprised only 5% of total contributions in 1982. Foundation giving grew 2.5% in current dollars in 2022, reaching its second highest total at $105.21 billion. The number of foundations has continued to grow since the 1990s, and estimates indicate about 50% of foundations are family foundations, which can represent a different form of individual giving. Foundation giving represents grants made by independent, community, and operating foundations.
• Bequest giving grew 2.3% in current dollars in 2022, representing 9% of total giving. By its nature, bequest giving is the most unpredictable source from one year to the next; in 2021, bequest giving declined by 5.6%. In the past 40 years, bequest giving has experienced a gradual upward trend from $15.79 billion to $45.60 billion in 2022.

Giving to five of nine charitable subsectors grew in current dollars compared to 2021, with International Affairs (10.9%) and Foundations (10.1%) leading the way. Adjusting for inflation, International Affairs and Foundations were the only sectors demonstrating growth, with 2.7% and 1.9%, respectively. In terms of percentage of overall giving, Religion (27%), Human Services (14%), and Education (13%) remained the top three subsectors, receiving 54% of all contributions, with giving to grant-making Foundations just slightly lower, with 11% of total giving.

Growing Philanthropy in 2023

Reflecting on this new Giving USA data, our experiences with clients, and in context of the current environment, JGA recommends the following strategies to grow philanthropy.

1. Engage your donors: Regardless of the philanthropic landscape, it is essential to continue to build relationships with your donors.  Strategic donor engagement and communication take time and collaboration across your organization and will reap long-term benefits. Authentic donor engagement is built upon sharing stories of impact, exhibiting meaningful stewardship, and paying attention to all of the details that make a relationship special.
2. Lean into online giving. More than ¾ of Gen Z and Millennial donors surveyed in the Giving USA Special Report 2022 noted that they give to charities online. It has become increasingly important to have online giving options available and to ensure that your platform is user-friendly, mobile, and provides the options that donors desire such as Venmo, Paypal, and Apple Pay. Online giving is a versatile and convenient vehicle to support your organization in a variety of ways, from a recurring gift to an in-the-moment gift at a special event.
3. Stay tuned in to current and upcoming challenges: In 2022, we traded an unusual set of challenges for new ones as our economy works to rebound—and nonprofits and donors of continue to be impacted by new challenges. Use your knowledge of external conditions to keep your donors informed, anticipate what they may need from you, and keep them connected as a vital part of your organizational impact.
4. Embrace emerging tools for nonprofits, fundraisers, and donors: Technology is moving at the speed of light, and it is important to keep up with what tools are available to enhance your donor relationships. AI tools and add-on modules for existing software packages present new opportunities for interaction, research, and other functions that can enhance your ability to personalize your donor outreach and continue to strengthen donor relationships.