Economic conditions factor strongly in giving trends. Over the last 40 years, only four years saw declines in giving—1987, 2008, 2009 and last year, 2022. These years all saw significant economic challenges. In 1987, the stock market crashed; the financial crisis of 2008 was severe and widespread, and lasted into 2009; and in 2022, the world was returning to a new normal and seeking recovery from the increased needs and demands of the pandemic, all while inflation was reaching 40-year highs and the stock market was down 25.4%[*].
While overall giving was down in 2022, there is reason to be optimistic with bright spots including mega donations, increased engagement in younger generations, and more opportunity with online giving.
Overall Giving is Down, but the Share of Sources of Giving is Becoming More Diverse
After a significant revision upward to $516.65 billion in giving in 2021, giving declined 10.5% to $499.33 billion[*] in 2022. Total giving was 1.9% of GDP in 2022, down from a 40-year high in 2020 of 2.3%. Sources of funds are also down. Inflation reached 9.1% in 2022, causing all four sources of funds—Corporations, Bequests, Foundations, and Individuals—to decline.
Since 1982, giving by foundations has grown significantly as a percentage of total giving; 6% in the first five years of Giving USA reports, to 19% in the most recent five years. In contrast, as a percentage of total giving, corporations have consistently given 5-6%. Giving from Individuals declined significantly over that time from 81% to 67%.
Diversify Fundraising Strategy
As giving from individuals takes a smaller share of the pie, giving way to foundations, corporations, and bequests, it is important for nonprofits to diversify their fundraising strategy to appeal to new and different donors. Conversations about estate planning is one place to start, as well as reaching out to local and national corporations that may align with your mission area.
Megadonors Make Headlines
Mega gifts by a handful of individuals, including MacKenzie Scott, totaled $13.96 billion, which is approximately 4.3% of individual gifts.
Review your publicly available information and consider transparency
Mega gifts are likely to continue with the Giving Pledge and other large donors committed to giving away their wealth. To be prepared for these gifts make sure your publicly available financial data is clear and up to date, and your impact and evidence-based outcomes are visible on your website and organizational ratings are high on websites that track nonprofit activity.
Disposable Income Is Down
Disposable income declined by 7.5%[*] in 2022. Giving as a percentage of disposable income was 1.7%. Overall, individual giving declined by 13.4% [*].
Tell Your Story
With the impact of inflation, annual donors may feel like they cannot give as much. Telling your story and sharing meaningful outcomes is more important than ever. Focusing on three areas—challenges, opportunities, and successes—can help build trust with your donors. Provide meaningful data to support the call to action, then make the ask. Also consider moving your annual one-time donors to a smaller monthly amount that, over a year, will be a larger donation. For example, consider a donor that gives $50 annually. If they gave $5 monthly instead, their annual contribution would be $60—a 20% increase!
Giving to International Affairs Is Up
Religion, Human Services, and Education remain the top three uses of funds, but International Affairs saw a 10.9% increase in giving, likely attributable to the crisis in Ukraine and more frequent natural disasters.
Expect Geopolitical and Environmental Trend to Continue
Geopolitical issues continue to influence the economy and markets, and now we are seeing the impacts in donor giving. World Health Organization reports that in 2023, 339 million[1] people are facing humanitarian crisis with severe health impacts, which may lead to more emergency funding for several cause areas. Dollars toward religious affiliated organizations may increase as they often support human aide and war-torn regions. Additionally, the percentage of Millennials attending church is on the rise, 39% in 2022 compared to 21% in 2019[2] , Gen Z’s attendance is also up which will likely influence giving to religious organizations in a positive way.
Donor Advised Funds (DAF) Continue to be a Popular Vehicle for Philanthropy
With flow rates in 2021 topping 60% (for every $10 received into DAFs, $6 is paid out) down from over 70% in 2020, nonprofit leaders should remain thoughtful about how to approach donors with DAFs. Most current data reveal Education continues to represent the largest share of grant dollars received from DAFs in 2020 at 26%, down slightly from 30% in 2019. We saw the biggest increase in DAF dollars received in the public society benefit category, at 16%.
Start with understanding your donor base and ask about Donor Advised Funds
Watch for legislation around DAFs. Despite high flow rates, there continues to be a push for stricter requirements around distributions from DAFs. Additionally, despite the large number of dollars flowing into DAFs, only about 19% of Americans said they know what DAFs are and how they work[3] . The opportunity set is great and will likely be a continued funding vehicle for those with philanthropic goals. Capturing DAF grants begins with understanding your donor base today—be sure to know who has a DAF, or is likely to, based on research using a wealth verification tool or publicly available data. Understand where your time is best spent with donors around these conversations, whether they be education around DAFs, engaging the next generation, or overall giving strategy.
Number of Charitable Organization Is Up
There are 1,480,565 charitable organizations registered under Section 501c3 of the Internal Revenue Code[4], a 3.4% increase over 2021, slightly ahead of the 3.2% increase over 2020.
Identify partners in your community and collaborate
Collaboration is crucial to avoid duplication of efforts and affect the greatest change in our communities. Working together with other nonprofits on fundraising efforts, leveraging networks to share best practices, and aligning programmatically will strengthen partnerships. Many organizations have experienced turnover in leadership after the challenges of the last few years. Use this opportunity to connect with new nonprofits and new leaders to support one another in achieving your missions.
Baby Boomers Remain Top Givers, Millennials Close Behind
By generation, Baby Boomers gave more annually than all other cohorts. Millennials gave more than Gen X and donated the most hours with an average of 36 donated in 2022.
Tailor Your Fundraising Approach
Until the official “wealth transfer” occurs, Baby Boomers will likely continue to lead in terms of giving. But it is important to understand the influence of grandparents and parents on future generations. Recruiting the younger generations to volunteer, sit on your board, and engage with your organization will help them see the impact of your mission and build relationships. Be mindful in your fundraising strategy with different generation segments. Pay attention to what they value, how they prefer to communicate, and how to best get them involved in advancing your mission.
Giving Online Is Up
Technology has a significant influence on giving. All generations are giving more online than they did in 2016 and increased the number of online gifts in 2022. More donors were influenced by websites and social media in 2022 than they were in 2016.
Focus on Digital
To attract more giving, make your donation process as easy as possible. An investment in your website donation function is well worth your resources, as is including information around all forms of giving like planned gifts on your site. Also consider investments in cybersecurity to make sure you are stewarding donor information effectively.
Let's Talk
To further understand how your organization may be impacted or can capitalize on these trends in giving, and for additional insights, please reach out to IAMNonprofitStrategy@pnc.com.
