Charitable Giving DOWN in 2022: What You Need to Know

In 2022, the charitable sector was taken by surprise: for the first time in over a decade, charitable giving declined. This development, unexpected and unsettling, has triggered extensive analysis and speculation among stakeholders and observers. Here's what you need to know about this troubling trend.

The 2022 Dip

Contrary to the steady increases observed in the past decade (even since the pandemic), philanthropy in the US experienced a significant decrease in 2022. The Giving USA report, the most comprehensive annual survey of American charitable giving, noted that total donations dropped by approximately 5% compared to the previous year. This downtrend was not limited to a specific sector or donor demographic, and both individual and corporate giving experienced this dip. There is no singular reason for this decline. Instead, a combination of factors seems to have contributed to this change:

Economic Instability

In 2022, the US and indeed the world faced a period of economic instability, especially in the later half of the year. Various factors such as rising inflation, concerns about the ongoing impact of the COVID-19 pandemic, and geopolitical uncertainties contributed to a less than ideal economic climate. This likely influenced individual and corporate donors' willingness and ability to donate to charitable causes. While the economy is not the sole factor that predicts charitable giving, there is no question that it does have an impact.

Donor Fatigue

Secondly, donor fatigue appears to have played a part. The years of the COVID-19 pandemic saw unprecedented levels of charitable giving, with many individuals and organizations going above and beyond their usual levels of giving. In the aftermath of such extraordinary generosity, it is perhaps not surprising that a slowdown occurred among the general population.

Changes in Tax Policies

Changes in the tax environment in 2022 also likely had an impact. The IRS implemented changes in tax regulations that reduced the advantages of charitable donations for many individuals and corporations. This likely acted as a disincentive for some potential donors.

Implications and Responses

The decline in charitable giving in 2022 has many implications for nonprofits and the individuals and communities they serve. Many organizations rely heavily on donations to fund their operations and programs. A decrease in giving means fewer resources for vital services and initiatives. It is also important to note that the number of individual donors over the last several years has declined, but until 2022, giving was actually increasing year over year. This means that those with the ability to give at a substantial level were giving more than ever before.

Given this, it is crucial that both nonprofits and philanthropists alike adjust their strategies. For nonprofits, this might mean focusing more on major and planned gifts, which move the needle of fundraising more than any other type of development activity. It might also mean building stronger relationships with high level donors, emphasizing transparency and demonstrating the tangible impact of donations.

For donors, it could be a time to reevaluate giving strategies. While the tax benefits of giving may have diminished slightly, the social and moral benefits remain. Therefore, it could be an opportunity to rediscover the intrinsic rewards of giving, such as the sense of fulfillment and connection to the community. This also might mean looking at other missions in their community that they might have a connection to.

Looking Ahead

While the decrease in charitable giving in 2022 is something to be aware of, it's important to remember that giving trends are cyclical. We've seen drops in giving during times of economic uncertainty before, and those they've always been followed by periods of recovery. Moreover, the world of philanthropy is incredibly resilient and resourceful. It's certain that strategies will be devised to counteract this downtrend, with the ultimate goal of continuing to support and uplift communities around the world.

In the meantime, it's more important than ever for all of us to recognize the critical role that major gifts play in our missions, especially in times of economic uncertainty.

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