Giving USA’s annual report on philanthropy for the year 2018 presents a complex climate for fundraisers and concerns for lovers of American civil society.
Giving USA’s Annual Report on Philanthropy for the Year 2018 is in, and its results may fuel concern for lovers of American civil society.
The survey tactfully describes 2018 as having been “a complex climate for charitable giving,” due to fluctuations in the stock market, the new standard deduction ushered in by the Tax Cuts and Jobs Act, and a host of other factors.
After charitable giving in the United States broke records in 2017, the “complex climate” of 2018 saw a marginal increase in dollars given, with Americans giving a projected $427.71 billion to charity. Adjusted for inflation, however, this represents a 1.7% decrease in charitable giving compared to 2017. This is noteworthy in a year that, for all its complexity, was ultimately economically strong.
As reported by Giving USA, charitable giving by foundations in 2018 increased by 4.7% (adjusted for inflation) to $75.86 billion, and giving by corporations similarly grew to $20.05 billion, a 2.9% increase (adjusted for inflation) from corporate giving in 2017. Individual giving—far and away the largest sector of charitable dollars every year—totaled $292.09 billion in 2018. This number is a marginal increase in overall dollars, but a 3.4% decrease from 2017 when adjusted for inflation.
Diagnosing the trends
It must be noted that the impressive growth in foundation giving this year may be largely attributed to changing trends in how Americans give. In a news conference earlier today, Dr. Una Osili of the Indiana University Lilly Family School of Philanthropy noted that “people don’t give because of the tax deduction that they get, but certainly the charitable deduction affects the amount that they give, the timing of their gift, and even the vehicle that they use to give.”
The new standard deduction may be a factor behind the growth of households forming nominal family foundations for use as their individual giving vehicles. As a result, giving that is effectively “individual charity” is categorized as “foundation giving.” Giving USA draws its data on foundation giving from Candid (formerly known as the Foundation Center), which tracks formal or staffed foundations as well as informal family foundations.
If the new standard deduction is facilitating an increase in family foundations—which time will tell—it may be hastening a trend that we have previously noted at Philanthropy Daily: an increase in the amount of individual giving, simultaneous with a decrease in the number of individual givers. Put another way, there is more dollars but less donors. This trend, causing the sharp rise in foundation giving, reflects increased income inequality along with the emergence of a new “philanthropic class” consisting of wealthy individuals relying on foundation structures as more expedient giving vehicles.
This is a troubling shift that may suggest a weakening in civil society, as well as some discomforting trends in the American economy: financial stagnation among the lower and middle socioeconomic classes exacerbating the fragmentation of, and disengagement from, communities.
How will this affect fundraisers?
Further questions about the causes of these developments remain. With significantly fewer households itemizing their taxes, tracking individual giving will be significantly more difficult. More IRS information will shed necessary light on these changes, and multiple years of giving under the Tax Reform and Jobs Act are essential to identifying the real impact of the new law. As Rick Dunham, Chair of the Giving USA Foundation, pointed out, “over the next 12, 18, 24 months we will get a lot more clarity over the actual impact of the tax reform and jobs act.”
One wonders how households of all giving capacities will adjust their giving to respond to the new tax policy. It is very likely that philanthropic trends will have to be considered on a multi-year basis in order to draw a complete picture, problematizing the Giving USA Report’s focus on year by year analyses.
What, then, of those organizations who make up the little platoons of our civil society? What are the practical implications of these findings for nonprofits in light of their perennial need for funding?
Certainly, Giving USA’s findings emphasize a robust development program’s need to pursue funding from foundations energetically, and so to capitalize on the increase of giving from that source. If you have not already done so, now is the time to invest in a grants program, or perhaps scale up the program you already have in place.
However, none of the findings in this study should diminish your efforts to pursue contributions from individuals. The decrease in individual giving in no way decreases the importance of raising money from individuals, who, despite their overall decrease in giving, still constitute the vast majority of charitable giving in the Unites States in 2018—no less than 68% of all charitable dollars. If we include bequests, the number climbs to 77%. (And with the coming “Great Wealth Transfer,” bequests will become only more important!)
Nevertheless, if individuals are giving less, your organization relies on renewing and increasing contributions from your current donors more than ever. There has never been a “secret sauce” to fundraising, and this year’s Giving USA findings do not change the necessary habits and foundations of effective fundraising: consistency, persistence, prudence, and building relationships.
2 thoughts on “A decrease in charity: troubling trends from Giving USA’s latest report”