According to the latest Giving USA report, charitable giving decreased by 2.1% in 2023 after adjusting for inflation.
Nonprofits have been concerned about the declining number of American donors for some time. The Giving USA report for 2023 confirms these worries, showing a 2.4% drop in giving by individuals. The percentage of overall giving from individual donors decreased slightly from 67.4% in 2022 to 67.2% in 2023. Back in 2013, individual donors contributed to 73% of total giving.
Foundations contributed 19% ($103.5 billion) to overall giving in 2023, while bequests made up 8% ($42.7 billion) and corporations accounted for the remaining 7%.
Although the decrease in giving in 2023 is discouraging, there are signs that charitable giving may be stabilizing after several turbulent years impacted by events like the pandemic and inflation.
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“The organizations we work with experienced a slight decrease in 2023,” says Rick Dunham, founder of Dunham+Company, a fundraising consulting firm. “The economy played a significant role. Donors pulled back due to inflation and personal economic circumstances.”
The economy was a major factor affecting giving in the past year, according to Una Osili, associate dean for Research and International Programs at the Indiana University Lilly Family School of Philanthropy, which helps produce Giving USA.
“Giving tends to increase as the economy improves,” Osili explains. “The economy exceeded expectations, with the stock market performing well even after adjusting for inflation.
However, inflation remained a significant challenge.”
Nonprofits like Feeding San Diego, which provides meals to those in need, felt the impact of inflation in various ways last year. Donors expressed uncertainty about their giving capacity, while the cost of food rose, and the number of individuals requiring assistance increased.
“While the economy may seem positive overall, the reality is that the cost of food has significantly increased over the past four years, while wages have not kept pace,” says Ali Colbran, senior director of development at the organization. “Hence, more families require assistance from organizations like Feeding San Diego today compared to 2020 and 2021.”
Inflation was 8% in 2022, contributing to a sharp decline in giving that year. In 2023, despite inflation dropping to 4.1%, it was still enough to nullify any giving gains. In current dollars, giving increased from $547 billion in 2022 to $557 billion in 2023, a 1.9% growth that translates to a 2.1% loss after considering inflation.
All causes, except giving to individuals, witnessed gains in current dollars. However, when adjusted for inflation, giving to religion decreased by 1%, international affairs by 1.6%, and individuals by 20.5%.
Project Hope, an international relief organization, highlights the challenge of fundraising amidst ongoing global crises in recent years, including those in Ukraine and the Middle East, as well as natural disasters.
“It feels like the world is in turmoil right now,” says Cinira Baldi, chief development and communications officer for the organization. “People are overwhelmed by the amount of crises happening and may feel powerless to make a difference.”
While some causes experienced minor decreases, others saw increases. Human services rose by 1.7%, environment and animal causes by 3.9%, and health by 4.4%. Significant gains were observed in arts, culture, and humanities (6.6%); education (6.7%); public-society benefit (7.2%); and gifts to foundations (10.8%).
The report also notes that contributions to causes with the largest increases—public-society benefit organizations and foundations—decreased by 15% and 21%, respectively, from 2021 to 2022.
Causes with substantial support from high-net-worth donors saw the biggest gains, according to Osili.
“Many affluent households had high savings rates and strong financial positions entering 2023,” she explains. “As a result, sectors typically supported by high-net-worth households, such as education, arts, and public-society benefit, performed relatively well.”
The 2023 Giving USA report highlights the role of large donations (gifts of $550 million or more), which totaled nearly $14 billion in 2022 and accounted for 5% of individual giving. In 2023, the impact of these mega-gifts decreased, with around $8 billion in such donations making up approximately 2% of individual giving.
“Megagiving has decreased compared to previous years,” says Jon Bergdoll, associate director of data partnerships at the Lilly Family School of Philanthropy, emphasizing that while the amounts are still substantial, they are lower than in recent years before 2020.
Woodrow Rosenbaum, chief data officer for Giving Tuesday, points out the challenge of nonprofits’ reliance on wealthy donors. He suggests that engaging everyday donors is crucial to ensuring the sector’s resilience in the future.
“It’s essential for the nonprofit sector to engage a broader audience to reverse this trend and remain sustainable,” Rosenbaum asserts. “The future of nonprofits hinges on how effectively they engage with all types of donors.”
