By Richard H. Levey

The $557.2 billion U.S. donors gave to nonprofits during 2023, according to data from Giving USA, is a high-water mark in terms of current dollars, and the amount exceeds pre-COVID-19 pandemic-giving, which peaked during 2019. 

But inflation nibbled at the value of the 2023 dollars. Even though actual giving ticked up from 2022’s level. a 4.1% inflation rate meant real-dollar giving declined by 2.1%. The first full year of the pandemic, 2021, saw the highest amount of inflation-adjusted dollars donated.

The Giving USA data is part of The 2024 Philanthropic Landscape, a report from CCS Fundraising. Sharp-eyed readers will note language in the report which reads “…total giving reached $557.2 billion in 2023, up from $499.3 billion in 2022, a growth of 1.9%.” This despite the fact that rising from $499.3 billion to $557.2 billion is an 11.6% increase.

By way of explanation, a representative from CCS sent a statement reading, in part, “Giving USA’s results are a series of estimates that primarily rely on econometric methodologies and are not a tabulation of actual charitable receipts from the prior year. The estimates are revised as additional information, such as final charitable receipts, becomes available. … Giving USA uses this updated information in the models for estimating both sources and uses of giving each year. With updated data, Giving USA’s estimates for 2021 and 2022 were revised upward, resulting in the reporting that overall giving grew 1.9% from the 2022 revised total.”

The point is that nonprofit donations are not keeping up with inflation, and that trend cuts across nearly all funding sources. In 2023, individuals — the largest category of funders, by aggregate dollar amount — donated $374.4 billion, up 1.6% in today’s dollars, but down 2.4% when those dollars are adjusted for year-over-year inflation. Foundation contributions, at $103.5 billion, rose by 1.7% more than 2022’s level but had an adjusted value decline of 2.3%. And corporate giving, which amounted to $36.6 billion — 3% above 2022’s level — had a decline of 1.1% when adjusted for inflation. Only bequests, which jumped by 4.8% to wind up at $42.7 billion in 2023, barely outstripped inflation, with a 0.6% adjusted value.

Inside these numbers, however, there is another disturbing trend. While the amount donated by individuals increased by 1.6%, the total number of individual donors fell by 3.4%. Even worse, the report authors note that during 2023 the U.S. Gross Domestic Product grew by 6.3% (2.5% adjusted for inflation), disposable personal income spiked by 8.1% and consumer spending grew 5.9% between December 2022 and December 2023.

In short, there was a lot more money sloshing around the U.S. economy, but it wasn’t going into the coffers of nonprofits. And this goes double for the investor class: in 2023, stocks generated a 24% gain (19.3% adjusted for inflation) although much of this consisted of making up for 2022’s significant drops.

It is possible that average donation amounts fell because individual funders were spreading what they were donating around a greater number of recipients. The report did not offer details of whether the number of nonprofits individual donors funded had changed between 2022 and 2023.

That said, donations among many individuals are down, and the declines were felt across several tiers of donors. Among those contributing $100 or less (59.3% of the donor population) the total amount given fell by 10.6%. Those distributing between $501 and $5000 (10.7% of donors) cut the total amount contributed by 4.5%. Those giving between $5001 and $50,000 (1.7% of all donors) reduced their total donations by 3.7% and those giving in excess of $50,000 (0.2% of donors) cut their contributions by 2.9%.

That total donations are up means the nonprofit community is increasingly relying on a tightening circle of high-value funders. While the overall trends among large samples of donors are toward declines, nine of ten charitable sectors saw an increase in giving in current dollars from 2022 to 2023. The top global philanthropy causes in 2023 included disaster relief, health, and human rights. As the report authors noted, “As fewer donors gave the majority of philanthropic dollars, nonprofit organizations should focus on increasing their revenue streams with major and leadership gifts and diversifying revenue with planned gifts. Implementing a wider range of revenue-generating initiatives strengthens an organization’s stability and cultivates resilience in navigating economic uncertainty.”

Among the report’s other findings:

* Gains made in online giving during the pandemic era appear to have peaked and are now declining. Online funding slipped by 1% between 2022 and 2023. That said, monthly recurring giving, which solidified its foothold during the pandemic, increased by 6% between 2022 and 2023 and now makes up 31% of all online revenue.

* Impact investing, which seeks to consider social or environmental concerns in addition to financial returns, made substantial gains in 2023. The global impact investing market grew from $420.9 billion in 2022 to $495.8 billion in 2023.

* Crowdfunding continues to be a popular funding mechanism among younger donors. GoFundMe reported $9 billion in cumulative gifts in 2019, nine years after the platform was launched. As of February 2024, that figure had jumped to $30 billion in cumulative gifts.

* Foundation giving exceeded the $100 billion threshold for the second year in a row, with giving hitting $103.5 billion in 2023, up 1.7% in dollars over 2022, but down 2.3% when adjusted for inflation. Foundation giving includes gifts from operating, community and independent or private foundations (including family foundations).

* Corporate giving was up 3%, reaching $36.6 billion in 2023. But when inflation’s impact was factored in, the value of 2023 contributions was 1.1% below that of 2022. The trends are more positive over a two-year period, however: Between 2021 and 2023, corporate giving grew by 14.9% in current dollars, and was positive by 2.1% despite inflation’s impact.

* During 2023, more than 27 million Americans donated $5 billion-plus through workplace giving programs. Nearly two-thirds (65%) of Fortune 500 companies provided matching gift options, and 66% created or participated in initiatives that enabled donations to most nonprofit organizations.

The 133-page report offers considerably more detailed insights. A copy is available here: https://go2.ccsfundraising.com/Download-2024-Philanthropic-Landscape-13th-Edition.html

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Source From Non Profit Times