If one thing has become clear over the past six years of bumpy roads, it’s that philanthropy is resilient. American generosity has weathered major tax legislation changes, a worldwide pandemic, natural disasters, humanitarian crises, political unrest and supply chain disruption.
Even above-average rates of inflation and changing norms around the transparency of large gifts haven’t deterred philanthropists.
The lesson to be learned is that all challenges don’t impact all donors in the same way or at the same time, and those challenges don’t happen in isolation. For every challenging influence out there, in the majority of cases there are countervailing influences that lessen impact.
For instance, a substantial tax law expected to decrease philanthropic output might be coupled with a strong economy, lessening its impact. Likewise, challenges in a single sector don’t equate to the entire economy. Some industries and some geographies may be impacted, yes, but it’s not universal. People and the nonprofits they support can and do flourish, even during hard times.
The proof is in the latest numbers from Giving USA 2023, which indicate Americans gave a generous $557.16 billion to charity in 2023, up 1.9%, or $57.83 billion, from the prior year. Giving USA: The Annual Report on Philanthropy is the seminal publication reporting on the sources and uses of charitable giving in the United States; its research, conducted by the Indiana University Lilly Family School of Philanthropy, estimates all giving to all charitable organizations across the United States. Measuring the previous year’s philanthropic performance, the 2023 report showed increases in giving by individuals (1.6%), foundations (1.7%), bequests (4.8%) and corporations (3%). Likewise, the top designations for charities — religion, human services, education, foundations, and public-society benefit — all increased this year.
As usual, corporate executives sitting on nonprofit boards can help their organizations interpret these giving trends and turn that insight into future fundraising success.
What the Numbers Say
Nonprofits should:
- Build bold ideas to generate bold investments. With the continuing trend of larger gifts and fewer donors, nonprofits must be able to articulate big, bold, groundbreaking initiatives and ideas in order to attract aspirational philanthropic partners who can bring them to fruition.
- Go where the money is. The numbers indicate that 84% of total giving (accounting for all the ways a person may give) comes from individuals. Start there. Foundation giving has grown to nearly 20% of charitable giving, surpassing $100 billion. Focus attention here, as well.
- Focus on Planned Giving. From 2019 through 2023, the wealth of older adults grew 30%. Target individuals aged 60-plus. After all, they make up 24% of the population — which is 77 million Americans. In their twilight years, they are looking to give, and those with bequest intentions also often give more while they are alive.
- Be flexible, adaptable and rigorous. During times of turmoil, implement the nonprofit’s plan with discipline and rigor, but be open to adaptation. If a donor is facing financial challenge, consider delaying current asks but continuing to articulate the case for support for the future.
- Instill trust. Become bona fide partners with donors, communicating openly and respectfully about shared visions, values and challenges. Build and instill trust that, together with the donor, will achieve the nonprofit’s — and the donor’s — goals and optimize impact.
- Take an expansive view of generosity. Fundraising is about more than the number of dollars donors give. It’s about their connection to issues and causes that will make a positive impact in the world; sometimes the non-monetary rewards to nonprofits — donors who volunteer, host events to introduce new people to the organization, advocate with family and friends for the cause — can be formidable, helping the charity or institution elevate its profile and achieve its vision tenfold.
Looking Forward
Do economic and social challenges exist? Yes. Is there increased competition in the growth of nonprofits? Yes. Those realities, alone, aren’t, however, reasons to pull back on or be pessimistic about fundraising.
As this year’s numbers illustrate, people are giving more. They want to continue to make the world a better place. And the good news: They exist everywhere, those unknown millionaires next door who, at first blush, don’t appear to be the obvious choices but who were smart investors, who own current or inherited real estate in strategic locations, or who married someone of wealth. It’s just a matter of finding those individuals and connecting their passions with the nonprofit mission.
Where Did the Dollars Go?
Philanthropic contributions by designation in 2023:
- Religion: $145.81 billion
- Human Services: $88.84 billion
- Education: $87.69 billion
- Foundations: $80.03 billion
- Public-Society Benefit: $62.81 billion
- Health: $56.58 billion
- International Affairs: $29.94 billion
- Arts, Culture, Humanities: $25.26 billion
- Environment/Animals: $21.20 billion
- Individuals: $20.66 billion
Remember, a nonprofit rarely fits into only one category; often, it offers programs and services in other areas as well. To expand fundraising dollars, nonprofits should explore institutional and individual donors who have a track record of supporting these top categories.
Richard Tollefson is founder and president of The Phoenix Philanthropy Group, an Arizona-based international consulting firm serving nonprofit organizations as well as institutional and individual philanthropists.
Did You Know: Bright Spot: While inflation increased during the Giving USA reporting period, so did the GDP, S&P 500 and disposable personal income.
