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A recent study shows that, since its pandemic peak, charitable giving has fallen—and competition for donations has grown. What does this mean for your nonprofit in the new year?

Giving USA 2023, an annual research summary of national giving trends organized by the Giving Institute and produced by the Lilly Family School of Philanthropy, shows that individuals have less personal disposable income available to spread among a growing number of nonprofit organizations. Giving decreased in 2022 across sectors, returning to the 2019 level from a historic pandemic-era peak.

When adjusted for inflation, the 2022 giving total, at $499.33 billion, declined by $58.58 billion from 2021. Most notably, giving by individuals declined by 13.4% (when adjusted for inflation). Giving by corporations, foundations, and bequests, when adjusted for inflation, fell by 4.2%, 5.0%, and 5.3%, respectively.

During the end-of-year giving season, inflation inched towards its 2022 peak of 8.0%. Donors were reluctant to part with their available cash: giving as a share of personal disposable income was 2.1% in 2002 and 2.0% in 2017; in 2022, it dipped to 1.7%. A recent study by True Sense Marketing offers a possible cause, pointing out that Americans’ perceptions of the severity of a recession often exceed economists’ predictions (by as much as 20%).

Since 1983, the earliest year data is available, individual contributions have made up the largest portion of charitable giving. Over the last forty years, though, that dominance has gradually diminished. Still, individual giving, including bequests (an important element as the Great Wealth Transfer unfolds), makes up 76% of the total giving sector.

As giving fell in 2022, competition for donations grew. In 2014, there were a little over 1.1 million registered nonprofit organizations across America. In 2022, that number was nearly 1.5 million.

The decline in giving didn’t apply to all subsectors, nor were rates of decline uniform. Giving to the international affairs subsector saw a 10.9% increase, growth that held even when adjusted for inflation. Giving to some other major subsectors increased­—but not enough to outpace inflation. Educational organizations weathered the steepest decline. Religious organizations still hold a 27% share of the charitable sector. One True Sense Marketing finding augurs ill for the charitable sector: people don’t feel as great a sense of responsibility, including tithing, as their top motivator to give.

Since 1982, total giving in America has increased or plateaued year-over-year with only four exceptions: 1987, 2008, 2009—and 2022. The pandemic years, 2020–2021, catalyzed a thirty-year charitable peak, and what goes so far up inevitably comes down.

Steady growth interrupted by declines that correct themselves, typically in short order, is the pattern shown by Giving USA’s reports over the years. Total giving in 2022 (adjusted for inflation) returned almost exactly to where it sat in 2019. But most nonprofits will feel the dip from last year's giving, and need to prepare for the possibility of ongoing decreases if the pattern of an eventual giving increase doesn’t play out for a few years. Next week, I’ll outline what those preparations should look like in part two of this series.

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