In 2022, charitable giving in the United States experienced a decline, marking a rare occurrence in a year characterized by economic uncertainty and stock market volatility. The Giving USA 2023 report, published by the Giving USA Foundation and researched and written by the Indiana University Lilly Family School of Philanthropy, reveals key insights into philanthropy trends during this challenging period. While the total amount donated decreased from last year, the unwavering commitment of individuals, bequests, foundations and corporations to supporting charitable causes remained evident.
The report underscores the challenges faced by nonprofits and donors due to the enduring effects of inflation, such as rising costs of goods and high interest rates. However, historical data from Giving USA provide hope, indicating that philanthropic giving has rebounded from previous declines.
Philanthropic freedom matters in times like these because it enables swift and effective responses to urgent needs, fosters innovation and flexibility, empowers individuals to target their resources effectively and promotes collaboration and collective action. By recognizing and preserving philanthropic freedom, we can harness the power of generosity and make a significant difference addressing the challenges faced by our communities.
A Notable Decline
The Giving USA 2023 report reveals total giving to U.S. charities in 2022 reached an estimated $499.33 billion. However, this figure represents a decrease of 3.4% in current dollars compared to the previous year, with a more significant decline of 10.5% after adjusting for inflation. The drop in charitable giving during 2022 was a departure from the positive trends witnessed in 2020 and 2021, the latter year being when donations surpassed $500 billion for the first time in history.
Several economic factors influenced the decline in philanthropic giving during 2022. Last year the stock market (S&P 500) experienced a 19.4% decrease (-25.4% when adjusted for inflation). This volatility created uncertainty among households and foundations heavily invested in the stock market. Additionally, disposable personal income remained relatively stagnant, with a nominal decrease of 0.1% (-7.5% when adjusted for inflation). Notably, 2022 witnessed an extraordinary 40-year-high inflation rate of 8.0%, further impacting households’ financial capacity for charitable giving.
The Importance of Individual Giving
Individuals play a crucial role in the philanthropic landscape, and their giving dipped significantly in 2022 compared to 2021. Individual giving decreased by 6.4%, amounting to $319.04 billion (a 13.4% decline when adjusted for inflation). This decline is part of a broader trend, as individual giving has been decreasing as a share of total giving over the years. In 2022, it accounted for only 64% of total giving, down from 70% in 2018 and over 80% in 1982. This year in particular, economic conditions and changing circumstances appear to have influenced individuals’ ability to give generously.
Promising Areas of Growth
While overall giving declined in 2022, there were notable areas of growth. Foundations and corporations both saw increases in giving, rising by 2.5% and 3.4%, respectively, in current dollars. Even when adjusting for inflation, giving by foundations and corporations showed positive two-year growth. Additionally, mega-gifts from a select group of affluent individuals and couples accounted for nearly 5% of individual giving, totaling $13.96 billion.
The report also highlights the distribution of charitable giving across various recipient organizations. Religion remained the largest beneficiary, experiencing a 5.2% increase in giving. However, when adjusted for inflation, seven of the nine subsectors studied saw declines, including education, human services, public-society benefit and environment and animals. Giving to foundations and international affairs showed modest growth when adjusted for inflation, with increases of 1.9% and 2.7%, respectively.
While inflationary pressures and stock market turmoil influenced the level of giving in 2022, the Giving USA report emphasizes the resilience and essential nature of philanthropy. Total giving as a share of GDP was down slightly from the 40-year average (1.94% vs. 1.98%). Despite uncertain times, Americans demonstrated their unwavering support for the nonprofit sector by giving nearly half a trillion dollars in 2022.
Looking Ahead with Hope
The years leading up to 2022 witnessed remarkable growth in philanthropy as individuals rallied to address the increasing needs stemming from the global pandemic and economic crisis. Charitable giving played a vital role in supporting organizations working toward these critical causes. While giving experienced a decline in 2022, it is important to recognize the substantial impact philanthropy has had and continues to have in times of crisis.
The Giving USA report also serves as a reminder that philanthropy has rebounded from previous declines. As economic conditions stabilize and uncertainties recede, there is an opportunity for charitable giving to regain its momentum.
The importance of philanthropic freedom becomes even more evident in times like these when faced with high inflation, stagnant wage growth and a declining stock market. As economic conditions pose challenges for individuals and institutions, philanthropic freedom empowers individuals to make a difference by directing their resources to the causes they believe in. By preserving and promoting philanthropic freedom, we foster an environment where individuals and organizations can actively contribute to positive social change, even in the face of economic adversity.
The philanthropic landscape in 2022 faced unique challenges, resulting in a decline in charitable giving. Nonprofit organizations, which often provide critical services, experienced the tangible impact of these decreases, highlighting yet again why private philanthropy is crucial to providing societal needs. Nonetheless, the resilience of the philanthropic sector remains evident, and the historical data from Giving USA offer hope for a rebound in giving. As we move forward, it is crucial to recognize the integral role of charitable giving in supporting organizations and causes that drive positive change in our communities.
