Created By: CJ OrrJune 22, 2023 Orr Group’s recent membership in The Giving Institute marks an exciting achievement for us. As we embark on our first year affiliated with The Giving Institute and take our place on the Board, we are thrilled to join forces with respected colleagues who have been instrumental in producing the annual Giving USA report. This partnership allows us to contribute to the Institute’s vital work and make a meaningful impact in the world of philanthropy. While the report itself provides a comprehensive analysis, I would like to share my perspective on several key insights revealed and their implications for the future of charitable giving. Philanthropy and the Economy While it may not come as a surprise, the data indicates a decline in total giving in 2022 vs the total giving in 2020 or 2021, which I view as a natural economic normalization process. When we consider the broader economic landscape, it becomes apparent that various sectors experienced setbacks in 2022: the S&P 500 declined by 19.4%, and Annual GDP in 2022 was 2.1% vs 5.9% in 2021. This economic backdrop, coupled with the Federal Reserve’s 2022 mandate to raise rates and mitigate inflation, had a direct impact on the economy and subsequently affected philanthropic endeavors. However, it is worth noting that even with a 10% decrease adjusted for inflation, philanthropy fared relatively better compared to many other sectors in the economy. For example, companies with high growth or excessive debt faced significant challenges, while philanthropy experienced a year of normalization. Two other interesting trends emerge when examining the flow of funds in the philanthropic sector over a 5-year period. Firstly, there is a noticeable flattening or downward trend in donations directed towards religious organizations over 5 years, accompanied by a notable increase in contributions towards other sectors. Additionally, it is important to emphasize that, out of the total amount of $499 billion over this period, a staggering $13 billion was contributed by merely six donors. This trend is expected to persist as numerous billionaires channel their donations into the philanthropic market through Mega Gifts. The 2023 Outlook Looking ahead to 2023, the outlook appears better now than it did at the beginning of 2023. The first three months of ’23 were challenging with increased rates, a regional bank crisis, and more, but these last three months witnessed a significant recovery. Overall, the market has shown a positive trend, with an increase of 14.31% to date, and it is reasonable to expect growth from 2022 levels for the philanthropic market. If the overall market and economy continue to grow, philanthropy will likely follow suit. I guess it won’t be apples to apples for growth, but somewhere lagging behind the overall economic growth. In conclusion, the Giving USA report provides valuable insights into the state of philanthropy. While the decline in total giving in 2022 can be seen as a normalization process, the data also highlights the impact of economic factors and the Federal Reserve’s actions on philanthropic trends. Observing shifts in donation patterns, it becomes clear that the distribution of funds is evolving, with less going toward religion and more toward other sectors. Additionally, the concentration of donations from a small number of wealthy individuals is expected to increase. As we move into 2023, the philanthropic market’s trajectory will likely be influenced by the overall market and economic conditions. Want to learn more? Visit Giving USA’s website to become an annual subscriber and download the full report. Access The Report CJ Orr is President and Partner of Orr Group. As an expert project and relationship manager with 10+ years of experience in the sector, CJ utilizes data, technology, and financially-backed trends to execute on the development of strategies and tactics to drive effective fundraising plans that meet or exceed targets.