Giving USA 2019: Top Ten Takeaways
In June, Giving USA published its Annual Report on Philanthropy – a comprehensive report on the state of philanthropy in the United States. The report indicates that the world of philanthropy, while relatively stable, is beginning to shift with the current political and economic climate. There were some trends we expected and some we didn’t. Here’s our take on the numbers:
What We Expected:
- Charitable giving increased slightly, reaching $427.71 billion, a 0.7% increase between 2017 and 2018. Despite the small increase, charitable giving reached its second highest level ever. Economic factors including a strong stock market, growing economy, historically low unemployment rate, and new corporate tax legislation may be responsible for the slight increase, though those factors would have indicated more robust growth. Growth is clearly good, but the slowing of growth is a cause for concern if it becomes a multi-year trend.
- Total fundraising increased for large and medium nonprofit organizations at 2.3% and 2%, respectively, while fundraising declined for small nonprofits by 2.3%. Larger nonprofits tend to have more resources to devote to marketing and fundraising than smaller organizations. This can lead to more brand recognition, stronger direct mail and online fundraising initiatives, and more funding from corporations.
- Contributions by major donors (those giving $1,000+), increased 2.6% from 2017. Gifts from donors giving below $250 declined by 4.4%, and those giving between $250 and $999 declined by 4%1. Major donors are typically motivated by more than simply a tax deduction. These donors often have personal and deep connections to the nonprofits they support. At Orr Group, we believe major donors will continue to give at engaged levels despite changes to the tax code. This also continues a longstanding trend of donors giving larger gifts to fewer nonprofits.
- Giving from the wealthiest Americans declined in 2018. At the same time, the 400 wealthiest U.S. residents reached $2.9 trillion in total wealth, an increase of $2 billion from 20172. Too often, nonprofits get caught in the “what about Bill Gates” trap. While it’s true that the wealthiest Americans have a lot to give, they don’t always give at the rates we would expect. Moreover, these individuals tend to have independent giving vehicles that make most of their philanthropic decisions for them.
- Giving to International Affairs and Environment/Animals were the only two sectors to show growth, up 9.6% and 3.6%, respectively. The world has transformed into a global, interconnected society and, given our current political climate, it’s no surprise that donors are increasingly supporting international affairs, including work to support refugee crises, natural disasters, the environment, and public health.
What Surprised Us:
- Contributions from individuals declined by 1.1% and 2018 was the first time in over 54 years that individuals comprised less than 70% of overall giving. Though the effects of the tax act are not “supposed” to set in until 2019, we could be seeing early effects of the legislation which nearly doubled the standard individual deduction, leading less people to itemize on their tax returns.
- Giving by bequests remained relatively flat after a 14.7% increase between 2016 and 2017. Still, only about 5% of estates leave a bequest today. Planned giving has become increasingly more popular with nonprofits. It allows donors to reach higher giving levels and eases the financial burden during the donor’s lifetime. All organizations should be taking the opportunity to invest in their planned giving efforts, as a $59 trillion transfer of wealth is expected to occur in the next several years.
- Both foundations and corporations* ramped up their charitable giving in 2018, increasing their contributions 7.3% and 5.4% from 2017, respectively. Several organizations made strategic donations in 2018 including Lyft’s $1 million donation to the American Civil Liberties Union (ACLU) and the Kresge Foundation’s $4 million donation to the Shared Prosperity Partnership, a collaboration focused on inclusive growth and economic equity. Organizations have been increasingly revising their giving strategy to reflect the political climate and the industry-wide move towards diversity, equity and inclusion.
- Grantmaking saw an increase for the second year in a row. Between 2016 and 2017, foundation giving increased by 12%. Between 2017 and 2018, foundation giving increased again by 7.3%. Foundations are ramping up their efforts to support some of the issues that the government is stepping away, from including climate change, disaster relief and immigration. Moreover, as wealth increases across the country, more high net worth individuals are establishing independent giving vehicles, often in the form of foundations. The strong stock market may also be a factor as it caused portfolios to grow rapidly, necessitating more giving.
*Corporate giving includes cash and in-kind contributions made through corporate giving programs, as well as grants and gifts made by corporate foundations.
Percentages and numbers are in current dollars, unless otherwise noted.
All information in this article was obtained from Giving USA: The Annual Report on Philanthropy for the Year 2018.
- Quarterly Fundraising Report: Year to Date Nonprofit Sector Trends 01/01/2018 to 12/31/2018, Fundraising Effectiveness Project, 2019, https://afpglobal.org/sites/default/files/attachments/2019-02/FEP2018Q4Report.pdf
- Kerry A. Dolan, “Forbes 400 2018: A New Number One And A Record-Breaking Year for America’s Richest People,” Forbes, October 3, 2018, https://www.forbes.com/sites/kerryadolan/2018/10/03/forbes-400-2018-a-new-number-oneand-a-record-breaking-year-for-americas-richest-people/#2fd6134260b7