Looking back on 2022, the landscape of giving continued to shift, and many of us in and beside the nonprofit sector witnessed these effects firsthand in our daily work. Our sector has received unprecedented levels of giving during the pandemic, seen market fluctuations that have contributed to lingering economic uncertainty, and responded to a multitude of political, social, and economic events, all while trying to keep pace with advancements in technology. Still, nonprofits have remained resilient and continue to be the beating heart of so many communities.
Navigating these challenges together means Giving USA's findings for 2022 have become even more significant. This annual report on philanthropy offers us a bird's-eye view of how these socioeconomic factors shape the nonprofit sector and allows us to collectively reflect on our shared experiences, enabling a better understanding of trends in charitable giving. Equipped with this knowledge, we can make informed decisions based on data, advance our fundraising strategies, and effectively allocate resources for the greatest outcomes.
Bonterra is proud to be a platinum sponsor of the 2023 Giving USA report released this past June because we firmly believe in the power of data and evidence to enhance our work and foster connections that unite us toward our common mission of making more good possible.
Together, we'll examine the key takeaways from the 2023 Giving USA report and offer our perspective on how you can begin acting on this data right away. Let's jump into it!
Total charitable giving declined by an inflation-adjusted 3.4% in 2022, compared to the $484.85 billion in 2021. While at first glance, it’s easy to feel discouraged by this news, we must keep in mind that we’re coming off the upswing of unprecedented giving that took place during the height of the COVID-19 pandemic—to give context, total giving in 2019 added up to $449.64 billion. Since the publication of the annual Giving USA report began in 1956, 2020 and 2021 stand out as the two best years of giving on record when adjusted for inflation. Given that context, it seems natural that giving would begin to revert to pre-pandemic levels in 2022.
However, this decline in giving is further compounded by the economic uncertainty experienced throughout the year. Giving USA's report highlights that the cumulative change in total giving between 2020 and 2022 was an inflation-adjusted -9.2%. While some of this decline can be attributed to a reduced sense of urgency around giving compared to previous years, individuals also faced diminished buying power. In 2022, the inflation rate reached its highest point in 40 years, and concerns about a potential recession loomed. Additionally, volatile fluctuations in the stock market may have prompted individuals to be more cautious with their diminishing disposable personal income (DPI) and resulted in lower charitable giving—more on that in a bit.
On a positive note, it’s worth highlighting that unemployment rates in 2022 returned to pre-pandemic levels. This suggests that more individuals are entering or re-entering the workforce, raising hopes that they may have increased capacity to contribute charitably in 2023.
Charitable contributions by foundations grew 2.5% to an estimated $105.21 billion in 2022 (a decline of 5%, when adjusted for inflation.) Despite the decline when adjusted for inflation, it’s great news to see that this audience of philanthropists have continued to increase their share of charitable giving over the past few decades as more foundations take a direct approach to supporting their local nonprofits. Foundations only made up 5% of all giving in 1982, which has since increased to 21% in 2022!
Foundations play an essential role as leaders in their communities, and we’ve seen many of our customers within this audience taking a strategic role in supporting operational efforts of nonprofits through grants, capacity building programs such as Jumpstart, and community-oriented initiatives such as Giving Days. By enabling nonprofits with the necessary funding and modern technology to thrive in an increasingly digital world, foundations are able to support nonprofits where they are now and help them develop methods for sustainable growth into the future.
Our new report, “Nonprofit needs by the numbers,” examines the ever-evolving challenges that nonprofit professionals currently face and provides insights into how grantmakers and foundations can further the investments in these organizations to help them raise more and advance their ability to serve their communities.
We look forward to seeing how foundations’ slice of the giving pie continues to grow as they place more emphasis on equitable distributions of funds and capacity-building tools to nonprofits.
Giving by individuals dropped in 2022 by 6.4% (13.4% when adjusted for inflation.) There were economic reasons for this decline, which we’ve described above, that compounded the reduction in individual giving. On top of the decline in the total amount of disposable income, in 2022 donors also gave the lowest percentage (1.7%) of that smaller pie since 1995.
