Donations to charities in the U.S. increased again in 2023 in total dollars, but giving actually declined when adjusted for inflation, according to the Giving USA Foundation's annual report.
In addition, the increase in giving from the wealthy and from corporations outpaced giving from middle-class individuals, Josh Birkholz, chair of the Giving USA Foundation, said.
“I would like to see us reclaim the everyday donor by encouraging giving as a cultural value,” Birkholz said in an interview. That will “require charities to be partners with advisors.”
Total giving grew by 1.9%, reaching $557.16 billion that went to U.S. charities in 2023, according to “Giving USA 2024: The Annual Report on Philanthropy for the Year 2023,” which is published by the Giving USA Foundation and researched and written by the Indiana University Lilly Family School of Philanthropy at IU Indianapolis.
Despite the increase, the growth in total giving did not outpace the higher-than-average inflation rate of 4.1%. Adjusted for inflation, giving declined by 2.1%, the report said.
“The increase in current dollars was buoyed by the stock market and GDP—both performed better than many economists initially expected in 2023,” the report said. Total giving has not yet surpassed the all-time inflation-adjusted high set in 2021.
“I thought we would exceed inflation, but maybe people are hesitant to make a multi-year pledge when they don’t know what to expect of the economy,” Birkholz said. “Donations are being driven by the wealthy. The majority of people may not feel they are doing OK economically.”
Bequests were up 4.8% and donations from corporations were up 3%, which was higher than the donations from individuals, which were up 1.6%.
Wendy McGrady, vice chair of Giving USA Foundation, said in a statement, “Among the recipients of giving, we see the strongest growth among grant making organizations: giving to foundations and to public-society benefit organizations that include national donor-advised funds. Giving to these areas is also well above pre-pandemic levels, indicating that the wealthy donors who tend to give to grant making organizations continue to invest in the future of the nonprofit sector.”
“We saw promising economic growth in 2023 after a tumultuous 2022,” Una Osili, associate dean for research and international programs at the Indiana University Lilly Family School of Philanthropy, said in an interview. “Strong market growth in the last five years increased the value of assets held by foundations, which in turn has enabled foundations to give more over time. For the second year in a row, grant making by foundations crossed over the $100 billion mark.”
“Americans increased their giving over the previous year despite the elevated cost of living and headlines warning of a possible recession in 2023,” Birkholz said. “We’re not yet back to the highs of pandemic-era giving, but there are some signs of stability.”
Some people may be feeling additional economic uncertainty because of the upcoming election, Birkholz said. “But the one bright spot connected to the election may be ‘protest donations,’” which are donations to causes thought to be tied to the losing candidate in the presidential race, he added.
“After a tumultuous 2022, total giving’s growth in 2023 may indicate positive signs in the nonprofit sector” for the future, the report said. “Total giving remains above pre-pandemic levels, even when adjusted for inflation. The COVID-19 pandemic significantly disrupted nonprofits’ operations, complicated their ability to provide services, increased demand, and created new types of constituent needs."
Charities have had a different scenario facing them since the pandemic.
“Nonprofits have had to navigate many unpredictable developments in the last few years, including a rare decline in total giving (adjusted for inflation) in 2022 and changes brought on by the pandemic. While the philanthropic landscape continues to evolve, it’s encouraging to see that giving continues to be resilient,” Amir Pasic, the Eugene R. Tempel dean of the Indiana University Lilly Family School of Philanthropy, said in a statement.
Measured in current dollars, giving grew in all nine categories of nonprofits that receive charitable contributions: religion; human services; education; to foundations; public safety benefit; health; international affairs; arts, culture and humanities; and the environment and animals. In inflation-adjusted terms, seven of the nine subsectors saw growth. Giving to religion and international affairs both declined.
“Putting everything together, giving was up because of the strong economy, but there were mitigating factors,” Osili said. “People give when they feel comfortable and we are seeing indicators for 2024 that are encouraging.
“It is an important time for advisors to talk with clients about their charitable giving,” she said. “There are more vehicles available for giving than there were a decade ago, so clients can maximize their donations.”