Some concerning statistics have emerged in Giving USA 2023 recently released report, which reviews the period from calendar year 2021 to 2022. Our goal is to provide some perspective to the numbers and even inject a touch of optimism into the situation. So, without further ado, let's dive right into the findings!
Key Facts about Philanthropy in 2022
The biggest headline from the Giving USA report is this: overall philanthropic giving revenue fell 3.4% in 2022.
Giving by individuals experienced an even faster decline, with a revenue decrease of 4.9%. Both general and major donors saw a decline in giving revenue. However, when factoring in inflation, the overall picture appears far worse, with a significant 13.4% decrease compared to 2021.
Looking outside the Giving USA numbers, the Fundraising Effectiveness Project (FEP) reports that overall donors declined by 10% in 2022, as individuals became increasingly cautious. It is worth noting that while the Giving USA report provides a comprehensive analysis of philanthropic giving across various sources — including giving by foundations, bequests, and corporations— the FEP specifically focuses on individual giving. Therefore, their findings complement each other, offering a more holistic understanding of the situation.
The impact of inflation cannot be underestimated as it directly influenced donor participation. With less disposable income due to rising costs, individuals found it more expensive to allocate funds for charitable donations. Giving as a share of disposable income reached a concerning rate of 1.9%, marking a 30-year record low, according to Giving USA. Such a decline highlights the challenging financial circumstances that many potential donors faced.
Additionally, direct mail response rates and fundraising emails declined, indicating a shift in donor behavior. Pursuant clients and M+R benchmarks observed direct mail response rates falling by nearly 1% over the past 18 months. These statistics suggest that donors likely gave to fewer charities in 2022, prioritizing their most essential causes.
Putting Philanthropy in Perspective
Despite the challenges faced in 2022, it is crucial to consider the long-term growth of philanthropy. Giving in 2022 actually increased by 8.6% to $482.44 billion compared to pre-pandemic 2019 levels of $444.24 billion, according to Giving USA. This positive trend highlights the resilience and enduring commitment of individuals to making a difference.
Individual donors continue to be the driving force behind philanthropy. Major gifts, donor-advised fund gifts, and bequests predominantly stem from one-on-one relationships with individuals. Despite the changing landscape, these personal connections remain vital to sustaining philanthropic support.
Challenges and Opportunities for Nonprofits
Short-term planning and goals often limit funnel creation and donor development for many organizations — perhaps for the industry as a whole. Limited resources and staffing shortages have led to a focus on the biggest donors, which inevitably depletes resources and attention to everyday donors. To sustain a healthy pipeline for future growth, nonprofits must recognize the value of nurturing relationships with all donors, as this can help break the cycle of fewer donors giving more dollars.
Despite the weaknesses reported by Giving USA, growth and opportunities exist in spades. In a poll conducted by Pursuant in Q1 2023, 60% of fundraisers met or exceeded their 2022 fundraising goals. Furthermore, two-thirds of fundraisers believe that the economy will stabilize or improve in the remaining months of 2023. This positive outlook reflects the resilience and optimism within the fundraising community.
Looking Ahead
Midway through 2023, there are signs of relief and recovery from the two major economic forces that impact philanthropy: inflation and the stock market. Both are showing positive trends, which bodes well for the future of philanthropy. As nonprofits navigate these changing dynamics, it is crucial to adapt strategies, leverage technology, and prioritize donor relationships to continue thriving in 2023 and beyond.
In conclusion, while the decline in overall giving presents challenges for nonprofits, taking a long-term perspective reveals a growth trajectory in philanthropy. Despite declines in giving in certain sectors, overall philanthropy is still growing. Nonprofits can maximize their resources by nurturing relationships with all donors, utilizing sustainable strategies, and staying optimistic about the potential for philanthropy to rebound and flourish.
Looking for help with your fundraising programs as we enter the second half of 2023? Get in touch to discover how Pursuant + Allegiance Group can help.