Trends In U.S. Philanthropy: Growing Donations, Shrinking Donors

U.S. philanthropy is witnessing a complex reshuffling. Despite record-breaking donations, fewer Americans are giving to charities, leaving nonprofits increasingly dependent on large donors and institutional grants. In 2023, charitable donations reached an unprecedented $557.2 billion, according to data from Giving USA. However, inflation eroded the value of these contributions, underscoring alarming trends: fewer individual donors are shouldering a growing share of the giving burden, while smaller nonprofits struggle to stay afloat.

A comprehensive report from GivingTuesday, Candid, Network for Good, and CCS Fundraising paints a nuanced picture. It reveals disparities in where donations flow, what causes attract the most funding, and how economic shifts impact philanthropy. Wealthier donors and institutions are shaping philanthropy, with large foundations focusing on education and health, while individual donors are directing their contributions to human services such as food banks and shelters.

Donations Up, Donors Down

From 2015 to 2022, individual donations increased by 58%, but the number of individual donors fell. In 2023 alone, the amount donated by individuals rose by 1.6% to $374.4 billion. However, adjusted for inflation, that represented a 2.4% decline. Wealth concentration is partly to blame: the wealthiest 0.3% of donors accounted for 45% of all donations from 2015 to 2022. Meanwhile, smaller donors—those giving under $100—accounted for less than 3% of the total philanthropic pie. This disparity has driven up the average donation size, while the median donation, stagnating at $50, loses value when adjusted for inflation.

“Nonprofits are under constant pressure to meet their missions and secure funding,” said Asha Curran, CEO of GivingTuesday. “This leaves little room for innovation, experimentation, or collaboration, which are crucial for long-term sustainability.”

Institutional Giving: More Funds, Fewer Grants

Institutional grant makers, such as foundations, have also ramped up their contributions. Grant dollars increased by 74% between 2015 and 2022, with the average grant size rising from $53,000 to $98,000. Still, smaller nonprofits—the majority of the sector—receive only a fraction of these funds, exacerbating inequities. Just 1.4% of individual donations and 4.3% of grant dollars go to the smallest nonprofits.

Corporate giving, which reached $36.6 billion in 2023, increased by 3%, but like individual donations, the value fell once inflation was factored in. Similarly, online giving, which surged during the pandemic, has started to taper off, decreasing by 1% between 2022 and 2023.

Geographic and Economic Shifts

Geography also plays a significant role in where charitable dollars flow. Wealthier states receive more donations per capita, while those with higher poverty rates receive less. Washington, D.C., Vermont, and Montana lead in nonprofits per capita, but larger states like California and Texas house the most nonprofits overall. Nebraska stands out due to the influence of major donor Warren Buffett, skewing its giving rates upward.

Economic conditions also have a direct impact on giving. A strong economy tends to boost donations, particularly among larger donors. For instance, in 2023, stock market gains (24%, adjusted for inflation) buoyed wealthy donors’ contributions, while smaller donors continued to give consistently, regardless of economic changes. Foundations have responded to rising inflation by increasing grant sizes, but individual donors have not kept pace with rising costs.

The Path Forward: Recommendations for Nonprofits

Given these trends, nonprofits must adapt to survive and thrive. Below are 10 actionable steps for organizations to strengthen their resilience and broaden their revenue streams:

1. Target Major and Leadership Gifts: As the wealthiest donors control a larger share of philanthropy, nonprofits should prioritize securing major gifts to ensure financial stability.
2. Expand Planned Giving Initiatives: Diversify revenue by encouraging donors to make bequests or include the organization in their estate plans.
3. Develop Recurring Giving Programs: Monthly giving grew by 6% from 2022 to 2023. Nonprofits should leverage this momentum by building or expanding subscription-like donation models.
4. Leverage Corporate Matching Programs: With 65% of Fortune 500 companies offering matching gift options, nonprofits should focus on encouraging donors to take advantage of these programs.
5. Invest in Digital Fundraising: While online giving saw a slight decline, its share of total donations remains significant. Strengthening digital strategies can help capture more donations from younger, tech-savvy donors.
6. Foster Local and Community Partnerships: Geographical disparities in donations mean that local connections matter. Nonprofits should build relationships with community foundations and regional donors.
7. Focus on Economic Trend Analysis: Nonprofits should track economic indicators such as stock market performance and disposable income to predict donor behavior and adjust strategies accordingly.
8. Diversify Revenue Sources: Exploring additional revenue-generating initiatives, such as social enterprises or fee-based services, can provide a buffer during economic downturns.
9. Engage in Impact Investing: Growing interest in social and environmental concerns among investors opens opportunities for nonprofits to align with impact-focused funds.
10. Maximize Grant Opportunities: With foundation giving surpassing $100 billion for the second year in a row, nonprofits should prioritize grant applications and demonstrate their measurable impact to attract larger awards.

By adopting these strategies, nonprofits can better position themselves to navigate the evolving philanthropic landscape, ensuring they remain resilient despite the challenges ahead.

Source: The Chronicle Of Philanthropy and The Nonprofit Times