In the wake of the unprecedented generosity witnessed during the pandemic, Americans have experienced a shift in their spending habits. While charitable contributions reached record levels in recent years, data from the Giving USA Foundation and Indiana University’s Lilly Family School of Philanthropy indicates a decline in charitable giving in 2022. Factors such as historically high inflation and stock market losses have prompted households to adjust their budgets. In this article, we will delve into the changing trends in American spending and explore the impact on charitable donations.
According to the annual report by the Giving USA Foundation, total U.S. charitable giving decreased by 3.4% in 2022, amounting to an estimated $499 billion compared to around $517 billion in the previous year. Adjusted for inflation, this decline translates to a drop of 10.5%. Inflation, which peaked above 9% in June 2022, has eroded consumers’ budgets and the value of their charitable dollars.
“Generosity is more resilient than the economy.” – Josh Birkholz, Chair of the Giving USA Foundation
While this fall is concerning, it comes after two years of unprecedented generosity in response to the epidemic (from roughly $437 billion in 2019 to over $486 billion in 2020). Only in 2021 and 2022 did giving rise to such heights as we saw in this year.
The decline in charitable giving has profound implications for nonprofit organizations, particularly those focused on providing essential services to vulnerable communities. Service-focused charities like food banks have experienced increased demand as grocery prices remain high, and many households face reduced federal assistance. Michelle Book, CEO of the Food Bank of Iowa, expressed concern about the pressure they are facing, stating, “It’s an extraordinary amount of pressure for us.” The Food Bank of Iowa, for instance, is distributing more food than ever before in its four-decade history.
Contributions to human services nonprofits, including food banks, saw an 8% decline in inflation-adjusted dollars in 2022, according to the Giving USA report. Moreover, seven out of the nine nonprofit subsectors studied experienced inflation-adjusted declines, with educational and public-society benefit organizations, such as United Way, witnessing double-digit drops in contributions.
However, donations to international affairs organizations saw a 2.7% increase. This increase can be largely attributed to the surge in popular support for Ukraine following Russia’s invasion in February 2022.
The decline in charitable giving can be attributed to various factors. During the pandemic, widespread appreciation for front-line workers and media coverage of rising food and housing insecurity prompted many individuals to donate like never before. However, as the pandemic recedes, the urgency and media attention surrounding these issues have diminished, potentially impacting the level of donations.
Additionally, the decline in individual giving and the increasing reliance on deep-pocketed mega-donors highlight a shift in the sources of charitable contributions. The Giving USA report reveals that just six individuals and couples accounted for 5% of all individual giving in 2022. This trend raises concerns about the long-term sustainability of charitable giving and the creation of a diverse donor pipeline.
Inflation plays a significant role in the changing trends of American spending and charitable contributions. While individual giving fell by nearly 14% when adjusted for inflation, those who did donate contributed larger amounts. This shift can be attributed to the impact of inflation on the purchasing power of individuals’ donations. Smaller donors, who typically contribute amounts like $50 or $100, are more likely to decrease their giving due to the impact of inflation. On the other hand, mega-donors with greater financial resources may be less deterred by inflationary pressures.
As charitable giving adapts to the changing economic landscape, nonprofit organizations face the challenge of meeting the increasing needs of their communities with limited resources. The pandemic-era surge in donations allowed many organizations to expand their operations and build reserves. However, the decline in giving and the rising expenses associated with fulfilling the needs of their communities threaten the sustainability of these efforts.
Casey Marsh, Feeding America’s Chief Development Officer, emphasizes the ongoing need for support, stating, “During the height of the pandemic, we were fortunate to receive an outpouring of support from the American public. Unfortunately, the need hasn’t gone away.” Organizations like Feeding America are witnessing increased demand for their services and must navigate the intersection of decreased donations and rising operating costs.
The decline in charitable giving among Americans reflects the impact of economic factors such as inflation and stock market losses. While the pandemic prompted record levels of generosity, the changing economic landscape has necessitated adjustments in individual budgets. Nonprofit organizations, particularly those providing essential services, face the challenge of meeting increased demand with limited resources. As the economy continues to evolve, it is crucial to address the factors influencing charitable giving and explore strategies to ensure the sustainability of organizations working to support vulnerable communities.
First reported on NBC News
