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Giving USA’s 2023 Annual Report on Philanthropy has officially been released to the public!
The report provides a comprehensive analysis of charitable giving in the United States, including data and trends related to philanthropic contributions made in the previous year. Knowing how higher education has fared is important not only for college advancement professionals, but for other higher education employees. Let’s take a look at the report’s insights, compare it to prior years, and discuss implications for the future of the nonprofit sector and higher education in particular.
What The Numbers Say
The Giving USA report breaks down philanthropy by sources (i.e., where dollars come from) and charitable destinations (i.e., where dollars are received). In total, Americans gave $499.33 billion to nonprofit institutions in 2022. This signifies a 3.4% decline compared to the previous calendar year and marks the first time in 15 years that philanthropy saw a decrease in the United States.
When adjusted for inflation, charitable giving’s decrease becomes even more significant. At an adjusted rate of 10.5%, this downturn indicates a stark contrast compared to 2020 and 2021, which were both the highest recorded years for philanthropy in the United States.
Who Gave in 2022?
Individuals gave a total of $319.04 billion. Consistent with prior years, the largest portion of all philanthropic dollars (64%) came from this category. While this segment saw a 6.4% decline (13.4% after adjusting for inflation) compared to 2021, it has consistently remained the primary source of all philanthropic dollars given in the United States.
Foundations increased their giving to a sum of $105.21 billion. They also achieved their second-highest charitable year in history. While this source came in second place with 21% of all dollars given (a 2.5% increase from 2021), it was still not able to keep up with inflation. After adjusting, the segment’s total ultimately resulted in a 5.0% decline.
Bequests saw an increase to a total of$45.60 billion. This category experienced an uptick of 2.3% compared to 2021 and landed in third place with a 9% total of all dollars given. While bequest dollars indicated an increase in generosity, after adjusting for inflation, the segment still experienced an overall decline of 5.3%.
Corporations gave a total of $21.08 billion.This segment experienced a 3.4% increase compared to 2021 and represented 6% of all total dollars given in 2022. When adjusted for inflation, this category experienced an estimated decline of 4.2%, the smallest of any source.
Who Benefited?
The Giving USA 2023 report segmented charitable destinations into 10 categories.
When looking at all destinations where charitable dollars were received, Religion remained the clear winner with 27% of total giving. This category has consistently endured as the leading destination for philanthropy in the United States.
While Education previously earned second place in 2021, and Human Services third, these categories were flipped for 2022. Human Services, while down in dollars received, ultimately gained one percentage point, and landed 14% of all total contributions. Additionally, Education saw a decline in dollars as well as a one percentage point decrease and received 13% of all gifts given.
Though the remaining categories prevailed in their rankings, several percentage points were reallocated between the various segments. Health and International Affairs both saw increases in their total percentages of giving (2% and 1% increases, respectively) while Foundations and Public-Society Benefit both experienced drops of two percentage points compared to the prior year.
The current report also marked the first year that included a category for Individuals, which received 2% of all gifts. Indiana University shares that this category primarily consists of in-kind gifts of medications made through patient assistance programs which are operated through medical company foundations.
Standout Categories
Although rankings largely remained consistent, there were two notable increases in dollars received. First, Foundations saw an uptick in gifts received with a 10.1% growth in contributions and a total amount of $56.85 billion. Second, International Affairs experienced a 10.9% increase in dollars, with a sum of $33.71 billion received. The latest report indicates that this influx of dollars for International Affairs was largely attributed to world events, such as the current Russo-Ukrainian War.
Implications of the Report
2022 signified the fourth time in the past 40 years that philanthropy in the United States experienced a decline. Compared to the prior year, charitable giving saw a loss of 3.4% in current dollars, 10.5% when adjusted for inflation.
Dr. Amir Pasic, Eugene R. Tempel Dean of the Lilly Family School of Philanthropy shared that declines were likely due to the stock market’s performance, which is “closely correlated with giving.” He noted, “The great generosity shown during the pandemic — 2020 and 2021 — were quite strong years, however, it’s not surprising that there was an adjustment. The stock market did go down significantly in the second part of the year. That combined with a high inflation environment is one that we haven’t seen in many years.”
When discussing anticipations for the future, Dr. Pasic noted, “Every time we’ve seen a decline in giving, we’ve always seen it come back again. As the stock market recovers and inflation comes under control, you can expect that [charitable giving] will come back.”
How Should Advancement Professionals Respond?
Like the stock market, it is within reason that philanthropy will continue to experience periods of peaks and valleys. Continuing with this comparison, successful investors realize that this is part of the course and refuse to withdraw their investments when the going gets tough. Jack Bogle, founder, and chief executive of the Vanguard Group once cautioned individuals to “Stay the course. Don’t let these changes in the market, even the big one…change your mind.”
Embrace this mentality and stay the course with your fundraising and engagement efforts.
Now is the time for you to continue working with your donors and having the conversations necessary to show them the critical importance of your mission.
Don’t make assumptions that donors are not capable of making investments in your organization during a down year. Not everyone fares the same when a market is experiencing its highs or lows. Get to know them on an individual level and ask direct, intentional questions, so that you can understand their priorities and if they’re ready to move closer to a point of making their impact.
Be prepared for when the market ultimately does return to normalcy. Make the necessary investments in your cultivation and stewardship efforts to ensure that your donors continue to feel appreciated during downtimes and that you remain their top priority when they are able to make a future investment. Remember that philanthropy encompasses the giving of one’s time, talent, and treasures. Focus on expanding your engagement strategies so you’re not only discussing financial ways to give; that may be a goal for you, but sharing time and talent is equally important.
Continue to invest in your staff’s professional development. Ensure that your team is up-to-date on industry best practices and that they are equipped with the knowledge and resources to work with modern donors. For example, in a market’s down year, it may be attractive for donors to make gifts that pay them a fixed income. Make sure your staff knows how to handle these conversations and that they are ready to present creative philanthropic solutions to match the needs of your donors.
Reflections
Philanthropy doesn’t happen in a vacuum. Whether we’re discussing donors as individuals, foundations, or corporations, we must recognize that we’re working with people who are keenly aware of the global economy. It is not unreasonable for them to pull back on investments when the market is down and to feel generous when things appear optimistic. As charitable organizations, however, we need to ensure that we’re playing the long game and aren’t too hyper-focused on the results of a single fiscal year. We must continue to focus on providing compelling cases to our donors now so that we can experience the benefits of their investments in the future. When the time comes for the stock market to return to normalcy, whether it’s this year or next, your team’s consistency and perseverance will ultimately pay off.
