4 Takeaways From “Giving USA” and More
Fundraising had one of its worst years ever in 2022, down 10.5 percent when adjusted for inflation, according to numbers released in the “Giving USA” report. The annual study gives a comprehensive estimate of charitable giving by individuals, foundations, and corporations. In addition to analyzing the report’s data, my colleague Emily Haynes and I talked to fundraisers and development experts to find out how things have been going so far in 2023. All signs point to a difficult year ahead in fundraising. Here are four key takeaways from the new report and our interviews:
Nonprofits need to focus more on everyday donors. The report found that individual giving fell to its lowest share of overall giving ever: 64 percent. This marks the fourth straight year individual giving has represented less than 70 percent of all giving.
While the overall state of the economy is clearly the big force behind the decline in charitable giving, Danielle Vance-McMullen, an assistant professor at DePaul University who studies donor behavior, says turnover and staffing shortages on fundraising teams may have exacerbated the problem. When the economy is in flux, she says, charities need to put far more effort into their fundraising operations.
They also need to focus more on finding and keeping a wider pool of people who give small or medium-size gifts so donations aren’t so concentrated among the wealthiest, experts say.
“We’ve seen shops that have become almost exclusively big-game hunters, and it becomes part of the culture — you’re not a cool kid unless you’re on the major-gifts team,” says Laura MacDonald, head of the Benefactor Group, a fundraising consultancy. “Annual giving or middle giving are not the paths for significant career advancement. They aren’t the folks who get called into the board meetings to be congratulated for their successes. Culturally, we need to begin to recognize the people who work to nurture everyday donors.”
Nikita Hlazyrin, Project HOPE
Inflation bites. One of the big takeaways from the report was that inflation killed any gains fundraisers made in 2022. Before adjusting for inflation, five of nine causes saw modest gains in their fundraising. After inflation, only two saw gains: international giving and giving to foundations. What’s more, those were slim gains, 2.7 percent and 1.9 percent, respectively.
High inflation is impacting nonprofits’ ability to carry out their missions, says alicia sanchez gill, executive director of the Emergent Fund, a group that provides grants to small and new nonprofits for rapid-response efforts, mostly focused on LGBTQ issues.
“The price of everything has gone up,” gill says. “So if you’re running a shelter, the price of housing has gone up. The price of food has gone up. Often funds like ours are helping to fill a gap so that LGBTQ organizations can really hold on to those precious general operating funds as we see inflation continue to rise.”
Corporate and foundation giving is expected to slow. The Association of Corporate Citizenship Professionals conducted a survey, expected to be released in July, asking members about their corporate-contributions budgets for 2023. Only 29 percent have increased grant-making budgets this year, compared with 48 percent in 2021 and 42 percent in 2022. What’s more, 19 percent decreased budgets in 2023, making it the highest level of budget cutting since 2020, when uncertainty about the pandemic led 29 percent to slash budgets.
“Corporate investment in the community is slowing,” says Jeanne Metzger, vice president of marketing at the association.
A similar survey from Candid found that 27 percent of foundations plan to decrease giving in 2023. Last year, 44 percent planned to increase giving, while only 9 percent expected decreases.
“This year, the story seems pretty different,” says Cathleen Clerkin, senior director of insights at Candid. “Twenty-seven percent of folks are saying that they anticipate decreasing their giving this year, and about half of folks are saying that they’re planning on holding stable.”
Education loses the No. 2 spot. For years, education has been the second most popular cause, following religion. This year, it was bumped, by a slim margin, to third place. Gifts to religion represented 27 percent of total giving in 2022, while human services represented 14 percent and education 13 percent. Total donations to colleges, schools, and other education groups declined nearly 11 percent last year, when adjusted for inflation.
Josh Birkholz, chair of the Giving USA Foundation, notes that past research has shown education is a less popular cause among millennial and Gen Z donors than it is among boomers. That may be because younger college graduates are more focused on paying back the mammoth student-loan debts that older generations didn’t accrue, he says.
While these four takeaways are great, there are more insights to dig into from the report and our interviews. To find out how arts organizations rebounded over the pandemic years and how donors are trying to be more involved with how their donations are used, read the complete article.
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