Rising inflation and persistent recession fears helped drive down 2022 charitable giving in the U.S. for only the third time in four decades, researchers behind the latest Giving USA study said.
Total giving by corporations, foundations, bequests and individuals dropped by 3.4% — 10.5% when adjusted for inflation — to $499.33 billion last year when inflation reached a 40-year high of 8%, according to the annual report published by the Giving USA Foundation and researched and written by the Indiana University Lilly Family School of Philanthropy at IUPUI.
The decline from $516.65 billion in contributions in 2021 represents “a relatively rare occurrence usually seen during years with difficult or unusual economic conditions. Giving was influenced by stock market volatility and economic uncertainty,” the June report said.
Last year’s giving followed two of the best years on record as donors responded to the extraordinary needs presented by the pandemic and a highly charged racial justice environment. In 2021, charitable contributions passed the $500 million mark for the first time.
But 2022 joined 1987, 2008 and 2009 as the only years giving trends declined in the last 40 years.
Scott Birkholz
“Drops in the stock market and high inflation caused many households to make tough decisions about their charitable giving for the year,” said Giving Foundation Chair Josh Birkholz. “But despite uncertain economic times, Americans demonstrated how essential they view the nonprofit sector and its ability to solve big problems — by still giving nearly half a trillion dollars in 2022.”
The decline has a tangible effect on nonprofit organizations that rely on charitable donations to operate, said Amir Pasic, dean of the Lilly Family School of Philanthropy. “Nonprofits and donors alike experienced the steady, negative impacts of inflation such as the growing cost of goods and high interest rates throughout 2022, and many of those challenges remain.”
Amir Pasic
Some recipient sectors fared better than others amid those challenges. According to the report, giving to religion as a whole rose 5.2% to $143.57 billion. But those contributions represented a 2.6% decline when adjusted for inflation.
The only recipient categories to see increased receipts before and after adjusting for inflation were foundations (up 1.9% to $56.84 million) and international affairs (up 2.7% to $33.71 billion). Causes such as education, health, arts and culture, and the environment and animals all saw notable declines when adjusted for inflation.
Anna Pruitt
In an article for the Lake Institute, Anna Pruitt, managing editor of the Giving USA report, explained that faith-based groups faced numerous challenges to their bottom lines in 2022, including membership, affiliation and attendance declines. But she added the nation’s economic condition also took a chunk.
“Giving to religion is dominated by gifts from individuals, and giving by individuals declined by 6.4% in 2022 (-13.4% when adjusted for inflation). Households of all levels were impacted by the conditions of the year,” she wrote. “The drop in the stock market likely dampened giving from high-net-worth donors, and the decline in disposable personal income (the amount that households have left after paying taxes) and high levels of inflation may have left households with fewer dollars to give to charity.”
The report found that giving from foundations, bequests and corporations, like that of individuals, declined when adjusted for inflation: “For the second year in a row, very large gifts by some of the wealthiest Americans represented nearly 5% of individual giving. Mega-giving from six individuals and couples totaled $13.96 billion.”
Una Osili
But the news wasn’t all negative, said Una Osili, dean for research and international programs at the Lilly Family School of Philanthropy. “Despite the downturn in financial markets in 2022, there were some bright spots in the economy thanks to a strong labor market and 9% growth in GDP. The economic picture that emerges suggests that many households were stable — we did not see job losses or an increase in unemployment the way we did in the Great Recession.”
Wendy McGrady
While declining to make predictions about giving for 2023 and beyond, Giving USA Vice Chair Wendy McGrady said the market’s current upward trend could be a good sign for nonprofits needing contributions. “We should continue to watch market performance and inflation for clues as to how donors may respond this year. All that said, we as Americans invest half a billion dollars in nonprofits to do the critical work they do. Donors continue to recognize and invest in the ability of the sector to meet unmet needs and the sector continues to deliver.”
Pasic added another encouraging note: “Giving USA’s historical data also provide a case for hope: We have seen charitable giving rebound from each decline.”
