"The charity that is trifle to us can be precious to others."
—Homer
Who are the most generous financial givers?
The short answer is individuals.
Giving USA's Annual Report on charitable contributions, published in June of this year (for 2023), shows that of the $557.16 billion given, 67 percent, or $374.40 billion, came from individuals, an increase of 1.9 percent over 2022.
Next are foundations, which gave 19 percent, or $103.53 billion, up 1.7 percent from the previous year. Bequests, at 8 percent, or 42.68 billion, gained 4.8 percent, and finally, corporations, with 7 percent, or $36.55 billion, increased by 3.0 percent over 2022.
These are current dollars as overall inflation-adjusted giving declined 2.1 percent for the year. Individual giving as a share of disposable income was only 1.9 percent—close to the all-time low of 1.7 percent in 2022.
The top three recipients were religion*, which received $145.81 billion; human services, $88.84 billion; and education, $87.69 billion.
In 2023, an outpouring of generosity produced record-high giving from resilient but changing donors.
Generosity—an expression of faith
"In study after study, says Karl Zinsmeister, author of The Almanac of American Philanthropy, "religious practice is the behavioral variable with the strongest and most consistent association with generous giving."
Here are Internet headlines from the past few years that underscore that point:
"The Gospel of Generosity: Study finds Scripture-engaged Americans are among the most generous"
"People who attend church regularly are more likely to donate to charities"
"The more people go to church, the more they give to church, study shows"
While those stories reflect American findings, Gallup surveys conducted from 2005 to 2009 in 145 countries revealed that these same religious practices held true internationally.
In an article in Philanthropy, Zinsmeister offers the following insights:
- Among Americans who attend services weekly and pray daily, 45% had volunteered during the previous week.
- Two-thirds of people who worship at least twice a month give to secular causes, compared to half of non-attenders.
- Seven of ten weekly church attenders told Pew Research they consider "work to help the needy" an "essential part" of their faith.
- Religion annually contributes an estimated $1.2 trillion of socio-economic value to the U.S. economy. That total is more than the combined revenue of America's ten biggest tech giants and the total economy of all but 14 nations.
A new study by Indiana University and the University of Notre Dame found that charitable giving fell by about $20 billion in 2018 after the Tax Cuts and Jobs Act was passed by the U.S. Congress.
However, according to that same study, the TCJA's increase in the standard (vs. itemized) deduction, which 90 percent of filers took in 2021 and is being raised for the 2024 tax season, had little to no effect on giving to houses of worship.
In another article, "Less God, Less Giving?" Karl Zinsmeister notes:
"It's clear that America's unusual religiosity and extraordinary generosity are closely linked. As faith spirals downward, voluntary giving is very likely to follow. An obvious question for philanthropists is whether the causation arrow can be reversed."
Blinking lights
What's happening in charitable giving over the donor spectrum, particularly middle-class philanthropy?
1. Giving is increasing because of large gifts from wealthy donors. Smaller and mid-level donors are slowly disappearing across the broad range of nonprofits. This impacts local charities like food pantries, YMCAs, and libraries. Large gifts tend to go to medical centers and museums. (See Dr. Ruth Gottesman's $1 billion gift to the Albert Einstein School of Medicine, Bronx, New York.)
2. The number of giving households is decreasing from all economic strata. Volunteerism is also in decline.
3. One-time donors giving less than $500 and $100 are collapsing. These are 98 percent of all givers.
4. Retention rates are declining among all donor categories.
5. Inflation is a thief but doesn't completely explain certain sectors' decline. Last year, considerable sums were spent on consumer goods, travel, and entertainment in the U.S.
6. The percentage of Americans who gave to religious causes is decreasing with attendance at worship services.
The Great Recession (2007-2009) made it difficult for some younger Americans to establish a habit of giving. Only one-third of households aged 40 and under gave to charities in 2018.
What factors motivate them to give, especially if they don't attend worship services or belong to networks encouraging giving?
Communicating well
Some observers believe that decreases in giving are often attributable to communication lapses and ineffective messages, as donors are looking for reasons to give.
"People give to causes they consider important regardless of their income and expenses," reports the American Bible Society in their annual study of giving. "The spirit of generosity in the U.S. remains strong," said Michael Tomlinson, president of the BDI Fundraising Agency.
How do those with expertise suggest improving donor relationships and successfully sharing the worthiness of your cause?
By doubling down on building trust with donors and inviting others into the fold. Transparency and accountability are paramount.
Demonstrating the impact of donor investment.
Crafting content with engagement in mind. What would that look like?
Telling great stories and harnessing technology to support people in need. The premium is on stories that speak to the heart and mind.
When it comes to bequests, don't overlook smaller or mid-size donors, as they may be able to make a larger gift someday.
And don't forget to say "thank you" for even the smallest contributions.
*Giving to religion, as defined by Giving USA, includes churches and mission organizations.
Sources: Indiana University Lilly School of Philanthropy; BDI; Mission Wired; The Chronicle of Philanthropy; Philanthropy Roundtable; New York Times; American Bible Society; Boomerang; and The Wall Street Journal.
Strategist.com
© Bredholt & Co.