Conditions last year were considered a “perfect storm” for a decline in individual giving: the market decline likely affected major donors; disposable personal income declined for everyday individual donors; and inflation and interest rates were incredibly high across the board. There’s also some speculation that after a few of the most generous years on record, largely influenced by the COVID-19 pandemic, donors felt a desire to “get back to normal” and slightly pull back their giving as they saw indicators of recovery from the initial crisis. Recent data from the Fundraising Effectiveness Project seems to back this up: donors and dollars were both down, bucking a consistent trend of “donors down, dollars up” that was also documented by Dorothy A. Johnson Center for PhilanthropyGrand Valley State University in 2022.
Although there was an overall decline in individual giving, this was still the biggest piece of the pie in 2022 at 64%, and despite this decline, one type of individual donor stood out: those making mega gifts, which Giving USA classifies as a gift greater than 0.1% of total giving in a given year, rounded to the nearest $50 million. In 2022, mega gifts were capped at $500 million each, and mega gifts from individuals totaled nearly $14 billion, or about 5% of all individual giving for the second year in a row.
In contrast with individual giving, giving by corporations for the year 2022 was actually stronger in current dollars despite the unusual economic conditions. The GDP grew 9.2% (1.1% after adjusting for inflation;) corporate pre-tax profits grew 6.6% (-1.3% after adjusting for inflation.) Corporate giving showed the strongest growth rate of all four sources in current dollars, which means it may make sense for nonprofits to lean into employee gift matching and corporate social responsibility (CSR) opportunities like the ones facilitated by FrontDoor and CyberGrants.
Nonprofits are no stranger to the influence current events have on their funding streams, programmatic activity, and more. Many won’t be surprised to hear that giving to international affairs, which was influenced by current events and crises, like Russia’s invasion of Ukraine, outpaced inflation. In fact, in 2022, giving to international affairs and to foundations reached its highest giving level on record after inflation, after giving to these causes sank during the pandemic. Organizations that will be best equipped to respond to current and future crisis moments are the ones that take the time now to establish 1) a crisis plan, 2) strong coalition relationships with similar organizations, and 3) invest in their technology so that staff can dedicate as much time as possible leaping into action and as little time as possible wrestling with technical issues or catching up on communications, fundraising, and logistics.
2022 represents more of a drop-off from an extraordinary high than a true plummet in giving, but many of the subsectors are seeing higher levels of giving now than they were pre-pandemic. The 2023 Giving USA report’s key takeaways centered on how the resilience and innovation developed during the pandemic will keep driving nonprofits’ success—and technology is an important aspect of these initiatives. These are just a few ways that the right technology can help nonprofits tap into the report’s recommended areas of focus, without creating more work for busy staff:
One important key to expanding online giving that the report identified is using mobile channels. Giving USA called out that mobile devices now make up a majority of traffic to nonprofit websites, a data point documented by the most recent M+R Benchmarks Ensuring that your online forms for donating, volunteering, taking advocacy action, and other engagement opportunities are optimized for mobile can help you ensure that you’re giving supporters the quick and seamless experience they need—which will help keep them coming back. Simple, intuitive tools like one-click form functionality and drag-and-drop email builders can all work together to support your ultimate goal of mobile optimization by helping you get your message out, meet your donors where they’re at, and fundraise across your many donor segments with less technical effort.
Giving USA noted that when meeting new donors and keeping the ones nonprofits have, communication and engagement are key. We’ve seen how important it is for nonprofits to not only keep in touch with all donors, but to do so in a segmented, targeted, and personalized way so these messages are as relevant as possible. Younger donors in particular require different communication strategies than elder generations—a 2021 report from Fidelity Charitable showed that these donors see themselves as participating in movements rather than seeing their gifts of money, time, or attention as transactional. Rising donors also think critically when forming a holistic opinion of an organization; they expect consistency and authenticity from the organizations they support—and they’ll revoke their resources if they don’t see organizations acting in alignment with their stated values, internally or externally.
One practice organizations can embrace now in order to attract, engage, and retain supporters that expect authentic, consistent, values-centered action is to use technology to share regular updates and keep lines of communication open. Automation is a great way for busy staff to ensure that supporters are reliably getting updates on your work and seeing how their support is helping you move your mission forward. No matter how this last year affected your fundraising, we’ve got your back with technology to help you deliver more good to the world.
Interested in diving into more of the data? Tune into the free recording of our session, “Piecing together the philanthropy puzzle.” You’ll hear from a panel of fundraising and data experts as they share main takeaways from the latest research in giving, talk through industry predictions, and discuss how to use reports to perfect your fundraising strategy in 2023 and beyond!